Long Term Assets

On Your Test

You will be expected to know the following for multiple-choice concept questions. Almost all questions will relate to these things:

The definition of a tangible asset
The definition of an intangible asset

What does “capitalize” mean
Is an expenditure capitalized or expensed

The general rules to apply when determining if expenditures are an asset or an expense
Common items added to the cost of an asset (capitalized)

What is residual value, depreciable base, and useful life

How the different methods of depreciation expense are computed
What is included in the different methods of depreciation

What accounts are used to record the use of an asset

The useful life of different intangible assets

What is goodwill and when does impairment of goodwill occur

What method is used to expense the use of natural assets

When must you change the depreciation expense calculation

Does the sale of an asset result in a gain or loss, and how much

You will be asked to do the following on problems and multiple-choice problems that require calculations.

Determine the total cost of an asset given a list of expenditures

Determine if an expenditure is an asset or expense and what account is used

Compute depreciation, amortization and depletion expense using all methods

Record depreciation, amortization and depletion expense

Record depreciation expense given a change in estimate or additional cost

Record the sale of an asset