Chapter 9 GLOSSARY REVIEW Flashcards
(27 cards)
What is the accelerated-depreciation method?
A depreciation method that produces higher depreciation expense in the early years than the straight-line approach.
What are additions and improvements?
Costs incurred to increase the operating efficiency, productive capacity, or ex- pected useful life of a plant asset.
What is amortization?
The process of allocating to expense the cost of an intangible asset.
What is a asset turnover?
Indicates how efficiently a company uses its assets to generate sales; calculated as net sales divided by average total assets.
What are capital expenditures?
Expenditures that increase the company’s investment in plant assets.
What is capital lease?
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.
What is the 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.
What is a copyright?
An exclusive right granted by the federal government allowing the owner to reproduce and sell an artistic or published work.
What is the 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.
What is depreciable cost?
The cost of a plant asset less its salvage value.
What is depreciation?
The process of allocating to expense the cost of a plant asset over its useful life in a rational and systematic manner.
What is a franchise?
A contractual arrangement 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.
What is goodwill?
The value of all favorable attributes that relate to a company that are not attributable to any other specific asset
What is impairment?
A permanent decline in the fair value of an asset.
What is the units-of-activity meethod?
A depreciation method in which useful life is expressed in terms of the total units of production or use expected from the asset.
What is a trademark or (trade name)?
A word, phrase, jingle, or symbol that distinguishes or identifies a particular enterprise or product.
What is the straight-line method?
A depreciation method in which companies expense an equal amount of depreciation for each year of the asset’s useful life.
What are revenue expenditures?
Expenditures that are immediately charged against revenues as an expense.
What are 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 total assets.
What are research and development costs?
Expenditures that may lead to patents, copyrights, new processes, and new products; must be expensed as incurred.
What are plant assets?
Resources that have physical substance, are used in the operations of a business, and are not intended for sale to customers.
What is a 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.
What are ordinary repairs?
Expenditures to maintain the operat- ing efficiency and expected productive life of the asset.
What is a operating lease?
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.
