7 & 8 P1

Tangible Assets- land, land improvements, buildings, equipment, and natural resources. Physical substance

Intangible assets- patents, trademarks, copyrights, frachchises, goodwill. Lack of physical substance, existence often based on legal contract.

Property, plant, and equipment- recorded at the original cost of the asset + all expenditures necessary to get the asset ready for use

Land improvements- are amounts spent to improve the land 

Natural assets- oil, natural gas, timber, and salt 

Purchased intangibles- recorded at their original cost plus all other costs necessary to get the asset ready for use 

Patents- exclusive rights to manufacture a product or to use a process 

Copyrights- exclusive right of protection given to the creator of a published work 

Trademarks- 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 its product  within a specified geographic area

Goodwill- is the portion of the purchase price that exceeds the fair values of identifiable net assets 

Net assets = assets acquired less liabilities assumed 

Material- if it is large enough to influence a decision

Not material- the item is typically recorded as an expense regardless of its expected period of benefit

Depreciation- decrease in value or selling of an asset, allocation of an asset's cost to expense over time 

Service life-the estimated use the company expects to receive from the asset before disposing of it

Residual value- the amount the company expects to receive from selling the asset at the end of its service life

Depreciation method- the pattern in which the assets depreciable cost (original cost minus residual value) is allocated over time. 

Profit margin- indicates the earnings per dollar of sales