Term
| Long-Term Operating Assets |
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Definition
| assets expected to be held and used over the course of several years to facilitate operating activities. |
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Term
| Property, Plant, and Equipment |
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Definition
| tangible, long-lived assets aquired for use in business operations: include land, buildings, machinery, equipment, and furniture. |
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Term
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Definition
| long-lived assets without physical substance that are used in business: including licenses, patents, franchise, and goodwill. |
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Term
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Definition
| systematic planning for a long-term investments in operating assets. |
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Term
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Definition
| the concept that a dollar recieved now is worth more than a dollar received in the future. |
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Term
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Definition
| purchase price, comission, legal fees, escrow fees, surveying fees, clearing and grading cost. |
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Term
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Definition
| cost of improvements, including expenditures for materials, labor and overhead. |
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Term
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Definition
| purchase price, comissions, reconditioning costs. |
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Term
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Definition
| Purchase price, taxes, freight, insurance, installation, and any expenditures incurred in preparing the asset for its intended use. |
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Term
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Definition
| a contract that specifies the terms under which the owner of an asset(the lessor) agrees to transfer the right to use the asset to another party(the lessee). |
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Term
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Definition
| the party that is granted the right to use the property under the terms of lease. |
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Term
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Definition
| the owner of property that is leased( rented) to another party. |
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Term
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Definition
| a simple rental agreement(rent) |
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Term
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Definition
| a lease transaction that is recorded as a purchase by the lessee. The lessee will the record the leased asset the same as if the asset had been acquired in an outright purchase. When the payments are made, the liability on the balance sheet is reduced.(lease property). |
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Term
| Operating lease vs. Capital lease |
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Definition
| Operating lease is treated as a rental and a capital lease is accounted for as a purchase. |
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Term
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Definition
| Interest that is recorded as part of the cost of a self-constructed asset. This is the interest cost associated with money borrowed to finance a construction project. |
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Term
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Definition
| materials, labor, reasonable overhead and interest. |
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Term
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Definition
| the purchase of 2 or more assets acquired together at a single price. |
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Term
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Definition
| an intangible asset that exists when a business is valued at more than the fair market value of its net assets, usually due to strategic locations, reputation, good customer relations, or similar factor: equal to the excess of the purchase price over the fair market value of the net assets purchased. |
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Term
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Definition
| the process of cost allocation that assigns the orginial cost of plant and equipment to the period benefited. A systemtic write-off of the original cost of an asset. |
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Term
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Definition
| for long term operating assets, the assets' original cost less any accumulated depreciation. |
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Term
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Definition
| the amount expected to be received when the asset is sold at the end of its useful life. |
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Term
| Straight Line Depreciation |
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Definition
(Cost-Salvage Value)/estimated useful life=annual depreciation expense
Journal Entry
Debit-Depreciaiton Expense
Credit-Accumulated Depreciation-Asset |
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Term
| Units of Production Method |
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Definition
((cost-salvage value)/estimated life in units)*Number of Units Produced
Journal Entry
Debit-Depreciation Expense
Credit-Accumulated Depreciation-Asset |
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Term
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Definition
| a contra asset account recorded on the balance sheet and is an offset to the cost of the asset. |
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Term
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Definition
| reported on the income statement as an expense |
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Term
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Definition
| Cost of Asset-Accumulated Depreciation |
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Term
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Definition
| assets that are physically consumed or waste away. They use the units of production method. |
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Term
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Definition
| The process of cost allocation that assigns the original cost of a natural resource to the periods benefitted. |
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Term
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Definition
a decline in the value of a long term operating asset. An asset is impaired when the sum of future cash flows is less than the book value of the asset.
Fair Value-Book Value
Journal Entry
D-Accum Depr-Building
D-Loss on Impariment
C-Building
If the value of an asset increases it is not booked |
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Term
| 3 Basic Ways to dispose of an Asset |
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Definition
Discard or scrap it
Sell it
Exchange it for another asset |
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Term
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Definition
| rights and privileges that are long-lived, are not held for resale, have NO physical substance, and usually provide their owners with competitive advantages over other firms. |
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Term
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Definition
| an exclusive right granted for 20 years by the federal government to manufacture and sell an invention. |
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Term
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Definition
| a distinctive name, symbol, or slogan that distinguishes a product or service from similar products or services. Nike Swoosh |
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Term
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Definition
| an exclusive right granted by a national government that permits an author to sell, license, or control his/her work. |
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Term
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Definition
| an entity that has been licensed to sell the product of a manufacturer or to offer a particular service in a given area. McDonald's |
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Term
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Definition
| a list or database containing customer info such as name, addressm past purchases. |
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Term
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Definition
| the process of cost allocation that assigns the original cost of an intangible asset to the period benefited. This is similar to depreciation expense for an asset and depletion of a natural resource. |
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Term
| Declining balance method(DDB) |
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Definition
an accelerated depreciation method using a constant rate and book value of the asset, salvage value is ignored under this method.
DDB=(1/estimated life)*2
Annual Depreciation= DDB*book value
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Term
| Sum of year's digit method |
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Definition
accelerated depreciation method in which a constant balance (cost minus salvage value) is multiplied by a declining depreciation rate.
ex. 5 year life
1+2+3+4+5=15
Year 2= (4/15)*(cost-salvage value) |
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