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Capital Assets. Capital Assets are…. Assets used in the operations of a company and have a useful life of more than one accounting period. Also called fixed assets, include plant and equipment; property, plant and equipment; natural resources and intangible assets. Exercise.

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Capital Assets


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capital assets are
Capital Assets are…
  • Assets used in the operations of a company and have a useful life of more than one accounting period.
  • Also called fixed assets, include plant and equipment; property, plant and equipment; natural resources and intangible assets.
exercise
Exercise
  • Identify all of the capital assets you own personally…
  • What could you classify as a capital asset?
  • What do you own that will be useful/entertaining to you for an extended period of time?
  • If you don’t own any, list some that your family owns…
issues in accounting for capital assets

Exhibit 12.1

Decline in Book Value Over Service Life

Issues in Accounting for Capital Assets

2. Account for subsequent costs.

3. Allocate cost to periods benefited.

2. Account for subsequent costs.

3. Allocate cost to periods benefited.

2. Account for subsequent costs.

3. Allocate cost to periods benefited.

2. Account for subsequent costs.

3. Allocate cost to periods benefited.

2. Account for subsequent costs.

3. Allocate cost to periods benefited.

2. Account for subsequent costs.

3. Allocate cost to periods benefited.

1. Compute initial acquisition cost.

1. Compute initial acquisition cost.

4. Record

disposal

4.Record

disposal

4.Record

disposal

1. Compute initial acquisition cost.

1. Compute initial acquisition cost.

4. Record

disposal

4. Record

disposal

cost of capital assets general rule
Cost of Capital Assets  General Rule
  • Capital Expenditures  Costs related to the capital asset that will extend its life span. The necessary costs (i.e. installation costs, assembly, testing). Purchase Price.
  • Revenue Expenditures  Costs that maintain an asset but do not materially increase the asset’s life or productive capabilities (Eg. Buying a car battery).
cost of capital assets land
Cost of Capital Assets  Land

Title insurance premiums

Purchaseprice

Delinquent

taxes

Real estate

commissions

Surveyingfees

Title search and transfer fees

Land is not subject to amortization.

cost of capital assets building
Cost of Capital Assets  Building

Purchaseprice

Installationcosts

Architecturalfees

Transportation

costs

Cost ofpermits

Excavation andconstruction costs