Long-Term Assets in Financial Accounting

Practice flashcards covering key vocabulary and concepts related to long-term assets in financial accounting.

Tangible Assets

Physical assets such as land, buildings, machinery, and equipment.

Intangible Assets

Non-physical assets such as patents, trademarks, and goodwill.

Goodwill

The portion of the purchase price that exceeds the fair value of identifiable net assets when one company acquires another.

Amortization

The process of allocating the cost of intangible assets over their estimated service lives.

Depreciation

The allocation of the cost of tangible assets to expense over time.

Basket Purchase

The acquisition of multiple assets for a single purchase price, which must be allocated based on the relative fair values of the individual assets.

Property, Plant, and Equipment

Long-term assets that include land, buildings, and equipment, recorded at their original cost and necessary expenditures to prepare them for use.

Impairment

Occurs when the expected future cash flows of a long-term asset fall below its book value.

Patents

Exclusive rights granted to inventors for a period of 20 years to manufacture a product or use a process.

Franchises

Local outlets that pay for the exclusive right to use the franchisor’s name and sell its products.