Acctg ch 7

Allocating the cost of intangible assets to expense is referred to as ______________.

amortization

The service life or useful life of an asset is

the estimated use that the company expects to obtain from the asset before disposing of it.

Straight-line, declining-balance, and activity-based refer to methods commonly used to ______________ property, plant, and equipment.

depreciate

Long-term assets are classified as

- tangible - intangible

The original cost of an asset minus accumulated depreciation is

book value

The purchase price and all costs to bring an asset to its desired condition and location for use should be ______.

capitalized

The depreciable cost is

the cost of the asset minus the residual value.

Amortization

Allocation of the cost of an intangible asset

Depletion

Allocation of the cost of natural resources

Amortization refers to the allocation of the cost of ____________ assets to expense.

intangible

An asset that has no physical substance is called a(n) ___________ asset.

intangible

An asset that has no physical substance is referred to as a(n)

intangible asset.

Depreciation

Allocation of the cost of a tangible fixed asset

The allocation of the cost of a tangible fixed asset is referred to as __________, whereas the allocation of the cost of an intangible asset is referred to as _______________

Blank 1: depreciation Blank 2: amortization

Which of the following are commonly used depreciation methods?

Declining-balance Activity-based Straight-line

Which statement is true about the straight-line method of depreciation?

It allocates an equal amount of depreciation to each year the asset is used.

Which of the following are expenditures for assets subsequent to acquisition?

additions improvements repairs & maintenance

For accounting purposes, depreciation is

an allocation of a cost of an asset.

In accounting, the term impairment refers to

an asset's significant decline in value.

The original cost of the asset less the accumulated depreciation is the _______________ of the asset.

book value

When an asset has a significant decline in value and is written down, this is called _____________.

impairment

The types of expenditures that can occur subsequent to an asset's acquisition are

repairs and maintenance. improvements. additions.

The depreciable cost of an asset is the asset's cost minus its estimated _____________ value.

residual

The term used to describe the amount the company expects to receive for an asset at the end of its service life is

residual value

The estimated use the company expects to obtain from an asset before disposing of it is referred to as the ____________ life of the asset.

service

The depreciation method that allocates an equal amount of the depreciable base to each year of the asset's service life is the

straight-line method.

___________ value is the amount the company expects to receive for the asset at the end of its service life.

Residual / Salvage

The initial cost of property, plant, and equipment includes the purchase price and all expenditures necessary to bring the asset to its desired condition and location for use.

true