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Accounting: What the Numbers Mean- Chapter 6 Vocabulary
Accounting for and Presentation of Property, Plant, and Equipment, and Other Noncurrent Assets
24
Accounting
Graduate
01/23/2012

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Term
Accelerated Cost Recovery System (ACRS)
Definition
The method prescribed in the Internal Revenue Code for calculating the depreciation deduction; applicable to the years 1981-1986.
Term
accelerated depreciation method
Definition
A depreciation calculation method that results in greater depreciation expense in the early periods of an asset's life than in the later periods of its life.
Term
amoritization
Definition
The process of spreading the cost of an intangible asset over its useful life.
Term
annuity
Definition
The receipt or payment of a constant amount over fixed periods of time, such as monthly, semiannually, or annually.
Term
capital lease
Definition
A lease, usually long-term, that has the effect of financing the acquisition of an asset. Sometimes called a financing lease.
Term
capitalizing
Definition
To record an expenditure as an asset as opposed to expensing the expenditure.
Term
copyright
Definition
An amoritizable intangible asset represented by the legally granted protection against unauthorized copying of creative work.
Term
declining-balance depreciation method
Definition
An accelerated depreciation method in which the delining net book value of the asset is multiplied by a constant rate.
Term
depletion
Definition
The accounting process recognizing that the cost of a natural resource asset is used up as the natural resource is consumed.
Term
discount rate
Definition
The interest rate used in a present value calculation.
Term
expensing
Definition
To record an expenditure as an expense, as opposed to capitalizing the expenditure.
Term
future value
Definition
The amount that a present investment will be worth at some point in the future, assuming a specified interest rate and the reinvestment of in interest in each period that it is earned.
Term
goodwill
Definition
A nonamoritizable intangible asset arising from the purchase of a business for more than the fair market value of the net assets acquired. Goodwill is the present value of the expected earnings of the acquired business in excess of the earnings that would represent an average return on investment, discounted at the investor's required rate of return for the expected duration of the excess earnings.
Term
intangible asset
Definition
A long-lived asset represented by a contractual right, or an asset that is not physically identifiable.
Term
leasehold improvement
Definition
An amoritizable intangible asset represented by the cost of improvements made to a leasehold be the lessee.
Term
Modified Accelerated Cost Recovery System (MACRS)
Definition
The method prescribed in the Internal Revenue Code for calculating the depreciation deduction; applicable to years after 1986.
Term
net book value
Definition
The difference between the cost of an asset and the accumulated depreciation related to the asset. Sometimes called carrying value.
Term
operating lease
Definition
A lease that does not involve any attributes of ownership.
Term
patent
Definition
An amoritizable intangible asset represented by a government-sanctioned monopoly over the use of a product or process.
Term
present value
Definition
The value now of an amount to be received or paid at some future date, recognizing an interest (or discount) rate for the period from the present to the future date.
Term
proceeds
Definition
The amount of cash (or equivalent value) received in a transaction.
Term
straight-line depreciation method
Definition
Calculation of periodic depreciation expense by dividing the amount to be depreciated by the number of periods over which the asset is to be depreciated.
Term
trademark
Definition
An amoritizable intangible asset represented by a right to the exclusive use of an identifying mark.
Term
units-of-production depreciation method
Definition
A depreciation method based on periodic use and life expressed in terms of asset utilization.
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