how to tell if an expenditure is being recorded as an asset or if it is...

how to tell if an expenditure is being recorded as an asset or if it is being expensed immediately when looking at a balance sheet.

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Expert Solution

When we look at Balance sheet the prepaid expenses which goes beyond the calendar year like prepaid insurance, prepaid rent , supplies are shown as current

assets in the balnce sheet. Part of it is expensed in the year for which is used.

Next is fixed assets which are used in the business to generate revenue. The fixed assets are expensed every year in form of depreciation. So when looking at balance sheet

we can know how much book value of fixed assets are left which is known by subtracting accumulated depreciation from cost.

Land is not expensed it is capitalized and shown in balance sheet

Intangible assets are amortize according to the useful life of it, so the amortization is shown as an expense and the remaining value is shown in balance sheet.

Cash and cash equivalents are shown as an asset in the balance sheet.

Hence the cash paid in adnace for the expenses are shown as asset in balance sheet and when used is expensed

If any doubt please comment

ekkarill92 answered 2 weeks ago

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