Chapter 7 Connect

An asset that has no physical substance is called a(n) __________ asset

intangible

The rationale for expenditures being capitalized as assets is based on whether the expenditures benefit __________.

future periods

We c________ to land all expenditures necessary to get the land ready for its intended use.

capitalize

A(n) __________ is an exclusive right of protection given to a creator of a published work, such as a song, film, painting, photograph, or book.

copyright

capitalized _________ include the purchase price of the land plus closing costs such as fees for the attorney, real state agent commissions, title, title search, and recording fees.

costs

Machines are used in manufacturing, computers, printers, vehicles, furniture, and fixtures generally are classified as ___________

equipment

If a company generates its own goodwill through advertising or training, how should these costs be treated?

expense the costs as incurred

When a company purchases another company and the purchase price is greater than the fair value of the net assets acquired, this excess is referred to as

goodwill

Goodwill may only be recognized

in a business acquisition

The following are expenditures for assets subsequent to acquisition

-Repairs and maintenance -Additions -Improvements

Capitalize

Record an expenditure as an asset

Which of the following items are capitalized in the cost of land?

-Grading the land -Title insurance -Legal fees to secure title -Costs to remove an old building

Which of the following items should be capitalized as land improvements?

Cost of fences, sidewalks and parking lots

If a company replaces a major component of an asset with a new component with the same characteristics of an old component, it is classified as

an improvement

Advertising costs, Internally developed intangibles, Research and development costs are initially recorded as __________ on the __________ statement.

expense; income

The distinction between land and land improvements is that

land has an indefinite life

We record a ___________ asset at its cost plus all expenditures necessary to get the asset ready for use.

long-term

A new major component that is added to an existing asset is considered a(n) __________ and should be capitalized

addition

Intangible Assets

Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance.

The purchase price in all costs to bring an asset to its desired condition and location for use should be _________.

capitalized

Accounting for land improvements requires that the costs of land improvements are

recorded separately form the land itself

Costs of periodically servicing equipment is an example of:

repair and maintenance

An exclusive right to display a word, slogan, symbol, or emblem that distinctively identifies a company, product, or service is referred to as

trademark

A _________ is a contractual arrangement in which one entity grants the purchaser the exclusive right to use the trade name, formulas, and product rights within a specific geographic area for a specific period of time.

franchise

The key factor in classifying as repairs and maintenance is that

future benefits are not provided beyond those originally anticipated from the asset

Long-Lived Assets are typically classified in two categories: __________ and ____________.

tangible; intagible

Tangible Assets

those assets that can be appraised by value or seen or touched