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Accounting Exam 4 Questions and Answers 100% Solved | Guaranteed Success Long-Lived Assets - Tangible and intangible resources owned by a business and used in its operations over several years. Business assets acquired for use over one or more years. Not intended for resale. Examples of Long...

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  • September 26, 2024
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  • 2024/2025
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Accounting Exam 4 Questions and

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Long-Lived Assets - ✔✔Tangible and intangible resources owned by a

business and used in its operations over several years.

Business assets acquired for use over one or more years.



Not intended for resale.

Examples of Long Lived Assets - ✔✔The stores where Walmart sells

merchandise.



Legal rights that restrict the use of the Under Armour logo.

Tangible Assets - ✔✔Long-Lived Assets that have physical substance,

which simply means you can see, touch, or kick them.



Most common examples include land, buildings, machinery, vehicles, office

equipment, and furniture and fixtures.

,Typically grouped into a single line item on the balance sheet called

Property, Plant, and Equipment.



AKA Fixed Assets.

Intangible Assets - ✔✔Long-Lived assets that have special rights but no

physical substance.



The existence of most of these is indicated only by legal documents that

describe their rights.



Includes brand names, trademarks, licensing rights.

Accumulated Depreciation Reporting - ✔✔Reported as a total for the entire

tangible assets category. Alternatively, it can be reported separately for

each type of tangible asset.

Three Key Accounting Decisions Related to Tangible Long-Lived Assets -

✔✔1.) Acquisition

2.) Use

3.) Disposal

,Land Improvements - ✔✔Include sidewalks, pavement, landscaping,

fencing, lighting, and sprinkler systems that are added to improve the

usefulness of land. Differ from land in that they deteriorate over time,

whereas land is assumed to last forever.

Construction in Progress - ✔✔Includes the costs of constructing new

buildings and equipment. When construction is finished, these costs are

moved from this account into the building or equipment account to which

they relate.

General Rule for Tangible Assets Under the Cost Principle - ✔✔All

reasonable and necessary costs to acquire and prepare an asset for use

should be recorded as a cost of the asset.

Capitalized Costs - ✔✔To record a cost as an asset, rather than an

expense

Capitalizing Costs Effects - ✔✔Increases Assets on Balance Sheet, and

decreases expenses on the income statement.

Costs That Should Be Capitalized (Land) - ✔✔-Purchase cost

-Legal fees

-Survey fees

-Title search fees

, Costs That Should Be Capitalized (Equipment) - ✔✔-Purchase/

construction cost

-Sales taxes

-Transportation costs

-Installation costs

Costs That Should Be Capitalized (Buildings) - ✔✔-Purchase/ construction

cost

-Legal fees

-Appraisal fees

-Architect fees

Capitalizing Costs for Land, Buildings, Equipment - ✔✔If a company buys

land, a building, or a piece of used equipment and incurs demolition,

renovation, or repair costs before it can't be used, these additional costs

are capitalized as a cost of the land, building, or equipment. These costs

are capitalized because they are needed to prepare the asset for use.

Basket Purchase - ✔✔When land, buildings, and equipment are purchased

together. When this occurs, the total cost is split among the assets in

proportion to the market value of the assets as a whole.

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