Assets Flashcards
What is the net book value?
Original Cost - Accumulated Depreciation/Amortization
Is deprecation expense for tangible or intangible assets?
Tangible
What is the straight line depreciation method?
Orginal Cost - salvage value/Useful life
What is the entry to dispose of assets? (sale)
Cash increases by the sale amount, PP&E and depreciation come off balance sheet, record gain (revenue) or loss (expense)
Where do you record a gain/loss of PP&E?
On balance sheet under revenue or expense, on income statement in operating section, on statement of cash flows
What is the double declining depreciation method?
NVB X 2/useful life
What is a betterment expenditure? And you capitalize the asset or expense it?
Extends useful life of PP&E and makes asset more productive - capitalize the asset (add to PP&E)
What is a maintenance expenditure? Do you capitalize or expense it?
Anything that doesn’t extend the useful life of PP&E - expense it
What is an impairment loss?
Loss of assets NBV (decrease asset and write up an impairment expense)
What are examples of intangible assets?
Patents, copyrights, goodwill, trademarks, product brand
What are the two types of intangible assets?
Finite - has an expected useful life (patents) & Indefinite - doesn’t have an expected useful life (goodwill, trademarks)
What types of intangible assets are amortized?
Finite
What types of intangible assets are not amortized?
Indefinite
What type of intangible assets are checked for impairment?
Both
What is goodwill?
From M&A activity: Purchase Price - NBV of assets
