Chapter 18 – Property, Plant and Equipment Flashcards
“Accelerated method of depreciation”
method of depreciating asset cost that allocates greater amounts of depreciation to an asset’s early years of useful life
“amortization”
process of periodically transferring acquisition cost of intangible assets with estimated useful lives to an expense account
“capitalized costs”
all costs recorded as part of an asset’s costs
“computer software”
- an intangible asset
2. written programs that instruct a computer’s hardware to do certain tasks
“copyright”
- intangible asset
- exclusive right granted by fed govt to product, publish, sell a literary or artistic work for a period equal to the creator’s life plus 70 years
“declining balance method”
accelerated method of depreciation in which an asset’s book value at the beginning of the year is multiplied by a constant percentage (equal to double the straight line rate) 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”
method of depreciation that uses a rate equal to twice the straight-line rate and applies that rate to the book value of the asset at the beginning of the year
“franchise”
- intangible asset
2. right to exclusive dealership granted by govt unit or business entity
“gain”
disposition of an asset for more than its book value
“goodwill”
- intangible asset
2. value of a business in excess of the net value of its identifiable assets
“impairment”
situation that occurs when the asset is determined to have a market value or value in use less than its book value
“income tax method”
- method of recording the trade-in of an asset for income tax purposes.
- does not permit a gain or loss to be recognized on the transaction
“intangible assets”
- assets that lack physical substance
2. goodwill, patents, copyrights, computer software
“loss”
disposition of an asset for less than its book value
“net book value” “book value”
- cost of an asset - accumulated depreciation, depletion or amortization
“net salvage value”
salvage value of an asset - any costs to remove or sell the asset
“patent”
- intangible asset
- exclusive right given by US Patent Office to manufacture and sell an invention for period of 17 years from date patent is granted
“real property”
assets such as land, land improvements, buildings, and other structures attached to the land
“recoverability test”
test for possible impairment that compares asset’s net book value with estimated net cash flows from future use of the asset
“residual value” “salvage value” “scrap value”
- estimate of the amount that could be obtained from the sale or disposition of an asset at the end of its useful life
“sum-of-the-years’-digits method”
method of depreciating asset costs by allocating as expense each year a fractional part of the asset’s depreciable cost, based on sum of the digits of the number of years in the asset’s useful life
“tangible personal property”
assets such as machinery, equipment, furniture, fixtures that can be removed and used elsewhere
“trade name” “brand name”
- intangible asset
2. exclusive business name registered with US Patent Office
“trademark”
- intangible asset
2. exclusive business symbol registered with US Patent Office
“units-of-production method”
“units-of-output method”
method of depreciating asset cost at the same rate fr each unit produced during each period
