| A | B |
|---|
| Accelerated Depreciation Method | Method that produces larger depreciation charges in the early years of an asset's life and smaller charges in its later years. (p. 338) |
| Amortization | Process of allocating the cost of an intangible asset to expense over its estimated useful life. (p. 349) |
| Betterments | Expenditures to make a plant asset more efficient or productive; also called improvements. (p. 349) |
| Book Value | Total cost of an asset less its accumulated depreciation (or depletion, or amortization). (p. 337) |
| Capital Expenditures | Additional costs of plant assets that provide material benefits extending behond the current period; also called balance sheet expenditures. (p. 343) |
| Change in an Accounting Estimate | Change in an accounting estimate that results from new information, subsequent developments, or improved judgment. (p. 342) |
| Copyright | Right giving the owner the exclusive privilege to publish and sell musical, literary, or artistic work during the creator's life plus 50 years. (p. 350) |
| Cost | All normal and reasonable expenditures necessary to get a plant asset in place and ready for its intended use. (p. 333) |
| Declining-Balance Method | Method that determines depreciation charge for the period by multiplying a depreciation rate (often twice tge straight-line rate) by the asset's beginning-period book value. (p. 338) |
| Depletion | Process of allocating the cost of natural resources to periods when they are consumed. (p. 348) |
| Depreciation | Process of allocating the cost of a plant asset to expense in the periods benefiting from its use. (p. 335) |
| Extraordinary Repairs | Major repairs that extend the useful life of a plant asset beyone prior expectations; treated as a capital expenditure. (p. 344) |
| Franchises | Privileges granted by a company or government to sell a product or service under specified conditions. (p. 352) |
| Goodwill | Amount by which a company's value exceeds the value of its individual assets and liabilities. (p. 352) |
| Inadequacy | Condition in which the capacity of plant assets is too small to meet the company's production demands. (p. 336) |
| Intangible Assets | Nonphysical assets (used in operations) that confer on their owners long-term rights, privileges, or competitive advantages. (p. 349) |
| Land Improvements | Assets that increase the benefits of land, have a limited useful life, and are depreciated. (p. 334) |
| Lease | Contract specifying the rental of property. (p. 351) |
| Leasehold | Rights the lessor grants to the lessee under the terms of a lease. (p. 351) |
| Leasehold Improvements | Alterations or improvements to leased property such as partitions and storefronts. (p. 351) |
| Lessee | Party to a lease who secures the right to possess and use the property from another party (the lessor). (p. 351) |
| Lessor | Party to a lease who grants another party (the lessee) the right to possess and use its property. (p. 351) |
| Licenses | Privileges granted by a company or government to sell a product or service under specified conditions. (p. 352) |
| Modified Accelerated Cost Recovery System (MACRS) | Depreciation system required by federal income tax law. (p. 341) |
| Natural Resources | Assets physically consumed when used; examples are timber, mineral deposits, and oil and gas fields; also called wasting assets. (p. 348) |
| Obsolescence | Condition in which, because of new inventions and improvements, a plant asset can no longer be used to produce goods or services with a competitive advantage. (p. 336) |
| Ordinary Repairs | Repairs to keep a plant asset in normal, good operating condition; treated as a revenue expenditure. (p. 343) |
| Patent | Exclusive right granted to its owner to manufature and sell an item or to use a process for 17 years. (p. 350) |
| Plant Assets | Tangible assets used in a company's operations that have a useful life of more than one period. (p. 332) |
| Revenue Expenditures | Expentitures reported on the current income statement as an expense because they do not provide benefits in future periods. (p. 343) |
| Salvage Value | Estimate of amount to be recovered at the end of an asset's useful life; also called residual, or scrap, value. (p. 335) |
| Straight-Line Depreciation | Method that allocates an equal portion of the total depreciation for a plant asset (cost minus salvage( to each accounting period in its useful life. (p.336) |
| Total Asset Turnover | Measure of a company's ability to use its assets to generate sales; computed by dividing net sales by average total assets. (p. 354) |
| Trademark or Trade (Brand) Name | Symbol, name, phrase, or jingle identified with a company, product, or service. (p. 353) |
| Units-of--Production Depreciation | Method that charges a varying amount to depreciation expense per period of an asset's useful life dependig on usage. (p. 338) |
| Useful Life | Length of time an asset will be productively used in the operations of a business; also called service life. (p. 335) |
