property, plant and equipment (PP&E)(fixed assets)

straight line method (SL)

a depreciation method resulting in the same amount of depreciation expense every period (PERIODIC DEPRECIATION EXPENSE=DEPRECIABLE BASIS/USEFUL LIFE IN PERIODS)

units of production- activity method

a depreciation method that assumes depreciation is a FUNCTION OF USE (machine hours) or PRODUCTIVITY (finished goods) instead of time passage (PERIODIC DEPRECIATION =DEPRECIABEL BASIS x USAGE [hours, units, etc.] IN CURRENT PERIOD/TOTAL ESTIMATED CAPACITY [hours, units, etc.])

accelerated depreciation

a method depreciation that applies to assets providing greater benefit, sometimes in the form of lower cost of operations, in the earlier years of its life resulting in allocating larger parts of the cost of the asset to earlier years an lower amount to later years. methods include sum-of-the-years'-digits and declining balance

depreciation

allocating the cost of an asset over its useful life using a systematic and rational method

sum-of-the-years'-digits (SYD) method

an accelerated depreciation method based on an asset's useful life with changes to depreciation expense reducing by a proportionate amount each period. PERIODIC DEPRECIATION=PERIOD IDENTIFIER/SUM OF THE YEARS' DIGITS: -period identifier is n, the number of periods in the useful life, for the 1st period, reduced by 1 each period, becoming 1 in the last period -sum of the years' digits= n(n+1)/2

declining balance method DDB

an accelerated depreciation method that applies a depreciation rate to the declining carrying value of the asset each period, switching to straight-line rate, which is 100%/useful life in periods. the multiple is determined by the particular declining balance method selected: -200DB (double declining balance)= 200% of SL rate -175DB= 175% of SL rate -150DB= 150% of SL rate

non-monetary exchanges

an exchange with another entity that primarily involves non-monetary assets and liabilites

monetary assets and liabilities

assets and liabilities that are fixed in the amount of currency to be received or paid

capital expenditure

costs that improve an asset by making it bigger, better, or last longer, recognized as an asset, generally an addition to the asset improved.

repairs & maintenance expense

costs to keep or restore an asset to its normal working condition without adding additional value, recognized as expenses when incurred

impairment

deeming an asset's carrying amount to exceed its fair value resulting in the recognition of an impairment loss and a reduction to the carrying value of the asset

composite depreciation

depreciation of assets that are dissimilar in nature, fairly heterogeneous, and have different useful lives, calculated using a weighted average depreciation rate

group depreciaion

depreciation of assets that are similar in nature, fairly homogeneous, and have similar useful lives, as if they were a single asset.

asset retirement obligation (ARO)

obligation to restore an asset to a specific condition prior to abandonment resulting in a liability recognized at its fair value when the obligation is incurred

depletion

recognition of the cost of natural resources as they are extracted using a method similar to the units or production or activity method of accounting

refurbishment

restoring an asset to a previous state, such as by replacing part of an asset.

boot

something typically added to a transaction to equalize the value of items exchanged, such as cash paid in addition to a vehicle being exchanged for another vehicle (for y ill give you x and w to boot)

commercial substance

the ability to significantly affect future cash flows as a result of an exchange

accretion expense

the increase in an obligation, such as an ARO, resulting from the passage of time, generally calculated usin the effective interest method

involuntary conversion

the loss of property through an act of nature, a governmental action, or some other circumstance beyond the control of the entity resulting in the recognition of a gain or loss equal to the difference between amounts received, including insurance recoveries, if any, and the carrying value of the property.

depreciable basis

the portion of a depreciable asset that is charged to depreciation over its useful life, equal to the amount capitalized as the cost of the asset minus its salvage value

salvage value

what an asset can be sold for at the end of its useful life