Text 10 Plant Assets, Intangible Assets, and Related Expenses

1 Identify the elements of a plant asset's cost. Plant assets are long-lived assets that the business uses in its operation. These assets are not held for sale as inventory.

2 Explain the concept of depreciation. The process of allocating a plant asset's cost to expense over the period the asset is used is called depreciation. The cost of all plant assets but land is expensed through depreciation.

3 Account for depreciation by four methods. Businesses may compute the depreciation of plant assets by four methods: straight-line, units-of-production, and the accelerated methods: double-declining-balance and sum-of-years '-digits. To measure depreciation, the accountant subtracts the asset's estimated residual value from its cost and divides that amount by the asset's estimated useful life. Most companies use the straight-line method for financial reporting purposes.

4 Identify the best depreciation method for income tax purposes. Almost all companies use an accelerated method for income tax purposes. Accelerated depreciation results in greater tax deductions early in the asset's life. These deductions decrease income tax payments and conserve cash that the company can use in its business.

5 Account for disposal of plant assets. Before disposing of a plant asset,the business updates the asset's depreciation. Disposal is recorded by removing the book balances from both the asset account and its related accumulated depreciation account. Disposal often results in recognition of a gain or a loss.

6 Account for natural resource assets and depletion. The cost of natural resources, a special category of long-lived assets, is expensed through depletion. Depletion. Depletion of natural resources is computed on a units-of-production basis.

7 Account for intangible assets and amortization. Long-lived assets called intangibles are rights that have no physical form. The cost of intangibles is expensed through amortization. Amortization of intangibles is computed on a straight-line basis over a maximum of 40 years. However, the useful lives of most intangibles are shorter than their legal lives. Depreciation, depletion, and amortization are identical in concept.8 Distinguish capital expenditures from revenueexpenditures. Capital expenditures increase the capacity or the efficiency of an asset or extend its useful life. Accordingly, they are debited to an asset account. Revenue expenditures merely maintain the asset's usefulness and are debited to an expense account.

New Words



identify vt.认别,鉴定

long-lived adj. 长期的

inventory n.存货,盘存;财产目录

depreciation n.折旧,贬值

straight-line n. 直线法

unit of production n. 单位产量

accelerated(depreciation) method n. 加速折旧法

double-declining-balance n. 加倍金额递减法

sum-of-the-years' -digits n.折旧年数合计法

subtract vt. 减去

residual value n. 剩余价值,残值

useful life n. 可用年限,有用寿命

financial adj.财政的,金融的

tax deduction n.税款扣除额,课税扣除

conserve vt.保藏,保存

disposal n. 处理,清理

update vt. 使现代化

book balance n. 帐面余额

accumulated depreciation n. 累计折旧

recognition n.认可,确定

resource n. 资源,物力

depletion n.折耗,耗减

category n. 种类,范畴,类目

intangible adj.摸不到的,无形的

amortization n. 分期偿还,摊销

maximum n. 最大化,最大值

identical adj.同一的,同等的

capital expenditure n.资本支出,基本建设费用

revenueexpenditure n.营业支出,收入支出

capacity n.能力,生产力

accordingly adv. 因此,从而

debit vt. 将 记入借方
关键字:会计英语
生词表: