accounting 201 ch 7: long term assets

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

Additions Repairs and maintenance Improvements

For accounting purposes, depreciation is

an allocation of a cost of an asset.

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

impairment

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

intangible asset.

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

repairs and maintenance. additions. improvements.

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.

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.

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

The original cost of the asset less the accumulated depreciation is the ________ ________ of the asset

book; value

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 _______.

depreciation; amortization

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

capitalized

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

residual

Long-term assets are classified as

tangible. intangible.

The depreciable cost is

the cost of the asset minus the residual value.

True or false: 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