Investing Activities

Analyst

A person who examines financial information to make investment decisions.

Bias

A systematic deviation from the true value, often introduced intentionally.

Accelerated depreciation

A depreciation method where more depreciation expense is recognized in the early years of an asset's life.

Straight-line depreciation

A depreciation method where the cost of an asset is evenly allocated over its useful life.

Investing activities

Activities related to acquiring and disposing of long-term assets and investments in other firms' securities.

Depreciable assets

Assets that are subject to depreciation, such as property, plant, and equipment.

Disclosures

Information provided by firms in their financial statements.

Financial statement information

Data presented in a company's financial statements.

Lengthening depreciable lives

Increasing the estimated useful lives of assets to reduce depreciation expense and boost reported earnings.

Long-lived operating assets

Tangible and intangible assets used in the company's operations, such as property, plant, and equipment (PP&E) and patents.

Depreciation expense

The annual amount of depreciation recognized for an asset.

Average useful life

The average estimated period over which depreciable assets are expected to be used.

Aggressiveness

The degree to which a firm extends the useful lives of its depreciable assets.

Useful life

The estimated period over which an asset is expected to be used.

Depreciable lives

The estimated useful lives of depreciable assets.

Salvage value

The estimated value of an asset at the end of its useful life.

Allocation method

The method used to allocate the acquisition costs of assets.

Age of the fixed asset

The number of years since the fixed asset was acquired.

Earning management

The practice of manipulating accounting estimates to influence reported earnings.

Depreciation

The process of allocating the historical cost of a long-lived asset to the periods of its use.