Accounting Chapter 9 info

Rights, privileges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance.

Intangible Assets

The revenue-producing ability of a depreciable asset will decline due to wear and tear and to obsolescence.

True

Three factors affect the computation of depreciation: cost, useful life, and salvage value.

True

The balance in accumulated depreciation represents the total cost that has been charged to expense since placing the asset in service.

True

Depreciation provides for the proper matching of expenses with revenues.

True

The allocation of the cost of an intangible asset to expense in a rational and systematic manner.

Amortization

The book value of a plant asset should approximate its fair value.

False

Depreciation applies to three classes of plant assets: land, buildings, and equipment.

False

Depreciation does not apply to a building because its usefulness and revenue-producing ability generally remain intact over time.

False

Depreciation expense and accumulated depreciation are reported on the income statement.

False

Depreciation is a process of asset valuation, not cost allocation.

False

Recognizing depreciation on an asset results in an accumulation of cash for replacement of the asset.

False

A right to sell certain products or services, or use certain trademarks or trade names within a designated geographic area.

Franchise

The excess of the cost of a company over the fair value of the net assets required.

Goodwill

Costs incurred by a company that often lead to patents or new products. These costs must be expensed as incurred.

Research and Development Cost