Ask Experts Questions for FREE Help !
Ask
    bengbernarte's Avatar
    bengbernarte Posts: 1, Reputation: 1
    New Member
     
    #1

    May 7, 2008, 08:34 AM
    Cost of a fixed asset
    Is a license to use of a particular asset could be considered part of its cost?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
     
    #2

    May 7, 2008, 09:02 PM
    Might depend on the situation and what type of license. A one-time license could possibly be counted as part of the cost of the item, but off the top of my head I can't think of anything like that. (Like a license to do construction would be part of the cost, but that's construction and not an outright purchase. But one-time costs like closing costs on purchasing a building would count. I just can't think of a one-time license to use an asset off the top of my head.)

    A license fee paid on a regular basis to use the asset would likely not be part of the cost, simply because it's an ongoing expense. That's kind of like a royalty, which is an expense. I don't see why that should be different than ongoing maintenance or insurance or anything like that, and those are not part of the costs. For instance, the license plate on your car (ongoing) is an expense, not part of the cost of the car.

    I'm not totally comfortable saying that since I don't know what this license and asset actually are.

    But as a general rule, all costs associated with the initial cost, getting it, installing it, even repairing it if it's used, are counted as the asset. But ongoing costs associated with using it is not the same thing.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Fixed asset or Intangible asset [ 4 Answers ]

Is the U.S. Treasury Note. A Fixed or Intangible Assets.

Fixed Asset J/E [ 6 Answers ]

Join Date: Feb 2008 Posts: 2 Journal Entries... please -------------------------------------------------------------------------------- On my trial balance I have an Bldg Fixed Assets of $110,000 debit; I need to credit this amount . Which account do I use? But, I have to create the...

Fixed asset [ 3 Answers ]

How do I categorize and enter into the checkbook?

Depreciation of fixed asset [ 1 Answers ]

Which account is creditted when recording depreciation of a fixed asset?


View more questions Search