Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
24 Cards in this Set
- Front
- Back
|
How are plant assets recorded?
|
At cost.
|
|
|
Cost of land includes
|
Cash purchase price, closing costs (title, attorney fee), real estate broker commission, accrued property taxes and other leins
|
|
|
Land improvements are
|
structural additions to land. driveways, parking lots, fences, landscaping
|
|
|
What comprises Building cost
|
cash cost, everything else (fees, interest, permits, excavation,etc).
interest costs are limited to the timeframe of construction |
|
|
what comprises cost of equipment?
|
everything it takes to get the equipment, make it ready. not licensing, gas, or insurance
|
|
|
entry for purchase
|
all costs are debited, cash is credited
|
|
|
what are some advantages of leasing?
|
reduced risk of obsolescence, little or no down payment, shared tax advantages, assets and liabilities are not reported on financial statements.
|
|
|
What does depreciation apply to?
|
land improvements, buildings, equipment
|
|
|
factors which affect depreciation are:
|
cost
useful life salvage value |
|
|
methods of depreciation calculation
|
straight line
declining balance units of activity |
|
|
straight line
|
(cost-salvage balance)/useful life
|
|
|
repairs
|
revenue expenditures, not depreciation
|
|
|
additions and improvements
|
capital expenditures. make an asset better/last longer
|
|
|
what is an impairment?
|
permanent decline in the market value of an asset. recognized immediately
|
|
|
know how to record sale of an asset
|
gain, loss, retired
|
|
|
What is return on assets ratio?
|
a measure of profitability
net income / average total assets |
|
|
What is the asset turnover ratio
|
indicates operating efficiency
net sales / average total assets |
|
|
What is return on assets ratio (again)?
|
profit margin ratio x asset turnover
(net income/net sales) x (net sales/average total assets) |
|
|
how to increase return on assets?
|
increase profit per sale
increase volume of sales |
|
|
what is an intangible asset?
|
something that doesnt possess physical substance, cant be valued in money. ie patents
recorded at cost |
|
|
what is an amortization expense classified as?
|
operating expense , in income statement
|
|
|
what is the term used for allocation of cost for an intangible asset?
|
amortization
|
|
|
patents last
copyrights last trademarks last |
20 years
50 years after the death of an author indefinite. thus not amortized |
|
|
R&D costs are recorded as
|
an expense, when incurred
|
