Chapter 8 Long Term Assets

Chapter 8 Long Term Assets - Chapter 8 Long Term Assets 8.1...

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Chapter 8 Long Term Assets 8.1 Acquisition Cost 8.2 Accounting for LTAs 8.3 Intangible Assets LTAs: 1. Tangible Assets: assets that have a physical substance(land, building, equipment, natural resources) 2. Intangible Assets: (intellectual property)assets that do not have a physical substance (copyright, patents, trademark) General Rule: LTA are recorded at historical cost less accumulated amortization Historical costs include all costs necessary to acquire and prepare long term assets for usage (acquisition cost) Acquisition Cost of LTA: purchase price+sales tax+ legal fees+transportation in costs +installation costs+all other costs necessary to prepare LTA for usage. Financing costs are not reported in the acquisition cost but reported as interest expense. Eg. Purchased $100000 worth of equip. sales tax 15% paid cash which had been borrowed for 1 year @ 5%. Transportation in costs $12000 Acquisition cost: 100000+15000+12000=127000 (BS equipment) Financing costs: 127000*5%=$6350 (IS interest expense)
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This note was uploaded on 09/13/2011 for the course ADM 2340 taught by Professor Perper during the Fall '07 term at University of Ottawa.

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Chapter 8 Long Term Assets - Chapter 8 Long Term Assets 8.1...

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