Scenario

You are a professional accountant who is working with an established construction company, Lou's Crew, to prepare its financial statements for the current fiscal year. You have been given the accounts and information you need to prepare the financial statements, but you will need to use your understanding of the balance sheet accounts for long-term assets to report accurate information to the finance department.

For a large company, they would more than likely use a software program to manage their finances. For purposes of this assignment, the information has been provided in Microsoft Excel.

1. Determine the importance of the company havingproperty, plant, and equipmentas part of the long-term assets on its balance sheet. Consider the following questions to guide your response:
   1. What are the costs for determining what is included in the acquisition of property, plant, and equipment?
   2. What are the methods you can use to calculate depreciation? Which method makes the most sense for this company?
   3. Taking into account the disposal of property, plant, and equipment, what is the correct way to record a disposal?
2. Determine the importance of the company havinggoodwill or intangiblesas part of the long-term assets on its balance sheet. Consider the following questions to guide your response:
   1. How do companies acquire goodwill?
   2. What are examples of intangible assets and how are they amortized?
3. Determine the importance of the company havinglong-term investmentsas part of the long-term assets on its balance sheet. Consider the following questions to guide your response:
   1. Should they retain long-term investments?
   2. How is the right-of-use asset determined on inception of the lease?
   3. How do you calculate the amortization the cost of a leased asset?
4. Cite the applicableFASB Codificationsection for the following items as a list: property plant and equipment, investments, and intangibles.

Company Balance Sheet

Assets				Liabilities and Owners' Equity
Current Assets:				Current Liabilities:
Cash	$ 20,000.00			Interest Payable	$ 7,525.00
				Total Current Liabilities	$ 7,525.00
				Long-Term Liabilities:
				Bank Loan	$ 350,000.00
Total Current Assets	$ 20,000.00			Lease Liability	$ 510,800.00
				Total Long-Term Liabilities:	$ 860,800.00
				Total Liabilities:	$ 868,325.00
Non-Current Assets:				Owner's Equity
Construction Equipment	$ 162,500.00			Retained Earnings	$ 321,533.73
Accumulated Depreciation - Construction Equipment	$ (21,085.71)
Vechicles	$ 550,000.00
Accumulated Depreciation - Vehicles	$ (109,166.67)			Total Equity	$ 321,533.73
Right of Use Asset	$ 510,800.00
Accumulated Amortization - Right of Use Asset	$ (14,188.89)
Long term investment and intangibles	$ 115,000.00			Total Liabilities & Equity	$ 1,189,858.73
Accumulated Amortization - Intangibles	$ (24,000.00)
Total Non-Current/Fixed Assets	$ 1,169,858.73
Total Assets:	$ 1,189,858.73