Case Study of financial accounting
Long-lived Nonmonetary Assets
Maren BorsheimQiao ChenHenry Ko
This case talked about Kim Park tries to investigate the accounting principle of long lived nonmonetary assets. While we try to determine the difference in various situations, we also tries to focus on the reasoning and logic of accounting principle applied. True Star Electronics Company
Now an entity can be either capitalized or expensed.
Capital expenditures (CAPEX or capex) are expenditures creating future benefits. A capital expenditure is incurred when a business spends money either to buy fixed assets or to add to the value of an existing fixed asset with a useful life extending beyond the taxable year. Operating expense, operating expenditure, operational expense, operational expenditure or OPEX is an ongoing cost for running a product, business, or system. As for the True Star Electronics Company, we believe the following the accounting treatment would be appropriate. a. CAPEX
c. It goes to Income Statement as an Income( may be other comprehensive income) d. OPEX
e. Income should be added for the sales of the office and CAPEX should go down as the assets have been sold. The difference should be record as gain/loss in Income Statement. f. CAPEX
i. This one should be allocated as the part of building the additional wing or else. The part for building the additional wing should be capitalized. The rest should be expensed. j. OPEX
Build on own long lived assets usually involved three phrase: (1) Purchase of the construction equipments and materials (2) Process of the construction work
(3) After construction, project ready to use
When making a judgment, it is critical to decide whether this event could affect the benefit for over one year or less and whether it is necessary to do to make a profit. Two Airlines...
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