ACC 221 1st Edition Lecture 21 Outline of Previous Lecture Section 20 Inventory Cash transaction activities o Operating Activities o Investing Activities o Financing Activities o Statement of cash flow Outline of Current Lecture Section 21 Fixed Assets Fixed Assets o Other Names o Characteristics o Dollar value we put into assets o Operating costs and expenses o Grey area Current Lecture Section 21 Fixed Assets Fixed Assets o Other names Fixed assets capital assets o 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 trucks o These may create up to 5 asset accounts all located in the asset section of the general ledger o Show wear through depreciation o 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 cash o Operating costs and expenses appear on income statement Expenses once capital asset is put into service maintenance ect Requirement for insurance o 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 asset o Dr truck cr Cash o 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 expense o Worst case scenario decreases assets o Makes a difference in how possible investors observe the business
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