Long-term assets are defined as resources with economic lives of more than a year that a business possesses and uses in generating revenue. The cost of long-term assets is recognized as an expense in the accounting periods in which the assets are used. The cost of all Long-Lived Assets that decline in value will through use and/or the passage of time will have their cost allocated to the periods that receive benefit. So, if a piece of machinery is expected to have an economic life of five years, then the machinery cost will be allocated over this five-year period. Long-term assets can be tangible and intangible. Tangible assets are those which one can touch and include natural resources, machinery, tools, equipment, buildings, and land. Intangible assets may be represented by a piece of paper or document. The real value of such assets is the rights and privileges extended to their owners. Examples of intangible assets can be a patent or a trademark. Property, plant, and equipment include furniture, machinery, computers, and fixtures that can be removed and used somewhere else. Real property is land, land improvements, building, and other structures attached to the land. Cost basis of a long-lived asset for tangible personal property The total cost of tangible personal property asset may consist of several elements. Every element is debited to the account for that asset. The cost of an asset includes: •Gross purchase price
•Cost of adjustments or modifications needed to prepare the asset for use. Cost basis of a long-lived asset for land and buildings
The acquisition cost of land includes:
•Legal costs connected to the acquisition
•Any other cost paid by the purchaser that is related to the acquisition The acquisition cost of land purchased for a building site should include: •Net cost (less Salvage) of removing......