Long term assets - Cost of assets

5 important questions on Long term assets - Cost of assets

What is included in the cost of an asset?

All normal charges necessary to get it operational, including delivery and installation fees.  Unexpected damages or repairs would not be included.

What costs may be included in a piece of real estate?

Commissions and fees associated with such purchases

How would a fence added to a piece of real estate be recorded on the books?

It would be considered an improvement, and would be depreciated on its own schedule.
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What happens when land and buildings are bought together?

They need to be allocated, often with the assistance of an appraiser.

What is the difference between a capital and a revenue expenditure?

Capital expenditures are long-term/special repairs that are depreciated as assets.  Revenue expenditures are expensed.

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