Plant Assets and Depreciation

These flashcards cover the essential vocabulary related to plant assets, depreciation, and accounting principles discussed in the lecture.

Plant Assets

Long term tangible assets used to produce and sell products and services.

Depreciation

The process of allocating the costs of plant assets over their expected useful lives.

Accumulated Depreciation Equipment

A contra account linked to the equipment account, which records the total depreciation expense allocated.

Book Value

The value of a plant asset calculated as the asset's cost less its accumulated depreciation.

Matching Principle

An accounting principle requiring expenses to be reported in the income statement in the period they are incurred.

Straight Line Depreciation Method

A method that allocates equal amounts of an asset's net cost to depreciation during its useful life.

Salvage Value

The estimated value of an asset at the end of its useful life.

Contra Account

An account that is linked to another account and has an opposite normal balance.

Equipment Account

An account where purchases of equipment are recorded as debits.

Depreciation Expense

The expense account reflecting the allocation of the cost of a plant asset over time.