accounting questions help?

Question

define operational assets and what they are used for. How do they differ from other types of assets?

Answer 1

General Motors Corporation has significant investments in the production facilities it uses to manufacture the automobiles it sells. On the other hand, the principal revenue-producing assets of Microsoft Corporation are the copyrights on its computer software that permit it the exclusive rights to earn profits from those products. Timber reserves provide major revenues to Boise Cascade. From a reporting perspective, we classify GM’s production facilities as property, plant, and equipment; Microsoft’s copyrights as intangible assets, and Boise Cascade’s timber reserves as natural resources. Together, these three noncurrent assets constitute operational assets, a term used to describe the broad category of long-term, revenue producing assets. Unlike manufacturers, many service firms and merchandising companies rely primarily on people or investments in inventories rather than on operational assets to generate revenues. Even nonmanufacturing firms, though, typically have at least modest investments in buildings, equipment, and other operational assets.

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