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1142 Words Oct 12th, 2012 5 Pages
Introduction to Business
2012/2013
Tuesday, 9 October 2012

TOPIC:
Business Assets – Part 1

Dr Darja Peljhan

ASSETS
ASSETS are only those INPUTS that are owned by the company.


All assets are property of a company and are recorded in the balance sheet. Not all inputs are also assets!



In economics: we talk about physical production and inputs  inputs are typically capital and labour, by capital we mean “physical” capital (property, plant, equipment) and not “financial” capital (equity).



In accounting: we talk about property and assetscapital (equity!!)is one of the sources of financing

The difference between inputs and assets:
- rented offices (input, but not asset – the rent is in IS, nothing in
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b) Two major elements of business assets are fixed assets and current assets.
c) Business inputs used by a company can be only those things, which are also owned by the company.
d) Labour and services provided by third parties are business inputs and also business assets.
e) Business assets are recorded in the balance sheet.

5

FIXED ASSETS
FIXED ASSETS
Property, plant & equipment
• Long-term property of a company, their value is carried over gradually to products and services.
• Examples:
- land, buildings;
- machines and equipment, vehicles, …
Intangibles
• Do not have a physical appearance, but have long-term value for a company. • Examples: patents, licences, trademarks, …

3

FIXED ASSETS
Value of Property, plant & equipment





Acquisition (purchasing) expenditure (invoice price + all expenditure necessary to prepare the asset for use)
Write-off value (accumulated depreciation)
Book value = Acquisition expenditure minus Write-off value Balance sheet shows the book value of property, plant & equipment. FIXED ASSETS
Capacity of Property, plant & equipment
Capacity of production. How can we report capacity?




Number of products produced in time unit – intensive capacity; Number of time units in a period, when the asset is used or operates – extensive capacity;
Number of products produced in

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