7 & 8 P1

Tangible Assets

Land, land improvements, buildings, equipment, and natural resources with physical substance.

Intangible Assets

Patents, trademarks, copyrights, franchises, and goodwill; lack physical substance and often based on legal contracts.

Property, Plant, and Equipment

Recorded at the original cost of the asset plus all expenditures necessary to prepare the asset for use.

Land Improvements

Amounts spent to enhance the value of the land.

Natural Assets

Resources such as oil, natural gas, timber, and salt.

Purchased Intangibles

Recorded at their original cost plus all other costs necessary to prepare the asset for use.

Patents

Exclusive rights to manufacture a product or to use a process.

Copyrights

Exclusive right of protection granted to the creator of a published work.

Trademarks

A word, slogan, or symbol that distinctly identifies a company, product, or service.

Franchises

Local outlets that pay for the exclusive right to use the franchisor's name and products in a specific area.

Goodwill

The portion of the purchase price that exceeds the fair values of identifiable net assets.

Net Assets

Assets acquired less liabilities assumed.

Material

An item large enough to influence a decision.

Not Material

An item typically recorded as an expense regardless of its expected period of benefit.

Depreciation

Reduction in value or selling of an asset; allocation of an asset's cost to expense over time.

Service Life

The estimated duration a company expects to receive use from an asset before disposal.

Residual Value

The expected amount from selling the asset at the end of its service life.

Depreciation Method

The pattern in which the asset's depreciable cost is allocated over time.

Profit Margin

Indicates the earnings per dollar of sales.