Term
| Operational Assets go on the books |
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| Operational assets are actively used in operations |
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| Examples of tangible assets |
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| Property, plant, equipment and natural resources |
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| Examples of intangible assets |
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| Investments arent operational assets |
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| Current assets like inventory are included in operational assets |
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| Initial cost of an operational asset includes purchase price and all expenditures necessary to bring the asset to its desired condition and location for use (purchase price, testing, freight) |
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| Examples of Equipment Costs Capitalized |
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Definition
net purchase price
taxes
transportation costs
installation costs
modification to building necessary to install equipment
testing and trial runs |
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| Costs are either capitalized OR expensed |
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| Examples of Land Costs Capitalized |
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Definition
purchase price
real estate commissions
attorney fees
title search
title transfer fees
title insurance premiums
removing old buildings |
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| If you have fees and then dont buy land, you would expense costs |
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| Ongoing insurance e.g fire insurance would be expensed |
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| Removing old buildings goes into land costs not building costs |
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| Land Improvement Costs Capitalized Examples |
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Definition
Driveways
Parking Lots
Fencing
Landscaping
Private Roads |
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| Building Costs Capitalized Examples |
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Definition
Purchase price
architect fees (labor)
cost of permits
excavation costs
construction costs (materials) |
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| Natural Resources Capitalized (examples) |
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| Purchase price, exploration & development: timber, mineral deposits, oil and gas reserves |
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| If natural resources were explored and not purchased, costs would be expensed |
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| intangible assets are usually acquired for |
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| economic benefits last beyond current period |
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| Intangible assets are not |
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| depreciated or depleted instead are amortized |
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| Examples of intangible assets |
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Definition
patents
copyrights
trademarks
franchises
goodwill |
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| intangible assets are recorded at |
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Definition
| current cash equivalent cost, including purchase price, legal fees, and filing fees |
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Term
| Patent is an exclusive right recognized by |
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Definition
| law and grated by US Patent office for 20 years |
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Term
| Patent holder has right to |
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Definition
| use, manufacture, or sell the patented product or process without interference or infringement by others |
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| R&D costs for patents are expensed when? |
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| in the period they occurred. GAAP wants you to be a little conservative |
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| Only capitalize what patent fees |
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| Copyright is a form of what |
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| protection given by law to authors of literary, musical artistic and similar works |
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| copyright owners have exclusive rights to |
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| print, reprint, copy, sell, or distribute perform and record the work |
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| What is legal life of copyright |
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| life of author plus 10 years |
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| How do you amortize a copyright |
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Definition
| amortized over useful life not actual life of copyright |
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| a symbol, design, or logo associated with business |
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