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Chapter 11 - Long-term assets. Chapter 11 covers the management issues associated with the acquisition, operation, and disposal of property, plant, and equipment, natural resources, and intangible assets, as well as the concepts and techniques of depreciation, depletion, and amortization. | Long-Term Assets Multimedia Slides by: Gail A. Mestas, MAcc, New Mexico State University Chapter 11 Learning Objectives Identify the types of long-term assets and explain the management issues related to accounting for them. Distinguish between capital and revenue expenditures, and account for the cost of property, plant, and equipment. Define depreciation and compute depreciation under the straight-line, production, and declining-balance methods. Learning Objectives (cont’d) Account for the disposal of depreciable assets. Identify the issues related to accounting for natural resources and compute depletion. Identify the issues related to accounting for intangible assets, including research and development costs and goodwill. Supplemental Objective Apply depreciation methods to problems of partial years, revised rates, groups of similar items, special types of capital expenditures, and cost recovery. Management Issues Related to Accounting for Long-Term Assets Objective 1 Identify the | Long-Term Assets Multimedia Slides by: Gail A. Mestas, MAcc, New Mexico State University Chapter 11 Learning Objectives Identify the types of long-term assets and explain the management issues related to accounting for them. Distinguish between capital and revenue expenditures, and account for the cost of property, plant, and equipment. Define depreciation and compute depreciation under the straight-line, production, and declining-balance methods. Learning Objectives (cont’d) Account for the disposal of depreciable assets. Identify the issues related to accounting for natural resources and compute depletion. Identify the issues related to accounting for intangible assets, including research and development costs and goodwill. Supplemental Objective Apply depreciation methods to problems of partial years, revised rates, groups of similar items, special types of capital expenditures, and cost recovery. Management Issues Related to Accounting for Long-Term Assets Objective 1 Identify the types of long-term assets and explain the management issues related to accounting for them Long-Term Assets are assets that have a useful life greater than one year, are acquired for use in the operation of a business, and are not intended for resale to customers Are reported at carrying value Information about long-term acquisitions can be found under investing activities in the statement of cash flows Carrying Value is the unexpired cost of an asset Unexpired Cost = Cost – Accumulated Depreciation Also called book value Carrying value is reduced if a long-term asset loses some or all of its revenue generating potential before the end of its useful life Called asset impairment Sum of expected cash flows from asset < Carrying value Carrying value is reduced to fair value (present value of future cash flows) Is an application of conservatism Carrying Value of Long-Term Assets on Balance Sheet Long-Term Assets as a Percentage of Total Assets for Selected Industries Classification of
