Term
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Definition
| things that have physical substance including fixed assets. |
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Term
| Three types of tangible assets |
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Definition
land
building
natural resources |
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Term
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Definition
| all reasonable and necessary expenditures made in acquiring and preparing an assets for use should be recorded as the cost of the asset. |
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Term
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Definition
| expenditures that are recorded as part of the cost of an asset |
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Term
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Definition
| have special rights but not physical substance |
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Term
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Definition
| tangible and intangible resources owned by a business and used in its operations over several years. |
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Term
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Definition
| =net sales (or operating revenues) / avg net fixed assets |
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Term
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Definition
| the net cash equivalent amount paid or to be paid for the asset |
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Term
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Definition
| the fair value of the assets given or assets received |
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Term
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Definition
| assets at their current value |
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Term
| ordinary repairs and maintenance |
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Definition
| expenditures for normal operating upkeep of long-lived assets |
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Term
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Definition
| maintain the productive capacity of the asset during the current accounting period only and are recorded as expenses |
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Term
| additions and improvements |
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Definition
| infrequent expenditures that increase an assets economic usefulness in the future |
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Term
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Definition
| increase the productive life operating efficiency or capacity of the assets and are recorded as increases in asset accounts not as expenses |
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Term
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Definition
| the process of allocating the cost of buildings and equipment over their productive lives using a systematic and rational method |
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Term
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Definition
| the process of allocating the cost of buildings and equipment over their productive lives using a systematic and rational method |
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Term
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Definition
| amount of depreciation expense since the acquisition date is reported on the balance sheet as a contra-account |
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Term
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Definition
| amount of depreciation recorded during each period and is reported on the income statement |
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Term
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Definition
| determining an asset's current market value or worth based on its depreciation |
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Term
| matching principle (with depreciation) |
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Definition
| requires that a portion of an asset's cost be allocated as an expense in the same period that revenues are generated by its use. |
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Term
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Definition
| =cost - accumulated depreciation (reported on balance sheet) |
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Term
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Definition
| the expected service life of an asset to the present owner |
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Term
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Definition
| also known as the a salvage value, the estimated amount to be recovered by the company at the end of an assets estimated useful life |
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Term
| straight line depreciation |
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Definition
| an equal proportion of an asset's depreciable cost is allocated to each accounting period over its useful life |
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Term
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Definition
| (cost - residual value) x (1/useful life) = depreciation expense |
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Term
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Definition
| amount of depreciation expense each year over the entire useful life of the machine |
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Term
| units of production depreciation |
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Definition
| allocates the cost of an asset over its useful life based on the relation of its periodic output to its total estimated output |
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