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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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How does the cost concept affect accounting for operating assets'? Under this concept, what is included in the cost of a fixed asset?

To determine

Operating Assets:

The assets which are used by the company for a long period for its own use for the purpose of generating profits but not held for sale in the ordinary course of business are known as operating assets.

Cost Concept:

The concept of recording the expenses in the books only after getting service potential from the assets.

The effect of cost concept in accounting of operating assets. Also, evaluate the inclusion in the cost of asset.

Explanation

The cost concept, usually, works as when the asset is purchased, the cost in addition with all expenditure related to the installation of the operating asset should be capitalized in the name of the asset and expensed off i.e. depreciated over the time when the asset is providing the revenue to the company...

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