Operational Assets

Operational Assets - OPERATIONALASSETS

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OPERATIONAL ASSETS I.Types of Operational Assets- Actively Used in Operations, Expected to Benefit Future Periods   A. Property, Plant, Equipment -tangible    B. Natural Resources-tangible, not man-made   B. Intangible-No PhysicalSubstance II.Expenditures-capital expenditures (dr to asset), revenue expenditures(dr to expense) A. Expenditures incurred prior to use, General Rule-The initial cost of an operational asset  includes the purchase price and all normal expenditures necessary to bring the asset to its  desired condition and location for use. Capital expenditures. 1.Equipment-Net purchase price, Taxes, Transportation costs, Installation costs,  Modification to building necessary to install equipment, Testing and trial runs 2.Land-Purchase price, Real estate commissions, Attorney’s fees, Title search, Title  transfer fees, Title insurance premiums, Removing old buildings 3.Land Improvements-Separately identifiable costs of Driveways, Parking lots, Fencing,  Landscaping, Private roads 4.Buildings-Purchase price, Attorney’s fees, Commissions, Reconditioning   5.Natural Resources-   Purchase price, exploration and development costs of: Timber,  Mineral deposits, Oil and gas reserves. Asset Retirement Obligations-Often encountered  with natural resource extraction when the land must be restored to a useable condition.  Recognize as a liability and a corresponding increase in the related asset. Record at fair  value, usually the present value of future cash outflows associated with the reclamation  or restoration. 6.Intangible Assets-Record at current cash equivalent cost, including purchase price,  legal fees, and filing fees.  incurred. 
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Research-Planned search or critical investigation aimed at discovery of new knowledge .  . . Development-The translation of research findings or other knowledge into a plan or  design . . . Goodwill-Occurs when one company buys another company. Only purchased  goodwill is an intangible asset. The amount by which the purchase price exceeds the  fair market value of net assets acquired is the cost of goodwill. 7.Lump-Sum Purchases-Allocation of the lump-sum price is based on relative values of 
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Operational Assets - OPERATIONALASSETS

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