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ACCT Test 3 vocab: chapter 9
Terms in this set (27)
accelerated depreciation method
A depreciation method that produces higher depreciation expense in the early years than the straight-line approach.
additions and improvements
costs incurred to increase the operating efficiency, productive capacity, or expected useful life of a plant asset
the process of allocating to expense the cost of an intangible asset
Indicates how efficiently a company uses its assets to generate sales; calculated as net sales divided by average total assets.
expenditures that increase the company's investment in plant assets
A contractual agreement allowing one party (the lessee) to use another party's asset (the lessor); accounted for like a debt-financed purchase by the lessee.
cash equivalent price
An amount equal to the fair value of the asset given up or the fair value of the asset received, whichever is more clearly determinable.
An exclusive right granted by the federal government allowing the owner to reproduce and sell an artistic or published work.
declining balance method
a depreciation method that applies a constant rate to the declining book value of the asset and produces a decreasing annual depreciation expense over the asset's useful life
the cost of a plant asset less its salvage value
the process of allocating to expense the cost of plant assets over its useful life in a rational and systematic manner
a contractual agreement under which the franchisor grants the franchisee the right to sell certain products, to perform specific services, or to use certain trademarks or trade names, usually within a designated geographic area
the value of all favorable attributes that relate to a company that are not attributable to any other specific asset
a permanent decline in the fair value of an asset
Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance.
A party that has made contractual arrangements to use another party's asset for a period at an agreed price.
A contractual agreement allowing one party (the lessee) to use the asset of another party (the lessor); accounted for as a rental by the lessee.
expenditures to maintain the operating efficiency and expected productive life of the asset
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.
Resources that have physical substance, are used in the operations of the business, and are not intended for sale to customers.
research and development costs
Expenditures that may lead to patents, copyrights, new processes, and new products; must be expensed as incurred.
Return on Assets
A profitability measure that indicates the amount of net income generated by each dollar of assets; computed as net income divided by average assets.
expenditures that are immediately charged against revenues as an expense
A depreciation method in which companies expense an equal amount of depreciation for each year of the assets useful life
a word, phrase, jingle, or symbol that distinguishes or identifies a particular enterprise or product
A depreciation method in which useful life is expressed in terms of the total units of production or use expected from the asset.
A party that has agreed contractually to let another party use its asset for a period at an agreed price.
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