Chap 18 Flashcards
Accelerated Method of Depreciation
a method of depreciating an asset’s cost that allocates greater amounts of depreciation to an asset’s early years of useful life.
Amortization
the process of periodically transferring the acquisition cost of intangible assets with estimated useful lives to an expense account.
Brand Name
trade name
Capitalized Costs
all costs recorded as part of an asset’s costs
Computer Software
an intangible asset; written program that instruct a computer’s hardware todo certain tasks
Copyright
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
Declining-Balance Method
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.
Depletion
allocating the cost of a natural resource to expense over the period in which the resource produces revenue
Double-Declining-Balance Method (DDB)
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
Franchise
an intangible asset; a right to an exclusive dealership granted by a governmental unit or a business entity
Gain
the disposition of an asset for more than its book value
Goodwill
an intangible asset; the value a business in excess of the net value of its identifiable assets
Impairment
a situation that occurs when the asset is determined to have a fair market value less than its book value
Income Tax Method
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
Intangible Assets
assets that lack a physical substance, such as goodwill, patents, copyrights, and computer software, although software has, in sense, a physical attribute.
Loss
the disposition of an asset for less than its book value
Net Book Value
the cost of an asset minus its accumulated depreciation, depletion, or amortization, also know as book value
Net Salvage Value
the salvage value of an asset less any costs to remove or sell the asset
Patent
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
Real Property
asses such as land, land improvements, buildings, and other structures attached to the land
Recoverability Test
test for possible impairment that compares the asset’s net book value with the estimated net cash flows from future use of the asset
Residual Value
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
Sum-of-the-Years’-Digits Method
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
Tangible Personal Property
assets such as machinery, equipment, furniture, and fixtures that can be removed and used elsewhere.
Trade Name
intangible asset; an exclusive business name registered with the US Patent and Trademark Office; also called brand name
Trademark
an intangible assets exclusive business symbol registered with the US Patent and Trademark Office
Units-of -Output Method
units of production method
Units-of-Production Method
a method of depreciating asset cost at the same rate for each unit produced during each period
