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ACG 2021

ACG 2021. Chapter 7 Summary. Long-Term Assets (PP&E). Allocating Costs. All Costs Associated with Purchase of Asset Costs needed to use Asset for Intended Purpose. What if you buy Multiple Assets Together?. What happens when you use up an Asset?. Assets:

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ACG 2021

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  1. ACG 2021 Chapter 7 Summary

  2. Long-Term Assets (PP&E)

  3. Allocating Costs • All Costs Associated with Purchase of Asset • Costs needed to use Asset for Intended Purpose

  4. What if you buy Multiple Assets Together?

  5. What happens when you use up an Asset? • Assets: • Economic Resources that provide a future Benefit • Benefit provided by Long-Term Assets • Revenue • Matching Principle • Record any costs associated with Revenue Earned in the Period • Consumption of Assets are a Cost, so we must Expense

  6. Expense is Called

  7. Depreciation Methods

  8. Accounting Transaction • Deprecation Expense xxxx • Accumulated Depreciation xxxxxx • Accumulated Depreciation is a • Contra Asset • Asset – Accumulated Depreciation = • Book Value of the Asset

  9. Capital Expenditure vs. Immediate Expense • Capital Expenditure • Add Cost to existing Asset and depreciate • Rules: • Capital Expenditures • Increase the capacity of the asset • It can do more • Drive more, make more copies, produce more widgets • Increase the useful life of the asset • It will last longer • Immediate Expense • Maintenance costs or Restoration costs

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