Chapter 10: Long-Term Assets: Fixed and Intangible

Initial Post:

Part 1 (Use the annual report of your Facebook Assume that one of the fixed assets listed in your company's balance sheet will be disposed of.Please provide the journal entry for the disposition of that asset.(You may have to look in the notes to the financial statements to see what the amount of accumulated depreciation is.) Next, assume that the company will sell the fixed asset for a gain of $20,000.Please provide the journal entry for the sale of that asset at a $20,000 gain.

Part 2

There are times when the cost of the fixed assets of the business are exactly equal to the amount in the related accumulated depreciation account. Please let us know when an entry should be made to remove the cost and the accumulated depreciation from the accounts.Also, let us know if it is permissible to record additional depreciation on the assets if they are still useful to the business.Please let us know why or why not.

Responses to Instructor

Please check your thread for questions or comments from me and be sure to provide a comprehensive response, as requested.

Responses to Classmates

Please provide your classmates with information about patents and whether or not they should be amortized and over what time period.Also, please provide an explanation of goodwill and let your classmates know whether or not it should be amortized.

I will be searching the annual report ofFacebookfor the financial year 2019.

Largest expense on the income statement is Research and Development of $ 13600 Millions.

Largest fixed asset on the balance sheet in terms of cost Network Equipment of $ 17005 Millions.

AssetsNature of AssetA) Current Assetsa) Cash and Cash EquivalentThis is classified as Level 1 or Level 2 because they are quoted at market prices.b) Marketable securitiesShort term highly liquid assets.This is classified as Level 1 or Level 2 because they are quoted at market prices.c) Accounts ReceivableThis is amount due from the customers.They are recorded at the original invoice amount less for any potential noncollectable amounts.d) Prepaid Expenses and other current assetsThis is unrestricted cash balance based upon term of remaining restrictions.B) Property,Plant & EquipmentThese are the assets used in the business operations to generate revenue.These are stated at cost less accumulated depreciation.

Difference between Current Liability and Long-term liability

Current Liabilities are the obligations due withing one year or normal operating cycle of the business, whichever is longer. These liabilities are generally paid with current assets.

Long-term liabilities are the debts of the business that are due beyond one year or normal operating cycle of the business. Long-term debt is the example of long-term liability and may include: leases, mortgage loan,bonds payable,deferred taxes etc.

I have selected annual report of Facebook Inc. because Face book is a popular global social networking website. It is one of the world's most valuable companies.It is considered one the Big Five technology companies along with Microsoft, Amazon, Google and Apple.

I really like the idea behind this kind of business model connecting people each other,making lot of friends,sharing our thoughts or opinion on the website at any time at any where. I am very familiar with this company because I am having Facebook account from the last 7 years and active in social media networking still today.

Examples on current liabilities, long-term liabilities, current assets and fixed assets

ItemsExamplesCurrent LiabilitiesAccount payable, Short term bank loan,Accrued income taxes, bills payable, Expense Payable, etcLong-term LiabilitiesLeases, Mortgage loan,Bonds payable,Deferred taxes,Current AssetsAccounts Receivable, Inventory, Cash and Cash Equivalents, Marketable Securities, Prepaid expensesFixed AssetsLand, Building, Plant and Machinery, Furniture and Fixtures, Equipment,etc

Link to company's annual report : https://investor.fb.com/financials/default.aspx