Tangible Assets: Property, Plant, and Equipment

Flashcards derived from lecture notes on Tangible Assets, focusing on definitions and key concepts related to property, plant, and equipment in accounting.

Tangible Assets

Assets that have physical existence, such as property, plant, and equipment.

Personal Property

Moveable property that is not fixed to one location.

Real Property

Land and anything permanently attached to it, including buildings.

Non-current Assets

Assets that are not expected to be used up in one year or within the operating cycle.

Revenue Expenditures

Cash outflows for goods and services that benefit only the current period.

Capital Expenditures

Cash outflows for goods and services that provide future economic benefits beyond the current period.

Cost to be Capitalized

The total initial cost of an asset, including purchase price and all necessary expenditures to prepare the asset for use.

Depreciation

The allocation of the cost of tangible assets over their useful lives, except for land which is not depreciable.

Land Improvements

Enhancements made to land that usually have a limited useful life and can be depreciated.

Subsequent Expenditures

Costs incurred after the initial cost of an asset, categorized as revenue or capital expenditures based on their impact on the asset's value or utility.

General Rule

The initial cost of an operational asset includes the purchase price and all expenditures necessary to bring the asset to its desired condition and location for use.