Lesson10Essay Acc111

In: Business and Management

Submitted By savannahwagoner
Words 1727
Pages 7
Assets are important to any business. As we have previously discussed, assets are economic resources expected to be beneficial for the future of the business. More importantly these are the things that a business has control of with value. Cash, inventory, land, furniture, and office supplies are all examples of assets that a company may have. Natural resources, plant assets, and intangible assets are some of the most important assets found on the balance sheet. The reason for this, they are the assets that assist in the induction of revenue of the conglomerate. Accounting for plant assets, natural resources, and intangible assets, are also eminent to the business, as doing so correctly and meritoriously, help to keep things running efficiently. Here, we will take a closer look at each of these assets, and form a better understanding for how to account for them without error.

Plant assets can be defined as long-lived assets used in the operation of a business. Examples of plant assets include things like equipment and buildings or land. Sometimes referred to as property, plant, and equipment or fixed assets, plant assets are a unique asset. Plant assets are long-term, as opposed to office supplies which are not projected to last over a large span of time. Due to the longevity of plant assets, a business must allocate the cost of these assets over the life expectancy period. This is what we call depreciation, as time goes on, the value of the plant asset depreciates, as the period in which it is expected to last decreases. The exception of depreciation for plant assets, is land. Land typically does not lose value over time, therefore there is no record for land depreciation. All other plant assets are depreciated over time, though. In order to accommodate for these plant assets correctly, the business must account for the plant asset by spreading its cost over…...

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