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Chapter 9 vocab
| Term | Definition |
|---|---|
| accelerated depreciation method | a depreciation method that provides for a higher depreciation amount in the first year in the asset's use followed by a gradually declining amount of depreciation |
| amoritization | periodic transfer of the cost of an intangible asset to expense or of a bond discount to interest expense |
| book value | difference between the cost of a fixed asset and its accumulated depreciation |
| boot | remaining amount a buyer owes after the trade-in allowance when a fixed asset is traded in for a similar asset |
| capital expenditures | costs of acquiring fixed assets, adding to a fixed asset, improving a fixed asset, or extending a fixed asset’s useful life |
| copyright | exclusive right to publish and sell a literary, artistic, or musical composition |
| depletion expense | process of transferring the cost of natural resources to an expense account |
| depreciable cost | amount of an asset’s cost that will be allocated to depreciation expense over its useful life =(asset’s initial cost - residual value) |
| depreciation | recording the cost of fixed assets as an expense |
| double declining balance method | method of depreciation that provides for a declining periodic depreciation expense over the expected useful life of an asset |
| expected useful life | estimated length of time an asset will be used in normal business operations |
| fixed asset turnover ratio | number of sales dollars earned per dollar of fixed assets =(sales/ average book value of fixed assets) |
| fixed assets | relatively permanent assets |
| goodwill | intangible asset that is created from such favorable factors |
| initial cost | purchase price of an asset plus all costs to obtain and ready it for use |
| intangible assets | long-term assets that are used in the operations of a business |
| patents | exclusive rights to produce and sell goods with one or more unique features |
| residual value | estimated value of a fixed asset at the end of its useful life |
| revenue expenditures | costs incurred for normal maintenance and repairs of fixed assets |
| straight line method | method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset |
| trade in allowance | amount a seller allows a buyer for a fixed asset that is traded in for a similar asset |
| trademark | name, term, or symbol used to identify a business and its products |
| units of activity method | method of depreciation that provides the same amount of depreciation expense for each unit of an asset’s activity |
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