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