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Chapter 8 is devoted to gaining an understanding of operating assets: property, plant, and equipment, and...

Chapter 8 is devoted to gaining an understanding of operating assets: property, plant, and equipment, and intangibles.  Why is it critical to study the accounting treatment of these assets

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Property, plant and equipment are fixed, tangibles assests shown on the balance sheet under the head assets.

These assets helps to generate revenue and profits for the business.

These types of assets are subjected to depreciation throught its life. Here depreciation means decrease in value of asset due to wear and tear. Depreciation charged on this assets are charged against the profits of current year. And every year asset value is revised by decreasing accumulated depreciation. Depreciation is a operaating expenditure.

Property, plant and euipment plays very important role in financial planning regards to capital expenditure.

where as intangibles assets like copyrights, patents etc., Intangibles assets are non-physical assets.The accounting for an intangible asset is to record the asset as a long term asset and amortize the asset over its useful life.

Here, amortization is same as depreciation. The difference is depreciation is charged on tangibles and amortization is a non-operating expenditure charged on intangibles.

ekkarill92 answered 2 years ago
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