ch8_sp11 - BCOR 2000 Chapter 8 Reporting and Interpreting...

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BCOR 2000 – Chapter 8 Reporting and Interpreting Property, Plant and Reporting and Interpreting Property, Plant and Equipment; Natural Resources; and Equipment; Natural Resources; and Intangibles Intangibles
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Long-Lived Assets Two Types: Tangible Assets Assets with physical substance: • Land • Buildings, Fixtures, and Equipment • Natural Resources Intangible Assets Assets without physical substance: • Patents, Copyrights, Franchises, Licenses, Trademarks
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Capitalization vs. Expense Type of Capital or Expenditure Revenue Identifying Characteristics Ordinary Revenue 1. Maintains normal operating condition repairs and (Expense) 2. Does not increase productivity maintenance 3. Does not extend life beyond original estimate Extraordinary Capital 1. Major overhauls or partial repairs replacements 2. Extends life beyond original estimate Additions Capital 1. Increases productivity 2. May extend useful life 3. Improvements or expansions
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Measuring and Recording Acquisition Cost Acquisition cost includes purchase price and all expenditures needed to prepare asset for intended use. Acquisition cost does not include financing charges and cash discounts . Acquisition cost includes purchase price and all expenditures needed to prepare asset for intended use. Acquisition cost does not include financing charges and cash discounts .
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Measuring Acquisition Cost – what is  included: Equipment Purchase price Installation costs Modification to building necessary to install equipment Transportation costs Equipment Purchase price Installation costs Modification to building necessary to install equipment Transportation costs Land Purchase price Real estate commissions Title insurance premiums Delinquent taxes Surveying fees Title search and transfer fees Land Purchase price Real estate commissions Title insurance premiums Delinquent taxes Surveying fees Title search and transfer fees Buildings Purchase price Renovation and repair costs Legal and realty fees Title fees Buildings Purchase price Renovation and repair costs Legal and realty fees Title fees
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Asset costs include: Asset costs include: All materials and labor traceable to the construction. A reasonable
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ch8_sp11 - BCOR 2000 Chapter 8 Reporting and Interpreting...

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