Describe the Accounting for Natural Resources, Including Their Acquisition, Cost

question 89

Essay

Describe the accounting for natural resources, including their acquisition, cost allocation, and account titles.

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Definitions:

Maintenance

The routine care and servicing by personnel for the purpose of maintaining equipment or facilities in satisfactory operating condition.

Operating Lease

A lease agreement that allows for the use of an asset but does not convey rights of ownership of the asset.

Financial Lease

A long-term lease agreement that allows the lessee to use an asset while essentially assuming both the risks and benefits of ownership.

Lessor

The owner of an asset in a leasing agreement. The lessor receives payments from the lessee.