CH 8 Acct for Long Term Assets

Front

What does Acquisition Cost include?

Back

All expenditures necessary to get the asset in place and ready for use.

Front

What is the term for the value of an item once it has been fully depreciated?

Back

Salvage Value.

Front

Define a non-current asset.

Back

An asset that cannot be sold without harming the long-term profit generation capacity.

Front

Is land a depreciating asset over time?

Back

False.

Front

What is a current asset?

Back

An asset that can be sold without affecting long-term profit generating capacity.

Front

What are the main categories of long-term assets?

Back

Property, Plant, Equipment (PP&E), Intangible Assets, and Long-term Investments.

Front

What is the purpose of depreciation?

Back

To allocate the cost of a tangible asset over its useful life.

Front

What is the difference between tangible and intangible assets?

Back

Tangible assets have physical substance (e.g., buildings, machinery), while intangible assets do not (e.g., patents, trademarks).

Front

What is the formula for calculating straight-line depreciation?

Back

(Cost of Asset - Salvage Value) / Useful Life.

Front

What is the significance of salvage value in accounting?

Back

It represents the estimated residual value of an asset at the end of its useful life.