Chapter 9(part 2) Flashcards Preview

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Flashcards in Chapter 9(part 2) Deck (19):
1

Revenue Expenditures(aka)

-expenses
-ordinary repairs and maintenance

2

Capital expenditures(aka)

-assets

-seldom occur
-large amounts of $$$$$$
-extended life
-greater efficiency
-additions

3

Depreciation is important to what time periods?

-future time

4

Depletion

systematic allocation of the cost of a natural resource to future periods in which asses contribute services

dr:depletion expense
cr:accumulated depletion or asset

5

Amortization

allocation of the cost of an intangible asset to future periods in which the assets contribute services

dr:amortization expense
cr: accumulated amortization or asset

6

Points on Intangible Assets

-have no physical substance
-provide future benefits
-benefits are derived from legal rights
-must acquired so they have a cost
-have a limited life

7

Examples of Intangible Assets

-patents, franchises and licenses, goodwill, trademarks, copyrights, and organizational cost

8

Research and Development

expensed in the period incurred
-patents have to be purchased or defended to be an asset

-those developed in-house are treated as expenses

9

Goodwill

is a result of increased earnings potential due to nme recognition/good reputation


-business can only record goodwill if it is paid for in connection with the purchase of an on-going business

10

Impairment

a permanent decline in the market value of an asset is an impairment period in which the decline occurs.

-written down to new market value

11

What does the FASB require in regards to recognition on losses?

-immediate recognition

12

Goodwill is analyzed for what?

impairment rather than amortized

13

Where do we disclose the method of depreciation?

footnotes

14

good will formula

fmv- purchase price

15

gain or loss formula

sales price
-book value

16

copyright

give the owner the exclusive right to reproduce an sell and artistic or published work

17

trademark or name

word phrase......etc that distinguishes or identifies a particular enterprise or product

18

franchises

is a contractual agreement under which the franchisor grants the franchisee the right to sell certain products
-perform specific services
-use certain trademarks

19

good will formula

fair market value-purchase price