Review - Intro to Identifying Assets and Acquisitions

Review - Intro to Identifying Assets and Acquisitions -...

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Intro to Identifying Assets and Acquisitions Classification of Long-Term Assets Two Conditions: o Actively used in operations (production or sale of other assets or services) o Expected to benefit future periods- GREATER than 1 year Assets held for sale or for future use are NOT classified as plant and equipment, but as long term investment Two types (both subject to amortization): o Tangible- Physical Substance (examples): Land (non-depreciable asset) Assets subject to amortization-building and equipment and furniture and fixtures Natural resource assets are subject to depletion-mineral deposits and timber o Intangible- No Physical Substance (examples): Value represented by rights that produce benefits-Patents, Copyrights, Trademarks, Franchises, Goodwill What is Included in the Cost of an Asset? Invoice Price (-) Less cash discount (+) Plus freight, duty, unpacking and assembling costs, special foundation, power connections, legal costs, etc. but excludes sales tax (HST)
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