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Unformatted text preview: AEM221 Chapter 8 Vocabulary & Notes Long-lived assets: are tangible and intangible resources owned by a business and used in its operations over several years. Tangible assets: have physical substance o Ex: Land, natural resources, Buildings, equipment (depreciation) I ntangible assets: have rights but no physical substance o EX: Copyrights, patents, goodwill Cost P rinciple: All reasonable and necessary expenditures made in acquiring and preparing an asset for use (or sale as in the case of inventory) should be recorded as the cost of the asset. Capitalized: occurs to expenditures when they are recorded as part of the cost of an asset instead of as expense in the current period Acquisition Cost: include all expenses associated with the preparing an asset for use in operations Ex: may include purchase price, construction costs, installation costs, title and transfer fees, etc. Capitalized I nterest: represents interest expenditures included in the cost of a self-constructed asset Ex: labor, materials, and portion of interest expense Ordinary Repairs & maintenance: expenditures for normal operating upkeep of long-lived assets Revenue Expenditure s: maintain the productive capacity of the asset during the current accounting period only and are recorded as expenses o Ex: Southwest Airlines replacing lights, oil, and fabric on seats in airplane ordinarily Additions and Improvements:...
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This note was uploaded on 11/07/2010 for the course AEM 2210 taught by Professor Little,j. during the Fall '07 term at Cornell University (Engineering School).
- Fall '07