Accounting Chapter 8
Terms
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copy deck
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acquisition cost
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the net cash equivalent amount paid or to be paid for the asset
- additions and improvements
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infrequent expenditure that increase an asset's economic usefulness in the future
- amortization
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the systematic and rational allocation of the acquistion cost of an intangible asset over its useful life
- capital expenditures
- increase the productive life, operating efficiency, or capacity of the asset and are recorded as increases in asset accounts, not as epenses
- capitalized interest
- represents interest expenditures included in the cost of a self-constructed asset
- copyright
- the exclusive right to publish, use, and sell a literary, musical, or artistic work
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declining-balance depreciation
- a method to allocate the cost of an asset over its useful life based on a multiples of the straight-line rate (often two times)
- depletion
- the systematic and rational allocation of the cost of a natural resource over the period of exploitation
- deprciation
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the process of allocating the cost of buildings and equipment over their productive lives using a systematic and rational method
- estimated useful life
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the expected service life of an asset tot he present owner
- franchise
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a contractual right to sell certain products or services, use certain trademarks, or [perform activities in a geographical region
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goodwill (cost in excess of net assets acquired)
- the excess of the purchases price of a business over the fair market value of the business's assets and liabilities
- intangible assets
- have special rights but not physical substance
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licenses and operating rights
- obtained through agreement with governmental units or agencies, permit owners to use public property n performing their services
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long-lived assets
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tangible and intangible resources owned by a business and sued in its operations over several years
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natural resources
- assets that occur in nature, such as mineral deposits, timber tracts, oil, and gas
- net book (or carrying value)
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the acquistion cost of an asset less accumulated depreciation
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ordinary repairs and maintenance
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expenditures for normal operating upkeep of long-lived assets
- patent
- granted by the federal government for an invention; it is an exclusive right given to the owner to use, manufacture, and sell the subject of the patent
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residual (or salvage) value
- the estimated amount to be recovered at eh end of the company's estimated useful life of a asset
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revenue expenditures
- maintain the productive capacity of the asset during the current accounting period only and are recorded as expenses
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straight-line depreciation
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the method that allocates the cost of and asset in equal periodic amounts over its useful life
- tangible assets (or fixed assets)
- have physical substance
- technology
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includes costs for computer software and web development
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trademark
- an exclusive legal right to use an special name, image, or slogan
- units-of-production depreciation
- a method to allocate the cost of an asset over its useful life based on the relation of its periodic output to its total estimated output