1What are long-term assets?
Long-term assets are assets a company owns that it expects will help generate revenue for more than one year
2What are the three main types of long-term assets?
The three main types of long-term assets are Plant assets, Natural resources, and Intangible assets.
3What are examples of plant assets?
Examples of plant assets are Buildings, machinery, equipment, vehicles
4How is cost expensed for plant assets?
Cost is expensed for plant assets by deprication
5What are examples of natural resources?
Oil, coal, timber, minerals
6How is cost expensed for natural resources?
Cost is expensed for natural resources by depletion
7What are examples of intangible assets?
Examples of intangible assets are Patents, copyrights, trademarks
8How are intangible assets expensed?
Intangible assets are expensed by Amortization
9What is depricaition?
Allocates the cost of a plant asset over its useful life.
10What is depletion?
Allocates the cost of a natural resource as it is extracted or consumed.
11What is Amortization?
Allocates the cost of an intangible asset over its useful life, if that life is finite.
12What are costs included in the original value of an asset?
Costs included in the original value of an asset are purchase price, sales tax, transportion and delivery fees, installation costs, and testing costs.
13What are the three methods for calculating depreciation?
Straight-line depreciation, Units-of-production depreciation, Declining balance depreciation.
14What is straight-line depreciation?
traight-line depreciation spreads the depreciable cost of an asset equally over its useful life. Cost - Salvage value / useful life
15What is units-of-production depreciation?
This method bases depreciation on how much the asset is actually used, rather than how much time passes. Cost- salvage value / Total estimated unites produces THEN rater per unit x units used
16What does cost mean?
Cost is the orginial recorded value of an asset
17What is useful life?
How long a company expects to use the asset
18What is Salvage value?
Estimated value of the asset at the end of its useful life
19What is accumulated depreciation?
Accumulated depreciation is the total depreciation recorded on an asset since it was placed into service.
It is a contra-asset account, meaning it reduces the asset's reported value.
20What is the journal entry for depreciation?
Depreciation expense Debit
Accumulated Depreciation—Equipment Credit
Depreciation expense is always debited and Accumulated depreciation is always credited
21What is book value?
Book value is the recorded value of an asset after subtracting is depreciation. Book value = cost - depreciation
22How does a company determine if it gained, lost, or is even on the sell of a plant asset?
Gain or loss = sales procedes - book value
Selling price is greater than book value → Gain
Selling price is less than book value → Loss
Selling price equals book value → No gain or loss