Unit 7: Depreciation and Amortization

Accelerated depreciation

a term used to show that the reduction of an assets value
happens faster at the start of its useful life than at the end

Accrual Accounting

an accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur

Allocate

Distribute according to an existing plan

Amortization

The deduction of capital expenses incurred on an intangible asset over a specific period of time

Annuity depreciation

a method of depreciation centered around cost recovery and a constant rate of return upon any asset that is being depreciated

Carry over

transfer a sum relating to one account to a new column, page, year

Cash-flow

the movement of money into and out of a company, firm or legal entity

Determined by

decided by or because of

Divide

split into equal parts or groups

Finite life

a lifespan which is limited to a certain number of years, months, weeks or days

Multiply

increase the number of by the power of x

Net-book value

the current value of an asset shown in the accounting documents

Salvage value

the amount of money that an asset will be worth at the end of its useful life

Straight line depreciation

the method for reducing the value of a tangible asset by equal amounts over its useful life

Sum-of-years-digits depreciation

the method for reducing the value of a tangible asset by a variable percentage depending on how long the asset has been on the books