Accounting chap 8 review

Accounting chap 8 review - Chapter 8 Review Understand...

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Chapter 8 Review Understand balance sheet disclosures for operating assets. Operating assets are the major productive assets of many companies, and investors must be able to evaluate the long-term potential of these assets for a return on their investments. o Operating assets may be classified as being either tangible or intangible assets. o Tangible assets are referred to as property, plant, and equipment or alternately fixed assets. o Intangible assets include goodwill, patents, copyrights, and various types of intellectual property. Determine the acquisition cost of an operating asset. Assets classified as property, plant, and equipment (for fixed assets) are initially recorded at the cost to acquire assets, also referred to as historical cost. o Acquisition costs include those that are normal and necessary to acquire the asset and prepare it for its intended use. Generally, acquisition costs would include purchase price, taxes paid at time of purchase, transportation charges, and installation costs. Explain how to calculate the acquisition cost of assets purchased for a lump sum. Sometimes more than one asset is purchased for a single sum of money and the acquisition costs must be allocated between the assets. o
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Accounting chap 8 review - Chapter 8 Review Understand...

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