Wiley CPAexcel Exam Review 2014 Study Guide, Financial Accounting and Reporting

Module 11: Fixed Assets

Overview

Fixed assets are defined as the capitalized amount of expenditures made to acquire tangible property which will be used for a period of more than one year. Tangible property includes property that physically exists. Intangible assets are nonphysical assets.

Fixed and intangible asset concepts are tested on the Financial Accounting and Reporting section of the exam. The primary topics covered include

1. Fixed and intangible asset acquisitions including the costs to be capitalized.

2. Self-constructed assets including capitalization of interest.

3. Asset exchanges including how to account for exchanges that lack commercial substance or include some monetary amount.

4. Asset cost allocation including depreciation, amortization, and depletion methods and impairment.

A. Acquisition Cost

B. Capitalization of Interest

C. Nonmonetary Exchanges

D. Purchase of Groups of Fixed Assets (Basket Purchase)

E. Capital vs. Revenue Expenditures

F. Depreciation

G. Disposals and Impairment of Value

H. Depletion

I. Insurance

J. Goodwill and Other Intangible Assets

K. Reporting on the Costs of Start-Up Activities

L. Research and Development Costs

M. Computer Software Costs

N. Development Stage Enterprises

O. Research Component—Accounting Standards Codification

P. International Financial Reporting Standards (IFRS)

Key Terms

Multiple-Choice Questions

Multiple-Choice Answers and Explanations

Simulations

Simulation Solutions

A. Acquisition Cost

1. Fixed assets represent ...