Accounting Ch 10 Plant Assets,Natural Resources, and Intangible Assets

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Accelerated-depreciation method

Depreciation method that produces higher depreciation expense in the early years rather than in the later years

Additions and improvements

Costs incurred to increase the operating efficiency, productive efficiency, or useful life of a plant asset

Amortization

The allocation of the cost of an intangible asset to expense over its useful life in a systematic and rational matter

Asset turnover ratio

A measure of how efficienly a company uses its assets to generate sales; calculated as net sales divided by average total assets

Capital expenditures

Expenditures that increase a company's investment in productive facilities.

Copyright

Exclusive grant from the federal government that allows the owner to reproduce and sell an artistic or published work

Declining-balance method

Depreciation method that applies a constant rate to the declining book value of the asset and produces a decreasing annual depreciation expense over the useful life of the asset

Depletion

The allocation of the cost of a natural resource to expense over its useful life in a rational and systematic manner

Depreciable cost

The cost of a plant asset minus salvage value

Franchise

A contractual arrangement under which the franchisor grants the franshisee the right to sell certain products, provide specific services, or use certain trademarks or trade names, usually within a designated geographic area.

Going-concern assumption

States that the company will continue in operation for the forseeable future

Goodwill

The value of all favorable attributes that relate to a business enterprise.

Intangible asset

Rights, priviliages, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance

Licenses

Operating rights to use public property, granted to a business enterprise by a governmental agency.

Materiality Priciple

If an item would not make a difference in decision making, a company does not have to follow GAAP in reporting it.

Natural Resources

Assets that consist of standing timber and underground deposits of oil,gas, or minerals

Ordinary repairs

Expenditures to maintain the operating efficiency and productive life of a unit.

Patent

An exclusive right issued by the U.S Patent Office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the grant.

Plant assets

Tangible resources that are used in the operations of the business and are not intended for sale to customers.

R and D Costs

Expenditures that may lead to patents, copyrights, new processes, or a new products.

Revenue expenditures

Expenditures that are immedietely charged against revenues as an expense.

Salvage value

An estimate of an asset's value at the end of its useful life

Straight-line method

Depreciation method in which periodic depreciation is the same for each year og the asset's useful life.

trademark

A word,phrase,jingle, or symbol that identifies a particular enterprise or product.

Units-of-activity method

Depreciation method in which useful life is expressed in terms of the total units of production or use expected from an asset

Useful life

An estimate of the expected productive life, also called service life, of an asset

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