Part 1 complete discussion
Class, what are Long Lived assets, what are intangible assets? How do you measure the cost of long-lived assets and intangible asset to report in balance sheet?
2.Class, what is the difference between depreciation and amortization? What are the different methods of depreciation? Please discuss with examples.
3.Class, can you differentiate between current liabilities and long-term liabilities? Give some examples. You can access the balance sheet of a public company on the internet and describe the current liabilities and long-term liabilities reported. You can know more about these liabilities if you read the notes to financial statements. Each one of you can select a different public company. Please do not repeat the same company that other students have already selected.
4.Class what are contingent liabilities? Explain with examples. Access the balance sheet of a publicly traded company and discuss on the contingent liabilities disclosed in the notes to financial statements.
Part 2 reply to discussion
Long-lived assets are assets that a company expects to hold and use for a long period, usually longer than one year. These assets are not intended for sale in the normal course of business. Examples include Property, Plant and Equipment (PP&E): Buildings, machinery, vehicles, land. Natural Resources (oil reserve, mineral deposit), Intangible Assets (Patents, trademark, goodwill).
Intangible Assets are non-physical assets that provide long-term value to a company. Thy are identifiable and can be controlled by the company as a result of past events. Examples, Patents (exclusive rights to produce a product or use a process.) Trademarks (Distinctive signs or symbols that differentiate product or services.) Goodwill (the excess value paid over the fair value of identifiable net assets during a business acquisition. Copyright (exclusive rights to reproduce, publish, and sell literary, musical, or artistic works. Franchises (rights to operate a business or sell products under a larger company’s brand.
Measure the Cost of Intangible Assets/purchased intangibles/ acquisition cost: purchase price any directly attributable cost necessary to prepare the asset for its intended use (e.g., legal fees).
Internally Generated Intangibles/ Generally, cost related to the creation of internally generated intangibles (e.g., research and development) are expensed as incurred. However, certain development costs can be capitalized if they meet specific criteria (e.g., technical feasibility, intent to complete and use/sell the asset).
Goodwill/cost measurement: The excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination.
Reporting on the Balance Sheet/Long-Lived Assets and Intangible Assets/Historical Cost: Initially recorded at cost, which included the purchase price and any cost necessary to bring the asset to a usable state. Depreciation (for PP&E): Systematic allocation of the cost of tangible long-lived assets over their useful lives. Amortization (for intangibles) Systematic allocation of the cost or intangible assets over their useful lives, if they have a finite life. Indefinite-live intangibles (like goodwill) are not amortized but are tested for impairment annually. Impairment/If the carrying amount of the assets exceeds its recoverable amount, an impairment loss is recognized.
In summary, long-lived assets and intangible assets are measured at their historical cost, and their cost is allocated over their useful lives through depreciation or amortization. Regular impairment testing ensures that the carrying amounts do not exceed their recoverable amounts.
What Are Intangible Assets? Examples and How to Value (investopedia.com)
Part 3 reply to discussion
What are Long Lived assets, what are intangible assets? How do you measure the cost of long-lived assets and intangible asset to report in balance sheet?
Long-lived assets are physical items that are purchased by businesses that have a life span of more than a year and are considered tangible assets. Long-lived asset items can be a computer, a building, furniture, equipment, etc. Intangible assets are items that are not physical items. Types of intangible assets are patents, brands, trademarks, or copyrights and can also be considered indefinite items (Kenton, 2024). To report long-lived and intangible assets on a balance sheet would depend on what the company decides as face value.
Long-lived assets are reported on a balance sheet under property, plant, and equipment minus their accumulated depreciation. Most businesses utilize a turnover ratio which varies depending on the type of business it operates. Some items are measured at historical cost or a variation thereof and others at fair value. Intangible assets appear as long-term assets on balance sheets. Its value is determined based on the purchase or acquisition price along with their amortization schedules. However, some intangible assets, such as goodwill, don’t appear on the balance sheets because their value cannot be spread out over time (Kenton, 2024).
References:
Kenton, W. (2024, May 30). What are intangible assets? Examples and how to value. Retrieved from Investopedia:
https://www.investopedia.com/terms/i/intangibleasset.asp
Part 4 complete discussion
Class,
how does the stockholders’ equity section of a corporate Balance Sheet differ from that of a single-owner business?
Part 5 reply to discussion
how does the stockholders’ equity section of a corporate Balance Sheet differ from that of a single-owner business?
The difference is, owners’ equity sections for corporations are labeled most times as “shareholders’ equity”, because stockholders own corporations jointly. “Owners’ equity sections for single-owner companies cannot include stock shares outstanding or dividend”. “Shareholders’ equity sections for corporations include shares of stock outstanding, dividends paid out and retained earnings.
https://smallbusiness.chron.com/definition-private-corporation-4396.htmlLinks to an external site.
Equity, as we know shows the level of ownership of an asset or public company. If one owns a house, but still has a mortgage or loan they do not have total equity in that home. “Shareholders’ equity is the net amount of a company’s total assets and total liabilities”. “The Shareholders’ equity represents a company’s net worth”.
https://www.investopedia.com/ask/answers/020415/wh…
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