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Accounting II Ch. 21
| Question | Answer |
|---|---|
| Cash and other assets expected to be exchanged for cash or consumed within a year. | Current assets |
| Assets that will be used for a number of years in the operation of a business. | Plant assets |
| Adequate disclosure | |
| FYI – 3 major plant assets | Equipment, buildings and land |
| Historical cost | |
| Land and anything attached to the land. | Real property |
| All property not classified as real property. | Personal property |
| The value of an asset determined by tax authorities for the purpose of collecting taxes. | Assessed value |
| Tax rate is multiplied by an asset's assessed value, not the value recorded on a business's record. Tax based on value of real property. Taxes on personal properties:cars, boats, etc. | FYI – assessed value extra |
| Matching Expenses with Revenue | |
| The portion of a plant asset's cost that is transferred to an expense account in each fiscal period during a plant asset's useful life. | Depreciation Expense |
| Includes all costs paid to make the asset usable to a business: price of asset, delivery costs, and any necessary installation costs. | Original Cost |
| The amount an owner expects to receive when a plant asset is removed from use. | Estimated Salvage Value |
| The other terms for estimated salvage value. | FYI – Residual Value or Scrap Value |
| The number of years an asset is useful must be estimated. This is what? | Estimated Useful Life |
| Caused by wear from use and deterioration from aging and weathering. | Physical Depreciation |
| Occurs when a plant asset becomes inadequate or obsolete. | Functional Depreciation |
| No longer satisfactorily performs the needed service. | Inadequate |
| When a newer asset can operate more efficiently or produce better service than the present. | Obsolete |
| Charging an equal amount of depreciation expense for a plant asset in each year of useful life. | Straight-line Method of Depreciation |
| The total amount of depreciation expense that has been recorded since the purchase of a plant asset. | Accumulated Depreciation |
| The original cost of a plant asset minus accumulated depreciation. | Book Value of a Plant Asset |
| An accounting form on which a business records information about each plant asset. | Plant Asset Record |
| FYI – Calculating book value any time | Subtracting Accumulated Depreciation from the plant asset account. |
| Depreciation from the beginning of the current fiscal year to the date of disposal is recorded after what? During any point of useful life? | FYI – plant asset sold |
| Revenue that results when a plant asset is sold for more than book value. | Gain on Plant Assets |
| A gain from sale of plant assets is not an operating revenue therefore it goes to what account? | Other Revenue |
| The loss that results when a plant asset is sold for less than book value. | Loss on Plant Assets |
| A loss from sale of plant assets in not an operating expense therefore what account does it go to? | Other Expenses |
| Multiplying the book value by a constant depreciation rate at the end of each fiscal period. | Declining-Balance Method of Depreciation |
| What is the name given to 2x times the straight-line-rate? | FYI – Double Declining-Balance Method |
| Never depreciated below its estimated salvage value. | FYI – Plant Asset is Never |
Created by:
jralston