The accelerated depreciation method provides for a higher depreciation expense in the first year of the asset’s use, followed by gradually declining amounts in subsequent years.
What is Amortization?
Amortization is the periodic allocation of the cost of an intangible asset to expense.
What is Book Value?
Book value is the cost of a fixed asset minus accumulated depreciation on the asset.
What is Boot?
“Boot” is the amount a buyer owes a seller when a fixed asset is traded in on a similar asset.
What is Capital Expenditure?
Capital expenditure is the cost of acquiring fixed assets, adding to a fixed asset, improving a fixed asset, or extending a fixed asset’s useful life.
What is Capital Lease?
A capital lease treats the leased assets as purchased assets, which are then carried in the balance sheet.
What is Component?
Component is a portion of a fixed asset that can be identified as a separate asset and depreciated over its own separate expected useful life.
What is Copyright?
Copyright is an exclusive right to publish and sell a literary, artistic, or musical composition.
What is Declining-balance Method?
The declining-balance method—also called Double Declining Balance method—provides for periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.
What is Depletion?
Depletion is the allocation of the cost of natural resources to an expense account.
What is Depreciation?
Depreciation is the allocation of the cost of a fixed asset to expense over its useful life in a rational and systematic manner.
What are Fixed Assets?
Fixed (plant) assets are the assets that depreciate over time, such as equipment, tools, machinery, and buildings. Although land is considered a fixed asset, it is never depreciated.
What is Goodwill?
Goodwill is an intangible asset that is created from such favorable factors as location, product quality, reputation, and managerial skill.
What are Intangible Assets?
Intangible assets have no physical substance, but they have value. Usually intangible assets are long-term assets that are useful in the operations of a business, and are not held for sale.
What is Operating Lease?
Operating lease is the lease that does not meet the criteria for capital lease and thus is accounted for as operating expenses.
What are Patents?
Patents are the exclusive rights to produce and sell goods with one or more unique features.
What is Ratio of Fixed Assets to Long-term Liabilities?
The ratio of fixed assets to long-term liabilities is a leverage ratio that measures the margin of safety of long-term creditors, calculated as the net fixed assets divided by the long-term liabilities.
What is Residual Value?
Residual value is the estimated value of a fixed asset at the end of its useful life. Other names used for residual value are: trade in value, scrap value, and salvage value.
What is Revenue Expenditures?
Revenue expenditures are the costs that benefit only the current period or costs incurred for normal maintenance and repairs of fixed assets.
What is Straight-line Method?
The straight-line method is a method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.
What is Trade-in Allowance?
The trade-in allowance is the amount a seller allows a buyer for a fixed asset that is traded in for a similar asset. Other names for trade-in allowance are: scrap value, residual value, and salvage value.
How Do You Find Depreciable Cost?
We find depreciable cost by subtracting the scrap value from the cost of a fixed asset.
What is Trademark?
Trademark is a name, term, or symbol used to identify a business and its products.
What is Units-of-production Method?
The units-of-production method is a method of depreciation that provides for depreciation expense based on the expected productive capacity of a fixed asset.
What is Depreciation?
Depreciation is the allocation of a long-lived asset to expense over its useful life in a rational and systematic manner.
What are other names for Residual Value?Scrap value, salvage value, and trade-in value.
Ch1 Accounting in Action
Ch2 Recording Process
Ch3 Adjusting the Accounts
Ch4 Completing the Accounting Cycle
Ch5 Merchandising Operations
Ch7 Accounting Information Systems
Ch8 Internal Control and Cash
Ch9 Accounting for Receivables
Ch10 PP&E, Natural Resources, and Intangible Assets
Ch11 Current Liabilities and Payroll
Ch14 Corporations:Dividends, RE
Ch15 Long Term Liabilities
Ch17 Statement of Cash Flows
Ch18 Financial Statement Analysis
Plato and Accounting
Luca Pacioli and DaVinci