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UARK ACCT Exam 3 With Complete
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Tangible Assets - ANSWER>>land, buildings, equipment, natural resources
Intangible Assets - ANSWER>>patents, trademarks, copyrights, franchises, and goodwill
The initial cost of a long-term asset will include - ANSWER>>any additional amounts the company paid to bring the asset to desired condition and location.
To capatalize an expedinture means to - ANSWER>>record the expenditure of an asset
An capitalized expedinture will be expensed. - ANSWER>>over time as the asset is used in company operations
To expense a expedinture means to record. - ANSWER>>the dull expenditure as an expense IMMEDIATLY
Costs to get land ready for use include: - ANSWER>>-Real estate commissions and fees
-Back property taxes or other obligations
-Clearing, filling, and leveling the land
-Cash received from selling salvaged building materials reduces the cost of land
Land improvements have limited useful lives and are recorded. - ANSWER>>seperatly from the land accounts
Costs of getting a building ready for use include: - ANSWER>>-Realtor commissions and fees
-Remodeling costs
The costs of equipment might include: - ANSWER>>-sales tax
-shipping
-assembly and any other costs to prepare the asset for use
Recurring costs such as annual property tax and annual property insurance on vehicles are. - ANSWER>>expensed as incurred
Basket Purchases are - ANSWER>>the purchases of more than one asset at the same time for one purchase price
Basket Purchases are recorded in. - ANSWER>>Accounts of each of the assets acquired
We allocate the total purchase brice of basket purchases as - ANSWER>>the total purchase price based on the relative fair values of individual assets (each asset's estimated fair value will be divided by the total estimated fair value to obtain an allocation percentage. Then the amount of the basket purchase is multiplied by the allocated percentage.)
The fair-value of an asset is - ANSWER>>its estimated stand-alone selling price
Natural resocurces include: - ANSWER>>oil, natural gas, timber and salt
Natural resources are distinguished from other assets by the fact that. - ANSWER>>They are physically used up or deleted (Record as cost + all other costs necessary to get asset ready for use)
All costs subsequent to acquisition - ANSWER>>Capitalise if: it enhances the FUTURE period
Expense if: it benefits ONLY the current period
Repairs and Maintenance - ANSWER>>We write off maintenance and repairs that affect productivity only in the current period in which they occur. The more major repairs that enhance the future benefits of productivity are added to the asset and capitalised. These include major repairs unlikely to recur in each period.
Additions - ANSWER>>An addition is made when we add a new major component to an existing asset. We should capitalize the cost of the additions if they increase, rather than maintain, the future benefits from the expenditure.
Improvements - ANSWER>>An improvement is the cost of replacing major components with the same characteristics as the old component, or a new component with enhanced operating abilities. The cost of the improvement usually increases future benefits, and we should capitalize it.
Legal defense and intangible assets ANSWER>>Intangible assets may also require costs subsequent to their acquisition, such as the cost of legally defending the right that gives the asset its value. The costs of successfully defending an intangible asset are added to the asset account. If the defense of the intangible is unsuccessful we expense the litigation costs as incurred,
Depreciation - ANSWER>>charge the cost of an asset to an expense over its service life. We recognize a portion of the assets cost of depreciation expense in each year the asset provides benefit
Recording depreciation- Service Value - ANSWER>>The estimated use the company expects to receive from the asset before disposing of it.
