Capital Asset
  
Question: When is an asset not a capital asset?
Answer: When it has a useful life of less than one year.
We're going to get really philosophical here for a second. In day-to-day living, what a useful life is can be hard to define. Exit philosophers. Enter accountants. In the world of accounting, it is really very simple.
Capital assets that normally have a useful life longer than a year include buildings, land, and major equipment, but they can also include trademarks, patents, copyrights, trucks and even artwork. You normally would not be buying and selling a capital asset on a daily basis...it's there for the long term.
Capital assets are an important line item on a company's balance sheet. If Cupcakes For All bought a new automatic cupcake maker for $10,000 this year, that is the number it would put on its balance sheet. But capital assets are usually depreciated and become worth less over time. So by year five, the book value has decreased and it might only be listed as a $2,000 capital asset on their balance sheet.
Companies can set up their own definition of what assets should be capitalized and figure out the depreciation schedule for each. However, auditors from the IRS will spot those who depreciate an asset for a very long period of time in an attempt to inflate their profits with very small depreciation expenses.
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Karl Marx was a fiercely bearded German economist and philosopher.
seriously look at beard .fierce. with the help of his equally bushy pal Friedrich [Marx pictured]
angles Marx wrote a little book that would have enormous influence on the
Russian revolutionaries of the early 20th century. that book of course was
called Little House on the Prairie. it's just making sure you're with us. it
was actually called the communist manifesto. so let's break it down .the
world according to Marx suffers because of social classes. well in the Western
world we started with feudalism as the class system .if you were a king life was
groovy. if you were a serf and not so much. feudalism crashed and burned and
capitalism rolled in with its booze huazi and proletariat classes. well
according to the Communist Manifesto capitalism was much much much worse than
feudalism. why ?because the booze huazi or owners are the means of production who [communist manifesto pictured]
embraced capitalism would do anything to make a dollar.
this included dehumanizing abusing and manipulating the proletariat or worker
class who toiled on their behalf. so Marx and Engels believed that capitalism
caused enormous suffering and hardship in the modern world. furthermore it
caused corruption because the government was essentially in cahoots with the
bourgeoisie. thanks to the unfairness inherent in capitalism Marxism states
that the proletariat and bourgeoisie will forever be butting heads .more
importantly that tension will eventually result in a revolution of the masses. and
just what would that revolution look like? well Marx and Engels had a few
ideas .there would be no private ownership of land. there would be no
inheritance rights. the state would control the means of communication and
transport .and instead of laboring in factories kids would go to school where
they'd get a free education. the communist manifesto posits that Marxism
would succeed where other forms of socialism had failed because communists
would always put the proletariat first. furthermore other forms of socialism
were nothing more than programs for small reforms .if the ship of the worker [different ships with different forms of government written on sails]
was going to be set right full-blown an all-out revolution was needed.
and that's what Marxism was all about. Marx and Engels like to think that
Germany would be ground zero for the proletariat takeover.
they probably rolled over in their graves when Hitler came to power, but
never fear the Communist Manifesto was a home run for one group. da the Russians.
at the turn of the 20th century there were two divisions of the Russian social
democratic Labour Party .the Bolsheviks and the Mensheviks many of whom had been
kicked out of Russia for being naughty revolutionaries spent about a decade
meeting in pubs in London. over a nice warm pint they'd argue about whose
interpretation of Marxism was correct and what the best method for taking over
Russia was .well frankly we would have picked somewhere tropical for our
communist revolution but well to each his own. while the Mensheviks and [Castro pictured]
Bolsheviks both wanted Russia to ditch capitalism and the Czar their
medium-term goals were quite different. well the Mensheviks wanted to work with
Russian officials already in office to build a kind of democratic system that
would make Russia a better place for everyone. Bolsheviks wanted to burn it
all down. well if you're wondering where Vladimir Lenin is and all this wonder no
more it was at the head of the Bolsheviks. he thought the Mensheviks
were wusses and that Russia's communist government would need to be small and
tightly controlled so that the masses wouldn't rebel. anywho after all those
years of plotting abroad the Mensheviks and Bolsheviks finally saw an
opportunity to get things going in 1917. and viva la revolucion. but that's for [mob of Russians protest]
another video. what, you thought we'd give you all the fun stuff right now?
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