• Identify the expenditures that should be included in an operational asset account ,that is, what expenditure should be capitalized. • How to account for acquisition of assets with deferred payment (interest bearing and non-interest bearing notes), donation, exchange, and with equity securities. (Problem) • How to account for disposition of assets and record of gain or losses • Understand lump-sum purchase of assets (journal entry) • Understand fixed assets turnover ratio =Net sales/ average total assets Average total assets= (Beg Bal total assets ENDING bal of total assets)/2 Fixed asset turnover ratio= Net sales/(Beg Bal total assets ENDING bal of total assets)/2 • How to compute interest capitalization Step 1: dollar amount (weighted accumulated expenditure) Step 2: identify interest rates to be used in the calculatin Step 3: calculate interest= Dollar amount * Interest • How to account for subsequent expenditures.

Answer rating: 100% (QA)

1 Expenditures to be Capitalized in an Operational Asset Account Expenditures that should be capitalized in an operational asset account include costs directly related to acquiring constructing or imp... View the full answer