prefer,Long,term,Assets,idea,h business, insurance I prefer Long term Assets

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An idea of how a company is utilizing longterm assets can be found in their financial statements. A company that isparticular good at this just happens to be one of the largest food companiesand goes by the name of H.J Heinz or that famous ketchup company.  It has close to 66 percent of its totalassets are classified as long term assets.  The income statement comes inhandy because it displays depreciation of assets over time, and Heinz has hadabout 299 million dollars worth of depreciated expenses.  Long term assets are constantly looked at tosee if some of the assets have loss some of its value which will result in whatis known as asset impairment. Getting rid of long term assets could show anincrease or decrease on the income statement, it just depends on thesituation.  So, long term assets areclassified as assets that have a relatively long life, usually of at least oneyear. Second, they are used for the operation of a business, and third, theyare not usually resold. In the pass years long term assets were usuallyreferred as fixed assets, but this statement is not correct today because fixedusually apply to something that lasts forever. There is no really set in stone rule to classify a long term asset, butthey are usually thought of to last for at least one year with repetitiveuse.   Assets that are not normally usedin the everyday operations of a business should not be included in thiscategory, and assets that are available for resale should be called inventory.Also, assets are different from current assets because they are expected to aida business for longer periods of time, and are used in the day to day operatingcycle of an entity.  A very importantpart of long term assets are its carrying value, or the part of the price of anasset that hasn’t expired yet.  It isalso known as the book value of an asset. If a long term asset just happens tolose part or all of its money producing potential before the end of its selflife than the carrying value is reduced. Asset impairment occurs when the cashflow of the asset ends up being less then the carrying value. When the carryingvalue is reduced then it is counted as a loss. Long term assets can be furtherbroken down into three distinct items. They are tangible assets, natural resources, and intangible assets.   A tangible asset is a type oflong term asset that is physical like land, buildings, and equipment. Naturalresources are a type of long term assets that is exchanged for economic valueand can be obtained from the land, like gas, gold, and ore.  Last a intangible asset is an type of longterm asset that doesn’t have any physical worth but have a value based on therights that is granted to the owner. An example of this is copyright, patent,and trademarks. The way that tangible assets loses value is throughdepreciation, the way that natural resources lose value is through depletion,and the way that intangible assets loses value is through amortization. Pickinglong term assets are a very concrete and intricate process.  Before choosing a long term assetthe management must decide how they will finance an asset one they haveit.  Companies that generate enoughprofit can pay for long term assets from the cash flow of their day to dayoperations.  It’s very similar to how anindividual pays for the loan of a car or the loan on mortgage. When companieswant issue a long term acquisition then they must do this through capitalstock, bonds, or long term notes.   A nice place to analyze acompany’s long term financing is through the financing activities in thestatement of cash flow. When you’re dealing with long term assets you must makesure that you’re using the matching rule appropriately.  The first thing you should do is find thetotal expense in the current accounting period. Second, you should see how muchmoney is retained from the on the balance sheet to see if the asset will bebeneficial in the future. To solve these dilemmas there should be fourimportant questions that you ask yourself.  First, how is the value of thelong term asset determined? Second, how much the depreciated value of the longterm asset should be allocated against the revenues in the long run. Third, howmuch money on expenditures such as repairs is use? Last, how would the disposalof the long term asset is recorded in the financial records?  Because long term assets are veryconfusing, they have many alternatives to manage them.  It’s best to think of long term assets assomething that will provide a particular need or operation over the years.  For example, you shouldn’t think of a truckon how long it will run, but on how many miles it will drive. Another exampleis how much paper a photocopier machine will copy, and how many people a hotelwill shelter.  It’s also important todetermine if a business will have the money to finance the asset in the future. Expenditure is known as thepayment or a promise to make a payment in the future for an asset such as for apayment of a service or for a new laser printer you purchased for yourbusiness.  There are two types ofexpenditures, and they are capital expenditures and revenue expenditures.  A capital expenditure refers to theexpenditure of a long term asset like land for example.  Revenue expenditure refers to the expenditurefor something related to repair or maintenance such as the repair of a bulldozer for a construction company.