Plant Assets, Natural Resources, and Intangibles

These flashcards cover key concepts related to plant assets, natural resources, and intangible assets as per Chapter 9 of Horngren’s Financial & Managerial Accounting.

Property, Plant, and Equipment (PP&E)

Long-lived, tangible assets used in the operations of a business.

Depreciation

The allocation of a plant asset’s cost over its useful life.

Capital Expenditure

Spending that increases the asset’s capacity, efficiency, or extends its useful life.

Revenue Expenditure

Expenses incurred to maintain an asset in working order without increasing its life or efficiency.

Depletion

The process by which businesses allocate a natural resource’s cost to expense over its usage.

Amortization

The allocation of the cost of an intangible asset to expense over its useful life.

Intangible Assets

Assets that have no physical form, such as patents and copyrights.

Goodwill

The excess payment made over the fair value of net assets acquired in a business acquisition.

Asset Turnover Ratio

A measure of the amount of net sales generated for each average dollar of total assets invested.

Historical Cost

The actual cost paid for an asset, including all related expenses required to make it ready for use.