Flashcards in Chapter#4A: Capital Assets Deck (19)
What are Capital Assets?
They are physical assets and non-physical
What are some examples of physical assets?
land, property, plant, and equipment
What are some examples of non-physical?
goodwill, trademarks, and licenses
What is the following criteria Capital Assets must meet?
they must be held for use in the production of goods and/or services
they must have a useful life of more than one year
they have been acquired with the intention of using them on a continuing basis to produce income for the business
they are not intended for resale
Whats the General Rule for Capital Assets?
Should always be recorded on the Balance Sheet at Cost
What is Land?
it's a capital asset that can be used to house a company's plant and equipment
What makes Land Unique compared to other capital assets?
Land has an indefinite life span and its not considered to reduce in value over time.
True or False? All land isn't grouped together?
False, it is.
True or False: Land is the first entry in the balance sheet?
What are some Tangible Capital Assets?
Buildings, Shop, Plant Equipment, automobiles and office furniture and fixtures
What are the differences between Land and Tangible assets
these have a limited life and are therefore depreciated
What is Depreciation?
it's a non cash expense that is used to distribute the cost of the capital asset over it's useful life
What is Intangible Capital Assets
includes items such as goodwill, trademarks, licenses and patents
Goodwill is an intangible asset that represents the value of a company’s name, customer service, staff, and other factors
A trademark is a word, symbol, design, or combination of these used to represent products or services provided by a company.
A license is a legal document giving official permission to do something.
A patent is a grant—by the government to an inventor—of the right to exclude others from making, using, or selling his or her invention.
Where are Intangible assets reported?
On the Balance Sheet