ACCT 3110 CH 10

ACCT 3110 CH 10 - A ccounting 3110: E xter nal F inancial...

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Accounting 3110: External Financial Reporting I Chapter 10: Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition (skip appendix)
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Actively Used in Operations Tangible Property, Plant, Equipment & Natural Resources Intangible No Physical Substance Types of Operational Assets Expected to Benefit Future Periods General Rule for Cost Capitalization The initial cost of an operational asset includes the purchase price and all expenditures necessary to bring the asset to its desired condition and location for use.
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Equipment Net purchase price Taxes Transportation costs Installation costs Modification to building necessary to install equipment Testing and trial runs Costs to be Capitalized Land (not depreciable) Purchase price Real estate commissions Attorney’s fees Title search Title transfer fees Title insurance premiums Removing old buildings
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Costs to be Capitalized Land Improvements Separately identifiable costs of Driveways Parking lots Fencing Landscaping Private roads Buildings Purchase price Attorney’s fees Commissions Reconditioning
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Costs to be Capitalized The initial cost of an intangible asset includes the purchase price and all other costs necessary to bring it to condition and location for use, such as legal and filing fees. I ntangible Assets Patents Copyrights Trademarks Franchises Goodwill
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Intangible Assets Lack physical substance. Exclusive Rights. Intangible Assets Future benefits less certain than tangible assets.
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I ntangible Assets - Patents Torch, Inc. has developed a new device. Research and development costs totaled $30,000. Patent registration costs consisted of $2,000 in attorney fees and $1,000 in federal registration fees. What is Torch’s patent cost? Torch’s cost for the new patent is $3,000. The $30,000 R & D cost is expensed as incurred. An exclusive right recognized by law and granted by the US Patent Office for 20 years . A patent holder has the right to use, manufacture, or sell the patented product or process without interference or infringement by others. R & D costs that lead to an internally developed patent are expensed in the period incurred.
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Copyrights A form of protection given by law to authors of literary, musical, artistic, and similar works. Copyright owners have exclusive rights to print, reprint, copy, sell or distribute, perform and record the work. Generally, the legal life of a copyright is the life of the author plus 70 years. Intangible Assets Trademarks A symbol, design, or logo associated with a business. If internally developed, trademarks have no recorded asset cost. If purchased, a trademark is recorded at cost. Registered with U.S. Patent Office and renewable indefinitely in 10-year periods.
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Occurs when one company buys another company.
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ACCT 3110 CH 10 - A ccounting 3110: E xter nal F inancial...

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