Question

1. What is the difference between a short and long-term asset? Provide an example of each one.

2. When we record an asset, what are the costs that are capitalized?

3. What are land improvements as it relates to tangible assets? Provide an example of one.

4. Some of the costs that can be incurred when buying an asset include property taxes, insurance. What type of taxes and insurance might be capitalized vs. expensed? Provide an example

Answer 1

Given Data :

(1) - What is the difference between a short and long-term asset? Provide an example of each one.

Answer :

(2) : When we record an asset, what are the costs that are capitalized?

When we record an asset, the costs which we use to capitalize are :

*The purchase price of asset alongwith sales taxes,

*Installation cost with material and labor charges,

*Freight charges and

*Employees training costs etc.

(3) : What are land improvements as it relates to tangible assets?

The land improvements includes following tangible assets inclusions :

*Development of Building alongside stopping and storage rooms,

*creating greenhouses and developing trees and creating diversion and getting a charge out of offices.

(4) : Some of the costs that can be incurred when buying an asset include property taxes, insurance. What type of taxes and insurance might be capitalized vs. expensed?

While buying an asset, we use to incure costs like sales / property taxes, insurance charges, installation costs, freight costs, cartages and labor costs.

We capitalize all the purchase costs, sales/property taxes, installation costs and freight costs. The costs which book as expenses includes insurance costs, cartages and labor costs and small wear and tear charges.