Glossary of Fin Acc: Chapter 8 Vocab: Operating Assets: Property, Plant, and Equipment, Natu
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- Acquisition Cost
- The amount that includes all of the cost normally necessary to acquire an asset and prepare it for its intended use.
- Capitalization of interest
- Interest on constructed assets is added to the asset account.
- The allocation of the original cost of an asset to the periods benefited by it use.
- Land Improvements
- Costs that are related to land but that have a limited life.
- Straight-line method
- A method by which the same dollar amount of depreciation is recorded in each year of asset use.
- Book Value
- The original cost of an asset minus the amount of accumulated depreciation.
- Units of Production Method
- Depreciation is determined as a function of the number of units the asset produces.
- Accelerated Depreciation
- A higher amount of depreciation is recorded in the early years and a lower amount in the later years.
- Double declining-balance method
- Depreciation is recorded at twice the straight-line rate, but the balance is reduced each period.
- Change in Estimate
- A change in the life of the asset or in its residual value.
- Capital Expenditure
- A cost that improves the asset and is added to the asset account.
- Revenue Expenditure
- A cost that keeps an asset in its normal operating condition and is treated as an expense.
- Gain on sale of asset
- The excess of the selling price over the asset's book value.
- Loss on sale of asset
- The amount by which selling price is less than book value.
- Natural Resources
- Assets that are consumed during their use.
- Intangible assets
- Assets with no physical properties.
- The excess of the purchase price to acquire a business over the value of individual net assets acquired.
- Research and development costs
- Costs incurred in the discovery of new knowledge.
- Cash dividends
- most common form of dividend declared on one date, paid out another date, paid to stockholders another date (3)
- 1) date of declaration
- cash dividends are declared
- 2) payment date
- paid out
- 3) date of record
- dividends are paid to stockholders
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