Wiley Not-for-Profit GAAP 2014: Interpretation and Application of Generally Accepted Accounting Principles

21 LONG-LIVED ASSETS, DEPRECIATION, AND IMPAIRMENT

Perspective and Issues

Concepts, Rules, and Examples

Asset Cost

Contributed Long-Lived Assets

Depreciation Methods

Other depreciation methods

Partial-Year Depreciation

Changes in Depreciation Calculations in Estimated Useful Life and Salvage Value

Impairment of Long-Lived Assets

Recoverability of an Asset

Assets to Be Disposed Of

Asset Retirement Obligations

Disclosure Requirements

Long-Lived Assets and Depreciation

Impaired Long-Lived Assets

Assets to Be Disposed Of

Asset Retirement Obligations

PERSPECTIVE AND ISSUES

Long-lived assets are those that provide an economic benefit to the organization for a number of future periods. GAAP regarding long-lived assets involves the determination of the appropriate cost at which to record the asset and the appropriate method to be used to allocate that cost over the relevant periods.

These assets are primarily operational assets, and they are broken down into two basic types: tangible and intangible. Tangible assets have physical substance and are categorized as follows:

1. Depreciable.
2. Depletable.
3. Other tangible assets.

Intangible assets have no physical substance. Their value is found in the rights or privileges that they grant to the organization.

Most of the accounting problems involve proper measurement and timing of the transactions. Adequate consideration must be given to the substance of the transaction.

In addition, GAAP provides guidance related to accounting for the impairment ...