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accumulated depletion
contra account that records the total depletion expense for a natural resource over its life
accumulated depreciation
contra account that records the total depreciation expense for a fixed asset over its life
allocation of the costs of intangible assets over their useful economic lives; also, process of separating the principal and interest in loan payments over the life of a loan
process in which a long-term asset is recorded on the balance sheet and its allocated costs are expensed on the income statement over the asset’s economic life
contra account
account paired with another account type, has an opposite normal balance to the paired account, and reduces the balance in the paired account at the end of a period
exclusive rights to reproduce and sell an artistic, literary, or musical asset
current expense
cost to the business that is charged in the current period
expense associated with consuming a natural resource
process of allocating the costs of a tangible asset over the asset’s economic life
double-declining-balance depreciation method
accelerated depreciation method that accounts for both time and usage, so it takes more expense in the first few years of the asset’s life
fixed asset
tangible long-term asset
functional obsolescence
reduction of an asset’s value to the company, not including physical obsolescence
value of certain favorable factors that a business possesses that allows it to generate a greater rate of return or profit; includes price paid for an acquired company above the fair value of its identifiable net assets
intangible asset
asset with financial value but no physical presence; examples include copyrights, patents, goodwill, and trademarks
short-term and long-term asset that is not used in the day-to-day operations of the business
long-term asset
asset used ongoing in the normal course of business for more than one year that is not intended to be resold
natural resources
assets a company owns that are consumed when used; they are typically taken out of the earth
contract providing exclusive rights to produce and sell a unique product without competition for twenty years
physical obsolescence
reduction in the value of an asset to the company based on its physical deterioration
salvage (residual) value
price that the asset will sell for or be worth as a trade-in when the useful life is over
straight-line depreciation
depreciation method that evenly splits the depreciable amount across the useful life of the asset
tangible asset
asset that has physical substance
exclusive right to a name, term, or symbol a company uses to identify itself or its products
units-of-production depreciation method
depreciation method that considers the actual usage of the asset to determine the depreciation expense
useful life
time period over which an asset cost is allocated
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