ch.6(1-4) Flashcards
Assets that can be touched, such as equipment, machinery, natural resources, and land.
tangible assets
Assets that may be represented by pieces of paper or contracts that appear tangible; however, the true value of an intangible asset lies in the rights and privileges extended to its owners.
intangible assets
Category of assets, sometimes called plant assets, used to produce products or to carry on the administrative and selling functions of a business; includes machinery and equipment, buildings, and land.
property, plant, and equipment
Mineral deposits, oil and gas reserves, and reserves of timber, mines, and quarries are examples; sometimes called wasting assets because their value wastes away as the resources are removed.
natural resources
The decline in value of long-term tangible assets such as buildings, furniture, or equipment. It is systematically recognized by accountants as depreciation expense over the useful lives of the affected assets.
depreciation
Method of systematically allocating the costs of natural resources to expense as the resources are removed from the land.
depletion
Method of systematically allocating the costs of intangible assets to expense over their useful lives; also term for converting the discount on a note or a bond to interest expense over a designated period.
amortization
Accounting practice of reporting assets at the actual price paid for them when purchased regardless of estimated changes in market value.
historical cost concept
The expected selling price of an asset at the end of its useful life.
salvage value
Original cost minus salvage value (of a long-term depreciable asset).
depreciable cost
Historical (original) cost of an asset minus the accumulated depreciation; alternatively, undepreciated amount to date.
book value
The face amount of a bond liability is less any unamortized bond discount or plus any unamortized bond premium.
carrying value
A depreciation method recognizes larger amounts of depreciation in the early stages of an asset’s life and progressively smaller amounts as the asset ages.
double-declining-balance depreciation
A depreciation method recognizes depreciation expense more rapidly in the early stages of an asset’s life than in the later stages of its life.
accelerated depreciation method
Depreciation method is based on a measure of production rather than a measure of time; for example, an automobile may be depreciated based on the expected miles to be driven rather than on a specific number of years.
units-of-production depreciation
