ACC212 Week 10

Financial Accounting For Managers: Long-Term Assets

Tangible Assets

A physical asset owned by a company subject to wear and tear

Intangible Assets

Non-monetary, non-physical assets that provide long-term economic value to a business.

Value of Property, Plant, and Equipment

The original cost of the asset + All expenditures necessary to get the asset ready for use

Cost of Patents when Purchased

Purchase Price plus legal and Filing Fees

Cost of Patents when developed internally

Legal and Filing Fees only

Capitalize

if payments benefit future periods; long-term

Expense

If payment only benefits the current period; short-term

Accumulated Depreciation

The sum of depreciation at a point in time

Amortization

Allocating the cost of intangible assets to expense; only assets with finite useful life

Methods of Asset Disposal

Sale, Retirement, Exchange

Return on Assets

Net income generated for each dollar invested in assets

Profit Margin

Indicates earnings per dollar of sales

Asset Turnover

Measures the sales per dollar of assets invested