This DQ covers chapter 7 topics and is worth 10 points. Answer each question bel
ID: 2394640 • Letter: T
Question
This DQ covers chapter 7 topics and is worth 10 points. Answer each question below to the best of your ability 1. What is the difference between a short and long term asset? (3 points) Provide an example of each one. 2. When we record an asset, what are the costs that are capitalized? (2 points) 3. What are land improvements as it relates to tangible assets? (2 points) Provide an example of one. 4. Some of the costs that can be incurred when buying an asset include property taxes, insurance. What type of taxes and insurance might be capitalized vs, expensed? (3 points) Provide an example and Search entrics or author Unread 6 Reply
Explanation / Answer
1.The short term asset provides benefits for the short period and this period could extend to one year. After the assets loses its utility and also it do not have any salvage. Example of such assets are : Stores and Office Stationary like printer ribbon.
The long term asset provides benefits to the organization for long term which extends over one year and its value is utilized and expense is booked in the form of depreciation every year. Example of such are : Plant and machinery, buildings etc.
2.When we record an asset, the costs which we use to capitalize are : The purchase price of asset alongwith sales taxes, installation cost with material and labor charges, freight charges, employees training costs etc.
3.The land improvements includes following tangible assets inclusions : development of building alongwith parking and storage spaces, creating gardens and growing trees and developing entertainment and enjoying facilities.
4.While buying an asset, we use to incure costs like sales / property taxes, insurance charges, installation costs, freight costs, cartages and labor costs.
We capitalize all the purchase costs, sales/property taxes, installation costs and freight costs. The costs which book as expenses includes insurance costs, cartages and labor costs and small wear and tear charges.
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