ACCT Ch.7
service life
or useful life, is how long the company expects to receive benefits from the asset before disposing of it. We can measure service life in units of time or in units of activity.
Book Value equation
cost - accumulated depreciation
Return on assets
net income/average total assets
Profit Margin
net income/net sales
Asset turnover
net sales/average total assets
Which of the following accounts are affected while recording the expense relating to the portion of a patent that expired during the year?
Amortization Expense Patents
amortize
Gradually pay off a debt, or gradually write off an asset
Which of the following intangible assets are usually subject to amortization?
Patent Franchise
What are the two major categories of long-term assets?
Tangible assets- Include land, buildings, equipment, etc. Intangible assets- Include patents, trademarks, copyrights etc.
amortization
allocating the cost of intangible assets to expense
Goodwill
most common intangible asset with an indefinite useful life.
Residual/Salvage Value
the amount the company expects to receive from selling the asset at the end of its service life.