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Long-Term Assets

Financial Reporting of Long-Term Assets

Depreciation, depletion, and amortization are presented on both the balance sheet and the income statement. Additional information relative to long-term assets, fixed and intangible, should be included in the notes to the financial statements.

Depreciation expense is reported on the income statement in the operating expense section. The accumulated depreciation amount should be shown in the notes along with the depreciation method utilized, as many companies will report property, plant, and equipment net of accumulated depreciation on the balance sheet. Each fixed asset is reported net of its accumulated depreciation, at book value or the net amount. If there is more than one class of fixed assets, a single line item can be used as long as a separate listing is disclosed in the notes to the financial statements.

Natural resources are depleted, and the depletion expense is reported on the income statement in the operating expense section. The initial cost of the natural resource and the accumulated depletion is reported on the balance sheet with the noncurrent assets identifying the type of natural resource, such as minerals, oil, or timber. Like fixed assets, natural resources are reported at book value on the balance sheet.

Amortization expense is reported on the income statement in the operating expense section. The accumulated amortization is reported on the balance sheet along with the cost of the intangible asset. Each class of intangible asset is required to be disclosed net of any amortization.