Amortization methods that produce larger amortization charges during the early years of an asset's life and smaller changes in the later years.
Accelerated amortization method
An expenditure to make a capital asset more efficient or productive and extend the useful life of a capital asset beyond original expectations; also called improvements.
Betterment
Assets used in the operation of a company that have a useful life of more than one accounting period; also known as fixed assets, or property, plant and equipment.
Capital asset
Additional costs of capital assets that provide material benefits extending beyond the current period.
Capital expenditure
A right granted by the federal government or by international agreement giving the owner exclusive privilege to publish and sell musical, literary, or artistic work during the life of the creator plus 50 years.
Copyright
An amortization method in which a capital asset's amortization charge for the period is determined by applying a constant amortization rate (up to twice the straight-line rate) each year to the asset's book value at the beginning of the year.
Declining-balance amortization
The process of allocating to expense the cost of a capital asset to the accounting periods benefiting from its use; another term for amortization.
Depreciation
A condition in which the capacity of the company's capital assets is too small to meet the company's productive demands.
Inadequacy
Assets that increase the usefulness of land but that have a limited useful life and are subject to amortization.
Land improvements
The party to a lease that secures the right to possess and use the property.
Lessee
Alterations or improvements to leased property such as partitions, painting, and storefronts.
Leasehold improvements
Assets that are physically consumed when used; examples include timber, mineral deposits, and oil and gas fields; also called wasting assets.
Natural resources
An exclusive right granted to its owner by the federal government to manufacture and sell a machine or device, or to use a process, for 17 years.
Patent
An expenditure that should appear on the current income statement as an expense and be deducted from the period's revenues because it does not provide a material benefit in future periods.
Revenue expenditure
A method that allocates an equal portion of the total amortization for a capital asset (cost minus salvage) to each accounting period in its useful life.
Straight-line amortization
A method that charges a varying amount to expense for each period of an asset's useful life depending on its usage; expense is computed by taking the cost of the asset less its salvage value and dividing by the total number of units expected to be produced during its useful life.
Units-of-production amortization
A process of systematically allocating the cost of a capital asset to expense over its estimated useful life.
Amortization
The original cost of a capital asset less its accumulated amortization.
Book value
The system of amortization required by federal income tax law.
Captial Cost Allowance (CCA)
A change in a computed amount used in the financial statements that results from new information or subsequent developments and from better insight or improved judgment.
Change in an accounting estimate
Includes all normal and reasonable expenditures necessary to get a capital asset in place and ready for its intended use.
Cost
The process of allocating the cost of natural resources to the period in which they are consumed; another term for amortization.
Depletion
The amount by which the value of a company exceeds the fair market value of the company's net assets if purchased separately.
Goodwill
Rights, privileges and competitive advantages to the owner of capital assets used in operations that have no physical substance; examples include patents, copyrights, leaseholds, leasehold improvements, goodwill, and trademarks.
Intangible assets
A contract allowing property rental.
Lease
A name for the rights granted to the lessee by the lessor by a lease.
Leasehold
The party to a lease that grants the right to possess and use property to another.
Lessor
A condition in which, because of new inventions and improvements, a capital asset can no longer be used to produce goods or services with a competitive advantage.
Obsolescence
Expenditures made to keep a capital asset in normal, good operating condition; treated as a revenue expenditure.
Repairs
Management's estimate of the amount that will be recovered at the end of a capital asset's useful life through a sale or as a trade-in allowance on the purchase of a new asset; also called residual or scrap value.
Salvage value
Symbol, name, phrase, or jingle identified with a company or service.
Trademark or trade name
The length of time in which a capital asset will be productively used in the operations of the business; also called service life.
Useful life
The nature of the transaction is the primary factor in establishing the original intention of the capital property.
True / False
False
The receipt of a government grant to acquire a capital property should be treated as a reduction of the adjusted cost base of the capital asset.
True / False
True
When the selling price is received over some future time period, the vendor may recognize the capital gain in direct proportion to the receipt of the proceeds of disposition.
True / False
False
It is easier to recognize a loss on a loan than on a share because it need only be established that the loan is uncollectible, whereas a shareholder must wait for bankruptcy or other specified conditions to occur.
True / False
True
When determining the adjusted cost base of identical properties, the weighted-average cost method is used.
True / False
True
