Chapter7andLong-livedAssetsDepreciationOverview ofLong-Lived AssetsAcquisition Cost of Tangible AssetsDepreciation Method
Chapter 7 Long-lived Assets and Depreciation Overview of Long-Lived Assets Acquisition Cost of Tangible Assets Depreciation Method
Overviewof Long-livedAssetsTangible AssetsIntangible Assets
Overview of Long-lived Assets Tangible Assets Intangible Assets
Types of AssetsLong-lived assets usedin the operationof a business are divided into categories:Plant AssetsIntangibleAssets
Plant Assets TerminologyRelatd ExpenseAccountAssetAccount(BaanceSheet)IncomeStaement)Plant AssetsLandNoneBuildings, Machinery and EquipmentFurniture and Fixtures,Depreciationand Land ImprovementsDepletionNatural ResourcesAmortizationIntangibles
Intangible AssetsNo physical formPatentsFranchisesLeaseholdsCopyrightsGoodwillTrademarks
IntangibleAssetsAmortization expense for an intangible assetcan be written off directly against the assetaccount rather than held in an accumulatedamortizationaccount.Assets with an indefinite useful lifeare not amortized.All intangible assets are subject to impaiment
Intangible Assets: PatentsPatents are federal governmentgrantsThey give the holder the right toproduce and sell an invention.Suppose a company pays $170,000to acquire a patent on January lThe company believes that itsexpected useful life is 5 years
Intangible Assets: PatentsJanuary1Patents170,000Cash170,000To acquire a patentDecember3134,000Amortization Expense34,000PatentsTo amortize the cost of a patent
Intangible Assets: CopyrightsLiterary compositions (novels)Musical compositionsFilms (movies)SoftwareOther works of artCopyrights extend 50 yearsbeyond the author's life
Intangible Assets: TrademarksTrademarks, Trade Names, orBrand Names are assets thatrepresent distinctive identificationsof a product or service