CH.7 Plant Assets, Natural Resources, & Intangibles

7-1

Prepared byCoby Harmon

University of California, Santa BarbaraWestmont CollegeCopyright ©2015 Pearson Education Inc. All rights reserved.

7-2

1. Measure and account for the cost of plant assets

Learning Objective

Learning Objective

Copyright ©2015 Pearson Education Inc. All rights reserved.

7-4

MEASURE AND ACCOUNT FOR THE COST OF PLANT ASSETS

Working rule for measuring the cost of an asset:

The cost of any asset is the sum of all the costs

incurred to bring the asset to its intended use

Cost includes

► Purchase price

► Taxes

► Commissions

► Other amounts paid to make the asset ready for use

LO 1Copyright ©2015 Pearson Education Inc. All rights reserved.

7-5

Land

Cost of land includes:

► Purchase price (cash plus any note payable given)

► Brokerage commission

► Survey fees

► Legal fees

► Back property taxes that the purchaser pays

► Expenditures for grading and clearing and for removing

unwanted buildings


7-6

Illustration

FedEx signs a $300,000 note payable to purchase 20 acres of land

for a new shipping site. FedEx also pays $10,000 for real estate

commission, $8,000 of back property tax, $5,000 for removal of an

old building, a $1,000 survey fee, and $260,000 to pave the parking

lot—all in cash. What is FedEx’s cost of this land?

LO 1

Land

Real estate commission

Back property tax 8,000

$324,000Cost of Land

Removal of building 5,000

Survey fee 1,000

10,000

Purchase price $300,000

Pave parking lot 0


7-7

Illustration

FedEx signs a $300,000 note payable to purchase 20 acres of land

for a new shipping site. FedEx also pays $10,000 for real estate

commission, $8,000 of back property tax, $5,000 for removal of an

old building, a $1,000 survey fee, and $260,000 to pave the parking

lot—all in cash.

FedEx records the purchase of the land as follows:

LO 1

Account Debit Credit

Land

Notes Payable

324,000

300,000

Cash 24,000


7-8

Buildings, Machinery, and Equipment

Cost of constructing a building includes:

► Architectural fees

► Building permits

► Contractors’ charges

► Payments for material, labor, and overhead

► Interest on money borrowed to finance construction

Cost of purchasing a building includes:

► Purchase price

► Brokerage commission

► Sales and other taxes paidLO 1

► Expenditures to repair and

renovate the building for its

intended purpose


7-9

Buildings, Machinery, and Equipment

Cost of equipment includes:

► Purchase price (less any discounts)

► Transportation from the seller

► Insurance while in transit

► Sales and other taxes

► Purchase commission

► Installation costs

► Expenditures to test the asset before it’s placed in service

► Cost of any special platforms


7-10

Land Improvements and Leasehold Improvements

Cost of land improvements include:

► Driveways, signs, fences, and sprinkler systems

These costs are subject to decay and should therefore be

depreciated

Leasehold improvements

► Improvements to leased property

► Depreciated or amortized over lease term


7-11

Lump-Sum (or Basket) Purchases of Assets

► Several assets purchased in a group at one price

► Total cost is allocated based on their market values

► Technique is called the relative-sales-value method

LO 1

Illustration: Suppose FedEx purchases land and a building in

Denver. The building sits on two acres of land, and the combined

purchase price of land and building is $2,800,000. An appraisal

indicates that the land’s market value is $300,000 and that the

building’s market value is $2,700,000.


7-12

Illustration

LO 1

FedEx first figures the ratio of each asset’s market value to the total

market value. These percentages are then used to determine the

cost of each asset:


7-13


Land

Building

280,000

2,520,000

Cash 2,800,000

Illustration

LO 1

If FedEx pays cash, the entry to record the

purchase of the land and building is as follows:


7-14 LO 1

How would FedEx divide a $120,000 lump-sum purchase price

for land, building, and equipment with estimated market values

of $40,000, $95,000, and $15,000, respectively?

Answer

*$40,000/$150,000 = 0.267Copyright ©2015 Pearson Education Inc. All rights reserved.

7-15

2. Distinguish a capital expenditure from an

immediate expense

Learning Objective

Learning Objective


7-16

DISTINGUISH A CAPITAL EXPENDITUREFROM AN IMMEDIATE EXPENSE

► Capital expenditures increase the asset’s capacity or

extend its useful life

► Capitalized, means the cost is added to an asset account

and not expensed immediately

LO 2

Exhibit 7-2


7-17

3. Measure and record depreciation on plant assets

Learning Objective

Learning Objective


7-18

MEASURE AND RECORD DEPRECIATIONON PLANT ASSETS

Depreciation

► Process that allocates a plant asset’s cost to expense over

its life

► Allocates cost against the revenue the asset helps earn

each period

► Depreciation expense (not accumulated depreciation) is

reported on the income statement

► Land is not depreciated


7-19

Exhibit 7-3 | Depreciation: Allocating Costs to Periods in Which Revenues Are Generated

MEASURE AND RECORD DEPRECIATIONON PLANT ASSETS

Depreciation

► Is not a process of valuation

► Does not mean setting aside cash to replace assets as they

wear out


7-20

Estimated Useful Life

Need to Know Three Things

Length of service expected from using the asset

May be expressed in years, units of output, miles, or some

other measure

CostEstimated Residual

Value

How to Measure Depreciation


7-21

Estimated Useful Life

Need to Know Three Things

Also called scrap value or salvage value

Expected cash value of an asset at the end of its useful

life

Not depreciated

Depreciable Cost = Asset’s cost - Estimated residual value

CostEstimated Residual

Value

How to Measure Depreciation


7-22

Units-of-production

Three Main Methods

Straight-lineDouble-

declining-balance

Depreciation Methods

Exhibit 7-4 | Depreciation Computation Data


7-23

Units-of-production

Three Main Methods

Equal amount of depreciation assigned to each year (or

period)

Depreciable cost is divided by useful life in years to

determine the annual depreciation expense


declining-balance



7-24

Depreciation expense per year =

Straight-line

Cost – Residual value

Useful life, in years

= $41,000

5

- $1,000

= $8,000

Exhibit 7-4


7-25

Straight-line


Depreciation Expense - Truck

Accumulated Depreciation - Truck

8,000

8,000

The entry to record depreciation is

Exhibit 7-5 | Straight-Line Depreciation Schedule for Truck


7-26

As an asset is used in operations and depreciated

Accumulated depreciation

increases

Book value decreases

Asset’s final book value = Residual value



7-27

Cost $10,000

Less: Residual value - 2,000

Depreciable cost 8,000

Useful life in years ÷ 5

Depreciation expense per year $1,600

A FedEx sorting machine that cost $10,000 with a useful life of

five years and a residual value of $2,000 was purchased on

January 1. What is SL depreciation for each year?

Answer


7-28

Units-of-production

Three Main Methods

Fixed amount of depreciation is assigned to each unit of

output, or service, produced by the asset

Depreciable cost is divided by useful life—in units of

production—to determine fixed amount per-unit

Per-unit depreciation expense is multiplied by number of

units produced each period to compute total expense


declining-balance



7-29

Depreciation per unit of output =

Units-of-Production

Cost – Residual value

Useful life, in units

= $41,000

100,000 miles

- $1,000

= $0.40 per mile

Exhibit 7-4


7-30

Units-of-Production

Assume that FedEx expects to drive the truck 20,000 miles

during the first year, 30,000 during the second, 25,000 during

the third, 15,000 during the fourth, and 10,000 during the fifth.

Exhibit 7-6 shows the UOP depreciation schedule.

Exhibit 7-6 | Units-of-Production (UOP) Depreciation Schedule for Truck

UOP depreciation varies with the number of units the asset produces


7-31


Depreciation Expense - Truck

Accumulated Depreciation - Truck

8,000

8,000

The entry to record depreciation is for year ended 12/31/2011 is

Units-of-Production

Exhibit 7-6 | Units-of-Production (UOP) Depreciation Schedule for Truck


7-32

Units-of-production

Three Main Methods

Writes off a larger amount of the asset’s cost near the start of its

useful life than the straight-line method

Most frequently used accelerated depreciation method

Computes annual depreciation by multiplying asset’s declining

book value at the beginning of the year by a constant

percentage two times the straight-line depreciation rate


declining-balance



7-33

DDB depreciation rate per year =

Double-declining-balance

1

Useful life, in years

= 1

5 years

= 20% x 2 = 40%

Exhibit 7-4

x 2

x 2


7-34


Exhibit 7-7 | Double-Declining-Balance Depreciation Schedule for Truck

For a 5-year asset the DDB rate is 40% (20% × 2)


7-35



Multiply the rate by the period’s beginning asset book value

(40% x $41,000 = $16,400)

Ignore residual value of asset in computing depreciation,

except during last year


7-36



Final year’s depreciation is $4,314—book value, end of year 4

of $5,314 less the $1,000 residual value

* Final-year depreciation is a plug amount needed to reduce asset book value to estimated salvage value


7-37


DDB method differs from other methods in two ways:

First-year depreciation is based on asset’s full cost

Final year depreciation is a “plug” amount needed to

reduce book value to residual value


7-38

A FedEx sorting machine that cost $10,000 with a useful life of

five years and a residual value of $2,000 was purchased on

January 1. What is DDB depreciation each year for the asset?

Answer

*The asset is not depreciated below residual value of $2,000.

*


7-39

Units-of-production

For a plant asset

that generates

revenue evenly

over time, best

meets the expense

recognition principle


declining-balance

Comparing Depreciation Methods

Best for assets that

wear out because

of use

Best for assets that

generate more

revenue early in

useful life


7-40



7-41


Exhibit 7-8 | Depreciation Patterns Through Time


7-42


Exhibit 7-9 | Depreciation Methods Used by 600 Companies


7-43

Illustration

Ralph's Pizza bought a used Toyota delivery van on January 2,

2014, for $13,000. The useful life of the van is 5 years. At the

end of its useful life, Ralph's officials estimated that the van’s

residual value would be $1,000. Prepare a schedule of

depreciation expense per year for the van using the straight-

line method.


7-44

Illustration: Straight-line Method

Depreciable Annual Accumulated Book

Year Cost x Rate = Expense Depreciation Value

2014 $ 12,000 20% $ 2,400 $ 2,400 $ 10,600

2015 12,000 20 2,400 4,800 8,200

2016 12,000 20 2,400 7,200 5,800

2017 12,000 20 2,400 9,600 3,400

2018 12,000 20 2,400 12,000 1,000


7-45

Illustration


2014, for $13,000. The van was expected to remain in service

for five years (100,000 miles). At the end of its useful life,

Ralph's officials estimated that the van’s residual value would be

$1,000. The van traveled 15,000 miles the first year, 30,000

miles the second year, 20,000 miles the third year, 25,000 miles

in the fourth year, and 10,000 miles in the fifth year.

Prepare a schedule of depreciation expense per year for the

van using the units-of-production method.


Rate

Miles per Annual Accumulated Book

Year Driven x Mile = Expense Depreciation Value

2014 15,000 $ 0.12 $ 1,800 $ 1,800 $ 11,200

2015 30,000 0.12 3,600 5,400 7,600

2016 20,000 0.12 2,400 7,800 5,200

2017 25,000 0.12 3,000 10,800 2,200

2018 10,000 0.12 1,200 12,000 1,000

Illustration: Units-of-Production

$13,000

100,000 miles

- $1,000 Depreciation per

unit of output = = $0.12 per mile


7-47

Illustration


2014, for $13,000. The useful life of the van is 5 years. At the

end of its useful life, Ralph's officials estimated that the van’s

residual value would be $1,000.

Prepare a schedule of depreciation expense per year for the

van using the double-declining-balance method.


Declining

Beginning Balance Annual Accumulated Book

Year Book value x Rate = Expense Depreciation Value

2014 13,000 40% $ 5,200 $ 5,200 $ 7,800

2015 7,800 40 3,120 8,320 4,680

2016 4,680 40 1,872 10,192 2,808

2017 2,808 40 1,123 11,315 1,685

2018 1,685 40 685* 12,000 1,000

* Computation of $674 ($1,685 x 40%) is adjusted to $685.

Illustration: Double-Declining Balance

LO 37-57Copyright ©2015 Pearson Education Inc. All rights reserved.

7-49

Other Issues in Accounting for Plant Assets

Plant assets are complex because

They have long lives

Depreciation affects income taxes

Gains or losses when plant assets sold

International accounting changes in the future


7-50

Depreciation for Tax Purposes

Accelerated deprecation provides fastest tax deductions

Tax deductions decrease tax payments

Tax savings can be reinvested in business


7-51

Depreciation for Tax Purposes

Exhibit 7-10 | The Cash Flow Advantage of Accelerated Depreciation for Tax Purposes


7-52

Depreciation for Partial Years

Companies must compute depreciation for partial years

Illustration: Suppose UPS purchases a warehouse building

on April 1 for $500,000. The building’s estimated life is 20

years, and its estimated residual value is $80,000. UPS’s

accounting year ends on December 31. Compute UPS’s

depreciation for April through December.

$500,000 - $80,000

20= $21,000Full-year depreciation =

Partial year depreciation = $21,000 x 9/12 = $15,750


7-53

Changing the Useful Life of a Depreciable Asset

After an asset is in use, managers may change its useful

life or residual value on the basis of experience and new

information

Accounted for in the period of change and future periods

Prior years not adjusted for change

Called a change in estimate


Illustration: Arcadia HS, purchased equipment for $510,000

which was estimated to have a useful life of 10 years with a

residual value of $10,000 at the end of that time. Depreciation has

been recorded for 7 years on a straight-line basis. In 2014 (year 8),

it is determined that the total estimated life should be 15 years with

a residual value of $5,000 at the end of that time.

No Entry Required

Questions:

What is the journal entry to correct the

prior years’ depreciation?

Calculate the depreciation expense for

2014.

Change in Estimate

LO 37-57 Copyright ©2015 Pearson Education Inc. All rights reserved.

Equipment cost $510,000

Residual value - 10,000

Depreciable base 500,000

Useful life (original) 10 years

Annual depreciation $ 50,000

Equipment $510,000

Plant Assets:

Accumulated depreciation 350,000

Net book value (NBV) $160,000

Balance Sheet (Dec. 31, 2013)

x 7 years = $350,000

First, establish NBV at date of change in estimate.

First, establish NBV at date of change in estimate.

After 7 yearsChange in Estimate


Net book value $160,000

Residual value (new) 5,000

Depreciable base 155,000

Useful life remaining 8 years

Annual depreciation $ 19,375

Depreciation Expense calculation for 2014.

Depreciation Expense calculation for 2014.

Depreciation Expense 19,375

Accumulated Depreciation 19,375

Journal entry for 2014 and future years.

After 7 yearsChange in Estimate


Illustration: Suppose FedEx has fully depreciated equipment

with zero residual value

Fully Depreciated Assets

► May use equipment for several more years

► Will not record any more depreciation

► When FedEx disposes of equipment they remove both the

asset’s cost and accumulated depreciation from the books


7-58

4. Analyze the effect of a plant asset disposal

Learning Objective

Learning Objective


7-59

ANALYZE THE EFFECT OF A PLANT ASSET DISPOSAL

Bring depreciation up to date to:

► Measure asset’s final book value

► Record expense up to date of sale

Remove asset and related accumulated depreciation

account from books


7-60

Disposing of a Fully Depreciated Asset for No Proceeds

Illustration: Suppose the final year’s depreciation expense has

just been recorded for a machine that cost $60,000 and is

estimated to have zero residual value. The machine’s

accumulated depreciation thus totals $60,000. Assuming that this

asset is junked, the entry to record its disposal is as follows:

LO 4


Accumulated Depreciation-Machinery

Machinery

60,000

60,000


7-61

Disposing of a Fully Depreciated Asset for No Proceeds

Illustration: Suppose FedEx disposes of equipment that cost

$60,000. This asset’s accumulated depreciation is $50,000, and

book value is, therefore, $10,000. Junking this equipment results

in a loss equal to the book value of the asset:

LO 4


Accumulated Depreciation-Equipment

Loss on Disposal of Equipment

50,000

10,000

Equipment 60,000

Gain or Loss on Disposal of Equipment is reported as Other income

(expense) on the income statement


7-62

Selling a Plant Asset

LO 4

If cash received is

greater than book value

GAIN

If cash received is

less than book value

LOSS


7-63


Illustration: Suppose FedEx sells equipment on September 30,

2014, for $7,300 cash. The equipment cost $10,000 when

purchased on January 1, 2011, and has been depreciated straight-

line. FedEx estimated a 10-year useful life and no residual value.

Partial-year depreciation must be recorded for the asset’s

depreciation from January 1, 2014, to the sale date. The

depreciation entry at September 30, 2014, is

LO 4


Depreciation expense


750

750

($10,000 ÷ 10 years x 9/12 = $750)


7-64


Illustration: The equipment’s book value is $6,250.

LO 4

Gain on sale of equipment:


7-65


LO 4


Cash


7,300

3,750

Equipment 10,000

Entry to record sale of equipment:

Gain on Sale of Equipment 1,050


7-66


LO 4

Illustration: Assume that on January 2, 2014, Crystal of Vermont

purchased fixtures for $8,700 cash, expecting the fixtures to remain in

service for five years. Crystal has depreciated the fixtures on a double-

declining-balance basis, with $1,800 estimated residual value. On

September 30, 2015, Crystal sold the fixtures for $2,600 cash. Record

both the depreciation expense on the fixtures for 2015 and the sale of

the fixtures. Apart from your journal entry, also show how to compute

the gain or loss on Crystal’s disposal of these fixtures.


7-67


LO 4

Illustration: Show how to compute the gain or loss on Crystal’s

disposal of these fixtures.

Cash received $2,600

Less book value fixtures - 3,654

Loss on sale $1,054


7-68


LO 4

Illustration: Record both the depreciation expense on the fixtures for

2015 and the sale of the fixtures.


Depreciation Expense

Accumulated Depreciation

1,566

1,566

Cash 2,600

Accumulated Depreciation 5,046

Loss on Sale of Plant Assets 1,054

Fixtures 8,700


7-69

Exchanging a Plant Asset

► Old assets traded in for new assets

■ Nonmonetary exchange

► Cost of plant asset received is equal to the fair values

of assets given up

■ Old asset and any cash paid

► Difference between fair value of old asset and its book

value is a gain or loss


7-70

Exchanging a Plant AssetIllustration: Papa John’s trades in the old automobile for a new one

with a fair market value of $15,000 and pays cash of $10,000. The old

auto has a cost of $9,000 and accumulated depreciation of $8,000.The

implied fair value of the old car is $5,000 ($15,000 − $10,000). The

cost of the new delivery car is $15,000 (fair value of the old asset,

$5,000, plus cash paid, $10,000). The pizzeria records the exchange

transaction:


Delivery Auto (new)

Accumulated Depreciation (old)

15,000

8,000

Delivery Auto (old) 9,000

Cash 10,000

Gain on Exchange of Delivery Auto 4,000


7-71

T-Accounts for Analyzing Plant Asset Transactions


7-72

5. Apply GAAP for natural resources and intangible

assets

Learning Objective

Learning Objective


7-73

Accounting for Natural Resources

► Include iron ore, oil, and timber

► Assets are physically used – depletion

■ Distinct from depreciation

■ Computed like units-of-production

► If all of extracted resource is sold

■ Amount depleted is recorded as an expense

► If portion of extracted resource is not immediately sold

■ Amount becomes inventory


7-74


LO 5

Illustration: An oil reserve may cost ExxonMobil $100,000,000 and

contain an estimated 10,000,000 barrels of oil. ExxonMobil is an

integrated oil company, meaning it both drills for oil and refines it, so

the company retains some inventory rather than selling all it produces.

Upon purchase or development of the oil reserve (assuming the

company paid cash), ExxonMobil makes the following entry:


Oil Reserve

Cash

100,000,000

100,000,000


7-75


LO 5

Illustration: The depletion rate is $10 per barrel ($100,000,000 ÷

10,000,000 barrels). If 3,000,000 barrels are extracted and 1,000,000

barrels are sold, the company’s different divisions might make the

following entries:


Oil Inventory (3,000,000 barrels x $10)

Oil Reserve

30,000,000

30,000,000

Cost of Oil Sold (1,000,000 barrels x $10) 10,000,000

Oil Inventory 10,000,000


7-76

Accounting for Intangible Assets

► No physical form

Carry special rights

Include patents, copyrights, and franchises

► Two categories

Finite lives

Amortization recorded

• Straight-line method

• Intangible asset reduced directly

Indefinite lives

Tested for loss in value (impairment)


7-77


LO 5

Patents

► Granted by federal government

► Give holder exclusive right to produce and sell an

invention

► Legal life of 20 years


7-78


LO 5

Patents

Illustration: Sony pays $170,000 to acquire a patent on

January 1, and the business believes the expected useful life of

the patent is 5 years—not the entire 20-year period.

Amortization expense is $34,000 per year ($170,000 ÷ 5 years).

Sony records the acquisition and amortization for this patent:


Patents

Cash

170,000

170,000

Jan 1


7-79


LO 5

Patents

Illustration: Sony pays $170,000 to acquire a patent on

January 1, and the business believes the expected useful life of

the patent is 5 years—not the entire 20-year period.

Amortization expense is $34,000 per year ($170,000 ÷ 5 years).

Sony records the acquisition and amortization for this patent:


Amortization Expense-Patents

Patents

34,000

34,000

Dec 31


7-80


LO 5

Copyrights

► Granted by federal government

► Give holder exclusive rights to reproduce and sell a

book, musical composition, film, or other work of art

► Extend 70 years after creator’s life

■ Useful life is usually very short


7-81


LO 5

Trademarks and Trade Names

► Distinctive identification of a product or service

■ Also include advertising slogans

► Useful life may be set by contract

■ Or indefinite life

► Indicated by TM or ®


7-82


LO 5

Franchises and Licenses

► Granted by private business or government

► Give purchaser right to sell a product or service with

specified conditions

► Include restaurant chains and sports organizations

► Have indefinite life


7-83


LO 5

Goodwill

► Only recorded when an entire company is purchased

► Defined as the excess of the purchase price of the

company over the market value of its net assets

► Represents earning power of company purchased

► Not amortized


7-84

6. Explain the effect of an asset impairment on the

financial statements

Learning Objective

Learning Objective


7-85

EXPLAIN THE EFFECT OF AN ASSET IMPAIRMENT ON THE FINANCIAL STATEMENTS

LO 6

► Both tangible and intangible assets must be tested

yearly for impairment

► Occurs when expected future cash flows less than

asset’s book value

► Carrying value adjusted to fair value

► Accounting for asset impairment requires two steps


7-86

EXPLAIN THE EFFECT OF AN ASSET IMPAIRMENT ON THE FINANCIAL STATEMENTS

LO 6

Impairment loss

> Estimated future cash flows

If yes, asset is impaired and proceed to step 2

Net book value

Fair value

Net book value

Step 1

=Step 2


7-87

ASSET IMPAIRMENT

LO 6

To illustrate, let’s assume that FedEx has a long-term asset with

the following information as of May 31, 2012:

■ Net book value $100 million

■ Estimated future cash flows 80 million

■ Fair (market) value 70 million

The two-stage impairment process is

> Estimated future cash flows

Net book value

Step 1

$100 million > $80 million

Asset is ImpairedCopyright ©2015 Pearson Education Inc. All rights reserved.

7-88

ASSET IMPAIRMENT

LO 6






The two-stage impairment process is

Step 2

$100 million $30 million

Impairment loss

Net book value

Fair value =

=$70 million


7-89

ASSET IMPAIRMENT

LO 6






FedEx will make the following entry:


Impairment Loss

Long-term Asset

30,000,000

30,000,000

May 31


7-90

7. Analyze rate of return on assets

Learning Objective

Learning Objective


7-91

ANALYZE RATE OF RETURN ON ASSETS

LO 7

Net income

Average total assets

(Beginning total assets + Ending total assets) ÷ 2

Measures how profitably management has used the assets

that stockholders and creditors have provided the company


7-92

DuPont Analysis: A Detailed View of ROA

LO 7

Net income

Net sales

Net profit margin ratio =

Measures how much every sales dollar generates in profit

Increased three ways:

1. Increasing sales volume

2. Increasing sales prices

3. Decreasing cost of goods sold and operating expenses


7-93


LO 7

Net sales


Total asset turnover =

Measures how many sales dollars are generated for each

dollar of assets invested

Increased by:

1. Increasing sales and keeping less inventory on hand

2. Closing facilities, selling idle assets, and consolidating

operations


7-94


LO 7

Net income

Net sales

Net sales


Net profit margin ratio =

Total asset turnover =


7-95


LO 7

Net profit margin ratio x Total asset

turnover =

Return on assets


7-96

8. Analyze the cash flow impact of long-lived asset

transactions

Learning Objective

Learning Objective


7-97

ANALYZE THE CASH FLOW IMPACT OF LONG-LIVED ASSET TRANSACTIONS

LO 8

Item Description

Depreciation Added to net income as a reconciling item

Sales of long-lived assets

Cash proceeds from sales of plant assets (inflow)

Purchase of long-lived assets

Cash purchases (outflow)

Section

Operating

Investing

Investing


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CH.7 Plant Assets, Natural Resources, & Intangibles

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