Reporting and Analyzing Long-Lived Assets

These flashcards cover key vocabulary and concepts related to Reporting and Analyzing Long-Lived Assets, including definitions of terms relevant to property, plant, equipment, depreciation methods, and intangible assets.

Property, Plant, and Equipment

Long-lived resources that are controlled by a company, are tangible, used in operations, not intended for sale, and provide economic benefits over many years.

Depreciation

Systematic allocation of the cost of property, plant, and equipment over the asset’s useful life.

Cost of Property, Plant, and Equipment

Includes purchase price, expenditures to bring asset to intended location, and estimated restoration costs.

Land Improvements

Costs of structural additions like parking lots that decline in service potential over time and are separately depreciated.

Buildings

Expenditures related to the purchase or construction of buildings, including closing costs and costs to make the building ready for use.

Equipment

Broad class that includes office equipment, machinery, vehicles, furniture, and fixtures, with costs including purchase price and installation.

Lease

A contractual agreement where the lessor allows the lessee to use an asset in exchange for periodic payments.

Amortization

The systematic allocation of the cost of intangible assets over their useful life.

Goodwill

Asset representing future economic benefits arising from the purchase of a business, recognized as excess of cost over fair market value of identifiable net assets.

Depreciation Methods

Different ways to calculate depreciation, including straight-line, diminishing-balance, and units-of-production.

Impairment

When the carrying amount of an asset exceeds its fair value, resulting in a loss that must be recorded.

Derecognition

The process of removing the cost of an asset and accumulated depreciation from the accounting records upon disposal.

Units-of-Production Method

Depreciation method where useful life is expressed in terms of total units of production or activity expected from the asset.

Capital Expenditures

Expenditures that enhance the asset's value or extend its useful life, capitalized as assets.

Intangible Assets

Non-physical assets that provide rights or competitive advantages, such as patents and trademarks.

Residual Value

The estimated amount that an asset is expected to realize upon disposal at the end of its useful life.

Return on Assets

A measure of overall profitability indicating how effectively assets generate net income.

Asset Turnover

A measure of how efficiently a company uses its assets to generate sales.