Chapter 8 - Chapter 8 1. Insufficient capacity results in...

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Chapter 8 1. Insufficient capacity results in lost sales. 2. Costly excess capacity reduces profits. 3. Tangible assets. Examples: land, building and equipment, furniture and fixtures, natural resource. 4. Intangible asset: patents, copyrights, trademarks, franchises, goodwill – subject to amortization. 5. Fixed Asset Turnover: Net Sales Revenue / Net fixed assets. 6. Acquisition cost = purchase price + expenditures needed to prepare asset a. For buildings: renovation, legal and realty fees, title fees b. For equipments: installation, transportation, modification to buildings c. For land: surveying fees, title insurance premiums, real estate commissions 7. Page 162 slide 1 and 2!! 8. Depreciation expense goes to income statement, accumulated depreciation goes to balance sheet. 9. Book value = Market value – depreciation 10. To calculate depreciation we need: acquisition cost, estimated useful life, estimated residual life. 11. Depreciation methods:
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This note was uploaded on 05/30/2008 for the course AEM 2210 taught by Professor Little,j. during the Spring '07 term at Cornell University (Engineering School).

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Chapter 8 - Chapter 8 1. Insufficient capacity results in...

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