MGMT 20000 Chapter Notes - Chapter 7: Intangible Asset, Write-Off

• School: Purdue University
• Department: Management
• Course: MGMT 20000
• Professor: Frank Kane

Document Summary

Capitalize an expenditure as an asset if it increases future benefits. Expense an expenditure if it benefits only the current period. Repairs and maintenance-expenses that maintain a given level of benefits in the period incurred. Addition-occurs when a new major component is added to an existing asset. Improvement-the cost of replacing a major component of an asset. Dictionary definition-decrease in value (or selling price) of an asset. Accounting definition-allocation of an asset"s cost to an expense over time. Depreciation-the process of allocating the cost of a long-term asset to expense over its useful life. Acculmulated depreciation-a contra asset account representing that total depreciation taken to date. Factors at the time an asset is put into use. Service life (or useful life)-the estimate use the company expects to receive from the asset before disposing of it. Residual value (salvage value)-the amount the company expects to receive from selling the asset at the end of its service life.