Contents of published accounts

Question 1

Intellectual property

Answer 1

the amount by which the market value of a firm exceeds its tangible assets less liabilities – an intangible asset.

Question 2

Market value

Answer 2

the estimated total value of a company if it were taken over.

Question 3

Capital expenditure

Answer 3

any item bought by a business and retained for more than one year, that is the purchase of fixed or non-current assets.

Question 4

Revenue expenditure

Answer 4

any expenditure on costs other than non-current asset expenditure.

Question 5

Depreciation

Answer 5

the decline in the estimated value of a non- current asset over time

Assets decline in value for two
main reasons:
- 1) normal wear and tear through usage
- 2) technological change, making either the asset, or the product it is used to make, obsolete.

Question 6

Net book value

Answer 6

the current Statement of financial position value of a non-current asset = original cost – accumulated depreciation.

Question 7

Straight-line depreciation

Answer 7

a constant amount of depreciation is subtracted from the value of the asset each year

= original cost of asset-expected residual value / expected useful life of asset (years)

Question 8

Net realisable value

Answer 8

the amount for which an asset (usually an inventory) can be sold minus the cost of selling it – it is only used on Statements of financial position when NRV is estimated to be below historical cost.