Ch. 9 PPE and Intangibles

Ch. 9 PPE and Intangibles - Investments in Property, Plant...

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Click to edit Master subtitle style 12/26/10 Investments in Property, Plant and Equipment and Chapter 9
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12/26/10 Long-Term Operating Assets There are two major categories of long-term operating assets: Property, Plant and Equipment (PPE) Tangible – has physical substance Long-lived assets acquired for business operations Intangible Assets Long-lived assets without “physical substance” that are used in business
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12/26/10 Nature of Operating Assets PPE Depreciation The process of allocating costs of these assets over their estimated lives Intangible Assets Amortization The process of allocating the costs of intangible assets over their estimated lives
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12/26/10 Step 1 - Evaluation Capital Budgeting Systematic planning for long-term investments in operating assets Long-term operating assets have value because they are expected to help the company generate cash flows in the future
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12/26/10 Step 2 - Acquire XYZ Inc. purchased a $1,000,000 warehouse for use in its business. XYZ paid $100,000 for the building, and borrowed the remaining $900,0000. Building $1,000,000 Cash $100,000 Mortgage Payable $900,000
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12/26/10 Leases Lease A contract that specifies the terms under which the owner of an asset ( the lessor ) agrees to transfer the right to use the asset to another party ( the lessee ) Contract includes: Time period Payment amounts
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12/26/10 Types of Leases Capital Leases
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This note was uploaded on 12/26/2010 for the course MGQ 201 taught by Professor Orrange during the Fall '09 term at SUNY Buffalo.

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Ch. 9 PPE and Intangibles - Investments in Property, Plant...

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