Accounting 221 Chapter 8

Your page rank:

Total word count: 513
Pages: 2

Calculate the Price

- -
275 words
Looking for Expert Opinion?
Let us have a look at your work and suggest how to improve it!
Get a Consultant

Tangible assets

have a physical presence; they can be seen and touched. Intangible assets are rights or privileges. They cannot be seen or touched.

Tangible asset types

1. Property, Plant, and Equipment – Sometimes called plant assets or fixed assets. We depreciate these assets over their useful life. 2. Natural Resources – Mineral deposits, oil and gas reserves, timber stands, coal mines, and stone quarries are some examples of natural resources. We deplete these assets over their useful life. 3. Land – Has an infinite life and is not subject to depreciation.

Intangible Assets with Identifiable Useful Lives

These intangibles include patents and copyrights. We amortize the cost of each over its useful life.

Intangible Assets with Indefinite Useful Lives –

These intangibles include renewable franchises, trademarks, and goodwill. The cost of these assets is not expensed unless it can be shown that there has been an impairment in value.

Costs of Long Term Assets: Buildings

Purchase price, Sales taxes, Title search and transfer document costs, Realtor’s and attorney’s fees, and Remodeling costs.

Costs of Long Term Assets:Equipment

Purchase price (less discounts), Sales taxes, Delivery costs, Installation costs, and Costs to adapt to intended use.

Costs of Long Term Assets: Land

Purchase price, Sales taxes, Title search and transfer document costs, Realtor’s and attorney’s fees, Costs of removal of old buildings, and Grading costs.

Life Cycle of Operational Assets

1)Acquire Funding 2)Buy Asset 3)Use Asset 4)Retire Asset

Straight-Line Method

The same amount of depreciation is taken each accounting period.

Double-declining Balance

produces more depreciation expense in the earlier years of an asset’s life, with a decline amount of expense in later years


produces varying amounts of depreciation in different accounting periods depending upon the number of units produced.

Costs that Are Expensed

The cost of routine maintenance and minor repairs that are incurred to keep an asset in good working order are expensed as incurred.

Costs that Are Capitalized

Expenditures that improve the quality of an asset are capitalized as part of the cost of that asset.

Intangible Assets

Trademarks A name or symbol that identifies a company or a product. The cost of a trademark may include design, purchase, or defense of the trademark.

Intangible Assets

Patents The exclusive legal right to produce and sell a product that has one or more unique features. The legal life of a patent is 20 years.

Intangible Assets

Copyrights Protection of writings, musical composition, work of art, or other intellectual property. The protection extends for the life of the creator plus 70 years.

Intangible Assets

Franchise The exclusive right to sell products or perform services in certain geographic areas.

Intangible Assets

Goodwill The excess of cost over fair value of net tangible assets acquired in a business acquisition.

Expensing Intangible Assets

An asset with an identifiable useful life is amortized using the straight-line method over the intangible’s legal life or its useful life.

Impairment of Intangible Asset

Intangible assets with indefinite useful lives must be tested for impairment annually. If the fair value of the intangible asset is less than its book value, an impairment loss is recognized.

Share This

More flashcards like this

NCLEX 10000 Integumentary Disorders

When assessing a client with partial-thickness burns over 60% of the body, which finding should the nurse report immediately? a) ...

Read more


A client with amyotrophic lateral sclerosis (ALS) tells the nurse, "Sometimes I feel so frustrated. I can’t do anything without ...

Read more

NASM Flashcards

Which of the following is the process of getting oxygen from the environment to the tissues of the body? Diffusion ...

Read more

Unfinished tasks keep piling up?

Let us complete them for you. Quickly and professionally.

Check Price

Successful message