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Ch7 - Fixed Assets and Intangible Assets A200 Chapter 7...

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Fixed Assets and Intangible Assets A200 Chapter 7
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Long-term assets are either Intangible, Investments or Fixed: Intangible: Patents, Copyrights, Trademarks, Goodwill Investments: Stocks and Bonds of other companies (not your own) Fixed assets (Also called Property, Plant & Equipment-PPE) Relatively permanent Useful life > 1 year They are owned and used by the business and are not held for sale as part of normal operations. Tangible (in that they have a physical presence). The costs to acquire them are capitalized. (Added together and booked as an Asset on the Balance Sheet.
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Business Expenditures: Costs Business expenditures (Costs) are classified as: Income Statement: Expense (Also called a Revenue Expenditure) Balance Sheet: Current assets Long-term (Fixed) assets (Property, Plant & Equipment) Investment assets Intangible assets If the business expects to benefit from the expenditure (Cost) within: The current period only The current year (within 12 months) Beyond the current year
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Capitalized Asset Cost = All expenditures necessary to acquire an asset and put it to its intended use . Costs to acquire an asset : Purchase price of asset (purchased or constructed) Related taxes Related fees (architect, engineer, real estate broker, surveyor, title searches, permits) Interest on construction loans Insurance during construction Freight/Shipping Costs to put the asset to use : Installation, assembly, testing Removing unwanted structures Modification costs Landscaping, paving, fencing, lighting Businesses do not capitalize as assets the costs of repairing damage, fines, etc. These costs are expensed on the income statement.
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Account for the Cost of Fixed Assets On 6-10-09, Staley Corporation made the following expenditures to acquire a printing machine and put it to use. It paid the freight and damage costs in cash and gave a note payable for the other costs: Purchase price of machine $165,000 Sales tax on purchase 2,500 Freight costs 1,700 Insurance 4,100 Installation and testing 800 Repair of damage incurred during installation 1,000 How does Staley record this transaction?
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