Ch 9 Long-Lived Assets Flashcards

1
Q

additions and improvements

A

Costs that are incurred to increase the operating efficiency, productive capacity, or expected useful life of property, plant, or equipment. (p. 483)

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2
Q

amortizable amount

A

The cost minus the residual value of a finite-life intangible asset that is amortized over its useful life. (p. 496)

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3
Q

amortization

A

The systematic allocation of the amortizable amount of a finite-life intangible asset over its useful life. (p. 496)

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4
Q

asset retirement costs

A

The cost to dismantle, remove, or restore an asset when it is retired. (p. 470)

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5
Q

asset turnover

A

A measure of how efficiently a company uses its total assets to generate sales. It is calculated by dividing net sales by average total assets. (p. 501)

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6
Q

basket purchase

A

The acquisition of a group of assets for a single price. Individual asset costs are determined by allocating relative fair values. (p. 472)

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7
Q

capitalized

A

Capital expenditures recorded as property, plant and equipment or other long-lived asset rather than being recorded as an expense. (p. 470)

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8
Q

Capital cost allowance (CCA)

A

The depreciation of long-lived assets that is allowed by the Income Tax Act for income tax purposes. It is calculated on a class (group) basis and mainly uses the diminishing-balance method with maximum rates specified for each class of assets. (p. 481)

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9
Q

capital expenditures

A

Expenditures related to long-lived assets that benefit the company over several accounting periods. (p. 470)

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10
Q

commercial substance

A

An exchange of long-lived assets that results in a change in future cash flows of each party to the transaction. (p. 492)

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11
Q

copyright

A

An exclusive right granted by the federal government allowing the owner to reproduce and sell an artistic or published work. (p. 497)

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12
Q

cost model

A

A model of accounting for a long-lived asset that carries the asset at its cost less accumulated depreciation or amortization and any impairment losses. (p. 468)

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13
Q

depreciable amount

A

The cost of a depreciable asset (property, plant, and equipment, or natural resources) less its residual value. (p. 475)

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14
Q

diminishing-balance method

A

A depreciation method that applies a constant rate to the asset’s diminishing carrying amount. This method produces a decreasing annual depreciation expense over the useful life of the asset. (p. 476)

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15
Q

double diminishing-balance method

A

A diminishing-balance method of depreciation that uses a rate equal to two times the straight-line rate. (p. 477)

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16
Q

franchise

A

A contractual arrangement under which the franchisor grants the franchisee the right to sell certain products, offer specific services, or use certain trademarks or trade names, usually inside a specific geographical area. (p. 499)

17
Q

goodwill

A

The amount paid to purchase another company that is more than the fair value of the company’s net identifiable assets. (p. 499)

18
Q

impairment loss

A

The amount by which an asset’s carrying amount exceeds its recoverable amount. (p. 483)

19
Q

intangible assets

A

Rights, privileges, and competitive advantages that result from owning long-lived assets that have no physical substance. (p. 496)

20
Q

land improvements

A

Structural additions to land that have limited useful lives, such as paving, fencing, and lighting (p. 471)

21
Q

licenses

A

Operating rights to use public property, granted by a government agency to a company. (p. 499)

22
Q

natural resources

A

Long-lived tangible assets, such as standing timber and underground deposits of oil, gas, and minerals, that are physically extracted and are only replaceable by an act of nature. (p. 493)

23
Q

operating expenditures

A

Expenditures that benefit only the current period. They are immediately charged against revenues as expenses. (p. 470)

24
Q

ordinary repairs

A

Expenditures to maintain the operating efficiency and productive life of the unit. (p. 483)

25
Q

patent

A

An exclusive right issued by the federal government that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the application. (p. 497)

26
Q

Property, plant, and equipment

A

Identifiable, long-lived tangible assets, such as land, land improvements, buildings, and equipment, that the company owns and uses for the production and sale of goods or services. (p. 470)

27
Q

recoverable amount

A

The higher of the asset’s fair value, less costs to sell, and its value in use. (p. 483)

28
Q

Research and development (R&D) costs

A

Expenditures that may lead to patents, copyrights, new processes, and new products. (p. 498)

29
Q

residual value

A

The estimated amount that a company would currently obtain from disposing of the asset if the asset were already as old as it will be, and in the condition it is expected to be in, at the end of its useful life. (p. 475)

30
Q

return on assets

A

An overall measure of profitability that indicates the amount of profit that is earned from each dollar invested in assets. It is calculated by dividing profit by average total assets. (p. 502)

31
Q

revaluation model

A

A model of accounting for a long-lived asset in which it is carried at its fair value less accumulated depreciation or amortization and any impairment loses. (p. 484)

32
Q

royalties

A

Recurring payments that may be required under a franchise agreement and are paid by the franchisee to the franchisor for services provided (e.g. advertising, purchasing), and are often proportionate to sales. (p. 499)

33
Q

straight-line method

A

A depreciation method in which an asset’s depreciable amount is divided by its estimated useful life. This method produces the same periodic depreciation for each year of the asset’s useful life. (p. 475)

34
Q

tangible assets

A

Long-lived resources that have physical substance, are used in the operations of the business, and are not intended for sale to customers. Tangible assets include property, plant, and equipment, and natural resources. (p. 496)

35
Q

trade-in allowance

A

A price reduction offered by the seller when a used asset is exchanged for a new asset as part of the deal. (p. 490)

36
Q

trademark (trade name)

A

A word, phrase, jingle, or symbol that distinguishes or identifies a particular enterprise or product. (p. 498)

37
Q

units-of-production method

A

A depreciation method in which useful life is expressed in terms of the total estimated units of production or use expected from the asset. Depreciation expense is calculated by multiplying the depreciable amount per unit (cost less residual value divided by total estimated activity) by the actual activity that occurs during the year. (p. 478)

38
Q

useful life

A

The period of time over which an asset is expected to be available for use, or the number of units of production (such as machine hours) or units of output are expected to be obtained from an asset. (p. 474)