Chap 18

Question 1

Accelerated Method of Depreciation

Answer 1

a method of depreciating an asset’s cost that allocates greater amounts of depreciation to an asset’s early years of useful life.

Question 2

Amortization

Answer 2

the process of periodically transferring the acquisition cost of intangible assets with estimated useful lives to an expense account.

Question 3

Brand Name

Answer 3

trade name

Question 4

Capitalized Costs

Answer 4

all costs recorded as part of an asset’s costs

Question 5

Computer Software

Answer 5

an intangible asset; written program that instruct a computer’s hardware todo certain tasks

Question 6

Copyright

Answer 6

an intangible asset; an exclusive right granted by the federal government to produce, publish, and sell a literary or artistic work for a period equal to the creator’s life plus 70 years

Question 7

Declining-Balance Method

Answer 7

an accelerated method of depreciation in which an asset’s book value at the beginning of a year is multiplied by a constant percentage to determine depreciation for the year.

Question 8

Depletion

Answer 8

allocating the cost of a natural resource to expense over the period in which the resource produces revenue

Question 9

Double-Declining-Balance Method (DDB)

Answer 9

a method of depreciation that uses a rate equal to twice the straight-line method rate and applies that rate to the book value of the asset at the beginning of the year

Question 10

Franchise

Answer 10

an intangible asset; a right to an exclusive dealership granted by a governmental unit or a business entity

Question 11

Gain

Answer 11

the disposition of an asset for more than its book value

Question 12

Goodwill

Answer 12

an intangible asset; the value a business in excess of the net value of its identifiable assets

Question 13

Impairment

Answer 13

a situation that occurs when the asset is determined to have a fair market value less than its book value

Question 14

Income Tax Method

Answer 14

a method of recording the trade-in of an asset for income tax purposes. It does not permit a gain or loss to be recognized on the transaction

Question 15

Intangible Assets

Answer 15

assets that lack a physical substance, such as goodwill, patents, copyrights, and computer software, although software has, in sense, a physical attribute.

Question 16

Loss

Answer 16

the disposition of an asset for less than its book value

Question 17

Net Book Value

Answer 17

the cost of an asset minus its accumulated depreciation, depletion, or amortization, also know as book value

Question 18

Net Salvage Value

Answer 18

the salvage value of an asset less any costs to remove or sell the asset

Question 19

Patent

Answer 19

intangible asset; an exclusive right given by the US Patent and Trademark Office to manufacture and sell an invention for a period of 20 years from the date the patent is granted

Question 20

Real Property

Answer 20

asses such as land, land improvements, buildings, and other structures attached to the land

Question 21

Recoverability Test

Answer 21

test for possible impairment that compares the asset’s net book value with the estimated net cash flows from future use of the asset

Question 22

Residual Value

Answer 22

the estimate of the amount that could be obtained from the sale or disposition of an asset at the end of its useful life; also called salvage or scrap value

Question 23

Sum-of-the-Years’-Digits Method

Answer 23

a method of depreciating asset costs by allocating as expense each year a fractional part of the asset’s depreciable cost, based on the sum of the digits of the number of years in the asset’s useful life

Question 24

Tangible Personal Property

Answer 24

assets such as machinery, equipment, furniture, and fixtures that can be removed and used elsewhere.

Question 25

Trade Name

Answer 25

intangible asset; an exclusive business name registered with the US Patent and Trademark Office; also called brand name

Question 26

Trademark

Answer 26

an intangible assets exclusive business symbol registered with the US Patent and Trademark Office

Question 27

Units-of -Output Method

Answer 27

units of production method

Question 28

Units-of-Production Method

Answer 28

a method of depreciating asset cost at the same rate for each unit produced during each period