Overview of Assets and Depreciation

These flashcards cover the key concepts related to assets, their classification, depreciation methods, and accounting treatments as discussed in the lecture.

Current Assets

Assets that are expected to be converted into cash or used up within one year.

Long-Term Operational Assets

Assets that are used for extended periods of time, typically many years.

Tangible Assets

Long-term assets that have a physical presence and can be seen and touched.

Intangible Assets

Long-term assets that represent rights or privileges and cannot be seen or touched.

Depreciation

The allocation of the cost of a tangible asset over its useful life.

Salvage Value

The expected market value of a fully depreciated asset.

Straight-Line Method

A method of depreciation that allocates the same amount of expense each accounting period.

Double-Declining-Balance Method

An accelerated depreciation method that produces more expense in the early years of an asset's life.

Units-of-Production Method

A depreciation method that produces varying amounts of expense in different accounting periods based on usage.

Accumulated Depreciation

A contra asset account that represents the total depreciation of an asset up to a specific point in time.

Book Value

The value of an asset as reported on the balance sheet, calculated as the original cost minus accumulated depreciation.

Goodwill

The value attributed to favorable factors such as reputation, location, and superior products.

Capital Expenditures

Amounts spent to improve the quality or extend the life of an asset, which are added to the cost of that asset.

Basket Purchase

Acquiring a group of assets in a single transaction with the total price allocated among the assets.

Legal Life of a Patent

20 years from the date of application.

Trademarks

Names or symbols that identify a company or product, protected indefinitely.

Copyrights

Legal protections for writings and artistic works, lasting the life of the creator plus 70 years.

Life Cycle of an Operational Asset

The process where an asset suffers wear and tear and declines in value over time.