Chapter#4A: Capital Assets Flashcards Preview

Bookkeeping > Chapter#4A: Capital Assets > Flashcards

Flashcards in Chapter#4A: Capital Assets Deck (19)
Loading flashcards...
1

What are Capital Assets?

They are physical assets and non-physical

2

What are some examples of physical assets?

land, property, plant, and equipment

3

What are some examples of non-physical?

goodwill, trademarks, and licenses

4

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

5

Whats the General Rule for Capital Assets?

Should always be recorded on the Balance Sheet at Cost

6

What is Land?

it's a capital asset that can be used to house a company's plant and equipment

7

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.

8

True or False? All land isn't grouped together?

False, it is.

9

True or False: Land is the first entry in the balance sheet?

True

10

What are some Tangible Capital Assets?

Buildings, Shop, Plant Equipment, automobiles and office furniture and fixtures

11

What are the differences between Land and Tangible assets

these have a limited life and are therefore depreciated

12

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

13

What is Intangible Capital Assets

includes items such as goodwill, trademarks, licenses and patents

14

Define Goodwill

Goodwill is an intangible asset that represents the value of a company’s name, customer service, staff, and other factors

15

Define Trademarks

A trademark is a word, symbol, design, or combination of these used to represent products or services provided by a company.

16

Define Licenses

A license is a legal document giving official permission to do something.

17

Define Patents

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.

18

Where are Intangible assets reported?

On the Balance Sheet

19

What is Amortization?

it's a non-cash expense that is used to distribute the cost of an intangible capital asset over it's useful life