Accounting Terms

On October 1, year 1, Kirby Corp. purchased equipment for $100,000. The equipment has a useful life of 5 years with no residual value. Kirby uses the straight-line method of depreciation. The partial year depreciation for year 1 is

$5,000

Depreciation

Allocation of the cost of a tangible fixed asset

Amortization

Allocation of the cost of an intangible asset

Depletion

Allocation of the cost of natural resources

Which of the following terms is equivalent to an asset's useful life to a particular company?

Service life

What is an activity-based depreciation method?

Units-of-production method

The gain or loss on disposal of an asset is calculated as

consideration received less the book value of asset sold

The cost of a natural resource less its anticipated residual value is called the

depletion base

The two categories for intangible assets are

intangibles with indefinite lives and intangibles with finite lives

Group and composite depreciation commonly is used to

reduce costs of record-keeping