What are the classifications of long-lived assets? Explain each.
Long-lived assets are classified as follows: (1) Tangible long-lived assets—assets that are tangible (i.e., have physical substance) and long-lived (i.e., beyond one year); they are acquired for use in the operation of a business and are not intended for resale. They are comprised of three different kinds of assets: (a) Land—not subject to depreciation. (b) Plant and equipment—subject to depreciation. (c) Natural resources—mines, gravel pits, and timber tracts. Natural resources are subject to depletion. (2) Intangible long-lived assets—assets held by the business because of the special valuable rights that they confer; they have no physical substance. Examples are patents, copyrights, franchises, licenses, trademarks, technology, and goodwill. Intangible assets with definite lives are subject to amortization.
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