Plant, Property, and Equipment Overview

The systematic allocation of the cost of tangible assets (like buildings and equipment) over their useful life.

The allocation of the cost of natural resource assets (like oil or minerals) over their useful life.

The allocation of the cost of intangible assets (like patents or copyrights) over their useful life.

The accounting principle requiring expenses to be recognized in the same period as the revenues they generate.

Physical assets that can be seen and touched, like buildings, machinery, and vehicles.

Assets that have value but no physical form, like patents, copyrights, and trademarks.

A category of assets that includes furniture, fixtures, machinery, vehicles, tools, computers, etc.

Costs incurred after an asset is in place, ready for use as intended, or to establish a new facility, product launch, or move to a new place. General administrative costs are excluded.

The process of systematically allocating the cost of an asset over its useful life.

The total cost incurred to acquire an asset and make it ready for use, including the price, freight, assembly, installation, and testing.

The period of time or units of activity an asset is expected to be used before it's retired.

The loss of value due to wear and tear from use, deterioration over time, or damage.

The loss of value due to becoming obsolete or outdated, even if physically still usable.

The expected value of an asset at the end of its service life, minus the costs of disposal.

The cost of an asset minus its estimated residual value.

They must be systematic (following a formula) and rational (related to the benefits the asset provides each period).

A note where the stated interest rate is zero, but the market still expects a return. The true cost of the note is reflected through a discount.

An account used to record the difference between the face value of a non-interest-bearing note and its present value.

A transfer of assets or services where only one party receives something of value. Often associated with donations.

An equity account used to record the value of assets received as donations. It represents a contribution to the company's net worth.

An increase in net income resulting from receiving a donation from a non-governmental entity.

The price at which an asset or security would be exchanged in a free and open market between willing buyers and sellers.

The company needs to determine the fair value of both the acquired asset and the securities issued. The fair value might differ for each.

In many cases, when assets are acquired through issuing securities (like stock), both the asset and the securities have a market value, which can differ.

The total amount of a natural resource that can be extracted and sold, measured in units of the desired product (e.g., ounces of silver).

The cost per unit of a natural resource, calculated by dividing the total cost of the resource (minus residual value) by the estimated recoverable units.

Intangible assets lack physical existence and derive their value from the rights and privileges granted to the company using them.

Coca-Cola's secret formula, America Online's subscriber base, and a company's brand name are examples of intangible assets.

Intangible assets are often the most valuable assets for companies in the information and service industries.

The value of an intangible asset is based on its potential to generate future economic benefits, like increased revenue or cost savings.

A valuable intangible asset representing a company's compiled list of existing and potential customers that can be used for marketing and sales purposes.

The systematic allocation of the cost of an intangible asset over its useful life, similar to how depreciation works for tangible assets.

A legal right granted to creators of original works, like music, books, and films, giving exclusive control over their use and reproduction.

A legal agreement where a company (franchisor) grants another company (franchisee) the right to use its brand, products, and business model in a specific area.

A legal right granted for an invention, giving the owner exclusive rights to use, manufacture, and sell it for a specific period.

An intangible asset representing the excess of the purchase price over the fair value of identifiable net assets acquired in a business combination.

Intangible assets associated with innovation and technological advancements, such as patents, trade secrets, and proprietary software.

Intangible assets derived from contractual arrangements, such as franchise rights, licensing agreements, and broadcast rights.

These are assets used to market or promote products or services, like trademarks, trade names, and domain names.

A unique word, phrase, or symbol that identifies a specific company or product, like the Apple logo or the Nike swoosh.

They arise from interactions with customers, such as customer lists, backlogs, and long-term relationships.

The asset is amortized over its useful life, meaning its cost is spread out as an expense over the period it benefits the company.

These include assets related to artistic creations, such as copyrights, patents, and artistic designs.

These assets arise from agreements with other parties, such as licenses, franchises, and non-competition agreements.

These include assets related to technological advancements, such as software, databases, and proprietary technology.

This intangible asset represents the excess of the purchase price of a company over the fair market value of its identifiable assets.