chapter 8_Notes - Chapter 8 Reporting and Interpreting...

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Chapter 8 – Reporting and Interpreting Property, Plant, and Equipment; Natural Resources; and Intangibles Acquisition and Maintenance of Plant and Equipment Long-lived assets – intangible and tangible resources owned by a business and used in its operations over several years Tangible assets (fixed assets) – assets with physical substance Intangible assets – assets hat have special rights but not physical substance Fixed asset turnover – how effective a company is utilizing fixed assets to generate revenues: Net sales / average fixed net assets = fixed asset turnover Acquisition cost – net cash equivalent amount paid or to be paid for the asset Capitalized interest – represents interest expenditures included in the cost of a self-constructed asset Ordinary repairs and maintenance – expenditures for normal operating upkeep of long-lived assets Revenue expenditures – maintain the productive capacity o the asset during the current accounting period only and are recorded as expenses Additions and improvements – infrequent expenditures that increase an asset’s
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chapter 8_Notes - Chapter 8 Reporting and Interpreting...

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