Chapter 9: Long-Lived Tangible and Intangible Assets

________ are assets that provide benefits over a length of time (a year or more). They help provide goods or services, but the asset will not be sold.

Long lived assets can also be called ________.

The two categories for long-lived assets are ________.

Tangible assets, also known as ________, are physical assets that are subject to depreciation (land, buildings, equipment).

________ are non-physical assets that have a limited life. They are created through legal documents and are subject to amortization (patents, logos, trademarks, slogans).

________ have an unlimited life and are NOT amortized.

Equation for Net Book Value (TANGIBLE)

Equation for Net Book Value (INTANGIBLE)

Tangible assets can include ________ that can enhance the asset and its functionality (walkways, sprinklers, roadways, fencing, etc).

________ is not depreciable.

_________ relates to the construction of tangible assets such as buildings and equipment.

The ________ has acquisition costs like the initial purchase to prep assets for use (transportation, construction, etc).

When costs are recorded as assets it is called ________, which delays it's recording as an expense.

Capitalizing costs causes assets to ________ on the balance sheet and expenses to ________ on the income statement.

The capitalized costs for land:

The capitalized costs for buildings:

The capitalized costs for Equipment:

A(n) ________ is when assets like land, equipment, and buildings are bought together.

________ for each asset is determined by the relative fair market value of each asset.

The two types of expenditures:

Ordinary repairs and maintenance are ________ changes and small expenditures, which are expensed on the income statement. They don't extend the life of the asset.

Extraordinary repairs, replacements, and additions are ________ changes and are large expenditures. The asset's productivity is increased. They are capitalized.

Depreciation is a ________ process that matches cost of operational assets with periods of its useful life.

To record depreciation, the acquisition cost of an asset moves from the ________ to the ________ as an expense.

What is the normal balance of Depreciation Expense and what financial statement is it on?

What is the normal balance of Accumulated Depreciation and what financial statement is it on?

The acquisition cost (including capitalized cost), estimated useful life, and the estimated residual (aka salvage) value (what the asset is worth if you sell it is all information you need to know to do:

The easiest and most widely used method. It indicates that depreciation expense is a constant amount each year, accumulated depreciation increases by an equal amount each year, and book value decreases the same amount each year.

Equation for Depreciation Expense (Straight Line Method)

________ is used if the life of an asset is generally measured in terms of units of production.

Equation for Depreciation Expense (Units of Production Method)

A greater depreciation expense is taken from the asset in the earlier years of its life versus its later years.

Equation for Depreciation Expense (Declining Balance Method)

The ________ says taxpayers want to pay the least tax that is legally permitted and want to pay on the latest possible date.

An asset is impaired when:

________ represent a lower asset value than the assets carrying value.

A(n) ________ has a normal credit balance.

A(n) ________ has a normal debit balance.

Two adjusted journal entries are required for the disposal of an asset to.....

Journal entry if there is a gain on disposal:

Journal entry if there is a gain on disposal:

There is ________ IF cash received is less than asset's book value.

Equation for annual Depreciation:

________ is similar to depreciation, but it is specifically used for intangible assets. It writes off the cost of an asset over its useful or legal life.

Slogans, logos, or names associated with a specific business.

An exclusive right granted by the federal government to protect properties.

An exclusive right granted by the federal government to sell or manufacture an invention.

Grant limited permission to use a product or service according to specific terms and conditions.

Software and web development work.

Provides legally protected rights to sell products or provide services purchased by a franchise from the franchisor.

Occurs when one company buys another company. It is not amortized. Purchased ________ is considered an intangible asset.

Equation for Goodwill:

The cost of intangible assets are recorded as assets if they've been ________.

If the asset is self constructed, the cost is reported as ________.

Intangible assets with unlimited lives are not ________. Intangible assets with limited lives are capitalized and later ________.

________ is a cost allocation process that matches cost of operational assets with periods of its useful life.

There is ________ IF the cash received is greater than the assets book value.

Gains for intangible assets are the result of amounts received being ________ than their book values.

Losses for intangible assets are the result of amounts received being ________ than their book values.

_________ is used to see how well long lived assets were used to generate revenue.

Equation for calculating the average of fixed assets:

Equation for the fixed asset turnover ratio:

A higher fixed asset turnover ratio implies ________.