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21 Cards in this Set
- Front
- Back
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Capital Expenditures |
cash outflow for goods and services that will provide future economic benefit beyond the current period. (assets) |
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Revenue Expenditures |
Cash outflows for goods and services beneficial only to the current period.
Expense xxxx cash xxxx
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Costs of Land Examples |
-cost of fill and clearing -delinquent taxes -cost of land and old building -commission to realtor -cost of removing old building -proceeds from old building salvage -cost of trees and shrubs |
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Cost of Building Examples |
-payment for construction -architect fees -excavation costs -interest during construction |
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Cost of Land Improvements Examples |
-Fences -parking lots and driveways |
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gains |
increases net income and equity |
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losses |
decreases net income and equity |
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exchange HAS commercial substance |
recognize gains and losses immediately |
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exchange LACKS commercial substance (no cash received) |
Defer gains; recognize losses immediately |
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exchange LACKS commercial substance (cash received) |
recognize partial gain, recognize losses immediately |
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start-up costs |
expensed when incurred |
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Limited Life Intangibles |
are amortized over time using the SL method. There is typically no SV for an intangible asset. (patent) |
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Indefinite-Life Intangibles |
are NOT amortized over time (trademarks, trade names, and goodwill) |
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direct costs for intangibles |
may be capitalized to the asset account |
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under IFRS |
operating assets may be recorded at FMV or cost |
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under IFRS |
impairment losses on operating assets other than goodwill may be reversed in future periods up to BV or CV |
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under IFRS |
Research costs are expensed and development costs are capitalized |
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under IFRS |
do not require recoverability test for impairments |
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What is meant by avoidable interest? |
the cost you could have avoided if you decided not to engage in the project |
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What is meant by depreciable basis? |
the cost of the asset minus SV, that amount is the cost of the asset that we allocate to expense over the life of the asset through depreciation |
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what is the recoverability test? |
says to look at EFCF you think you can get from it, add together and compare to the BV, if EFCF is less than you have an impairment loss |
