Lesson 15- Long Lived Assets

  • Lesson 15- Long Lived Assets

    Learning Goals: By the end of this lesson you will be able to

    1. Understand what are long lived assets
    2. Determine the cost of property, plant and equipment.
    3. .Explain and calculate depreciation.




    • Lesson Glossary

      Fixed assets :Property, plant and equipment are long-lived assets that are used for the production and sale of goods or services to consumers.

      Cost includes the purchase price plus any non-recoverable taxes less discounts or rebates.

      Operating expenditures. Costs which benefit only the current period are expensed.  These costs are called operating expenditures.

      Capital expense  Costs that benefit future periods are included in a long-lived asset account and are called capital expenditures

      Depreciation

      Depreciation is the systematic allocation of the cost of a long-lived asset, such as property, plant and equipment, over its useful life

         Depreciation is generally calculated using one of the following methods:

                     1.   Straight-line

                     2.   Diminishing-balance

                     3.    Units-of-production