财务会计概念与应用英文版Lecture 9.pptVIP

Chapter 9 Investments in Property, Plant, and Equipment and in Intangible Assets Long-Term Assets Property, plant, and equipment Tangible assets acquired for the use in business operations. Land, buildings, and equipment. Intangible Assets Assets without physical substance that are used in business. Licenses, patents, franchises, and goodwill. Capital Budgeting Capital budgeting Planning for investment in long-term assets. Long-term assets have value because they help companies generate future cash flows. Involves comparing the cost of the asset to the value of the expected cash flows, after adjusting for the time value of money. Time value of money The concept that a dollar today is worth more than a dollar received in the future. Asset Acquisition Include purchase price. Include costs incurred to acquire the asset and getting it ready for its intended use. Sales tax, shipping, installation, and other costs. Leases Lease A contract that specifies the terms under which the owner of an asset (the lessor) agrees to transfer the right to use the asset to another party (the lessee). What terms should be included in a lease? Term Payment amount Due dates Match Lease Terms The party that is granted the right to use the property under the terms of a lease. Classifying Leases A lease is classified as a capital lease if it is non-cancelable and meets one of the following criteria: Lease transfers ownership of the asset. Lease contains a bargain purchase option. Lease term is equal to 75% or more of the estimated life of the asset. Present value of the lease payments is equal to 90% or more of the fair market value of the asset. Operating Lease Capital Lease Assets Acquired bySelf Construction Self-constructed assets Recorded at cost. Include all expenditures incurred to build the asset and make it ready for its intended use. Costs include: Materials used to build the asset. The construction labor. Capitalized interest. Some reasonable share of the general company over