Long live asset are reported on the balance sheet in two parts. One is the plant assets and the other is the in intangible assets. Plant assets are physical assets, such as property, plant and equipment that the company owes. These assets provide services for the company for a number of years and are not intended to sell to customers. Plant assets are extremely important to a company’s success because it determines the company’s capacity, and its ability to please customers. The cost principle requires company to record plant assets at cost, which means it not only record the asset itself, but also expenditures needed, such as installation, to make it ready to operate. These expenditures are known as capital expenditures. Plant assets’ value decrease over its life- time used, except for land. Land does not decrease or change its value until it is sold. Cost of land includes the value of the land itself, closing costs, real estate’s broker commission, property taxes and all its necessary costs needed to make the land ready to use.
This is the end of the preview.
access the rest of the document.