You are reviewing the balance sheet of Love's Industries, manufacturer of assorted electronic components. You observe the following account classifications.
a. Accounts receivable
b. Property, plant, and equipment
d. Intangible assets
e. Investment in marketable securities
For each of the classifications listed above, indicate whether it probably involves current assets or long-term assets. For each classification, give two examples of assets that might be reported there. Also indicate what attribute is being reported for each example you give (e.g., original cost, depreciated cost, market value, and so on).
First we'll look at current and long-term assets. Accounts receivable and inventory are always current assets, as well as cash and prepaid expenses. Marketable securities are also current assets because of how quickly it can be turned into cash - cashed in for the money. Property, plant and equipment and intangible assets are long-term assets. These are the most common current ...
This solution discusses each part of the Love's Industries balance sheet classifications for current and long term assets. All parts of the questions presented are fully discussed.