ACC 221 1st Edition Lecture 21 Outline of Previous Lecture- Section 20: Inventory Cash transaction activitieso Operating Activitieso Investing Activitieso Financing Activitieso Statement of cash flowOutline of Current Lecture - Section 21: Fixed Assets Fixed Assetso Other Nameso Characteristicso Dollar value we put into assetso Operating costs and expenseso Grey area Current Lecture- Section 21: Fixed Assets Fixed Assetso Other names Fixed assets, capital assetso Characteristics Long term (Over 1 year) Company intends to use up Items never resold- Equipment- Land (Does not depreciate over time)- Buildings- Company cars- Company truckso These may create up to 5 asset accounts, all located in the asset section of the general ledgero Show wear through depreciationo Dollar value we put into the asset accounts (Appear on balance sheet)These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. Total amount of money paid to be able to put it into service- Purchase price ($30,000)- Sales tax ($2,000)- Service fees ($200)o Total amount to be able to put the capital asset into use: $32,200 Transaction- Dr. truck $32,200, Cr. casho Operating costs and expenses (appear on income statement) Expenses once capital asset is put into service (maintenance, ect.)- Requirement for insuranceo Not a capital cost, reoccurring expense Maintaining the vehicle- Oil change – maintaining the life – expense- Tire change – maintaining the life – expense- New engine, $5,000 to extend life extra 3 years – extending life of asset, considered capital asseto Dr. truck, cr. Casho Grey area Putting logo onto a truck- Needed? Or just for advertising purposes? - May be either – in some cases, this is a requirement prior to operating the vehicle. o Company rules, ice cream truck If we were not sure, where would our conservative guess go?- Consider operating expenseo Worst case scenario, decreases assetso Makes a difference in how possible investors observe the
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