Chapter 8 – Property, Plant and Equipment - Terminology

Flashcards covering key terminology related to Property, Plant and Equipment.

Plant Assets

Equipment and buildings used in the operations of a business, not held for sale, and may have a life of several years.

Cost of Plant Asset

All expenditures incurred in getting a fixed asset in place and ready for its intended use.

Useful Life

Estimated number of years the asset will provide a service.

Salvage Value

Estimated resale value the asset will have at the end of its useful life.

Depreciation

Process of allocating the cost of a fixed asset to an expense during the years in which the asset is used.

Depreciable Cost

The original cost of the asset minus its salvage value; this is the total amount that will be depreciated.

Depreciation Expense

The amount of cost which is charged to an expense during the current year.

Accumulated Depreciation

The total of all depreciation expenses incurred to-date for a particular asset.

Book Value

The portion of the cost of an asset which has not been charged to expense; it equals original cost less accumulated depreciation.

Lump Sum Acquisitions

Allocating the total purchase price between various assets based on their percent of total fair market values.