Addition An enlargement to the physical layout of a plant asset.

Amortization The periodic allocation of the cost of an intangible asset to the periods it benefits.

Asset impairment "Loss of revenue-generating potential of a long-lived asset before the end of its useful life; the difference between an asset’s carrying value and its fair value, as measured by the present value of the expected cash flows."






Betterment An improvement that does not add to the physical layout of a plant asset.

Brand name A registered name that can be used only by its owner to identify a product or service.






Capital expenditure "An expenditure for the purchase or expansion of a long-term asset, recorded in an asset account."

Carrying value "The unexpired part of the cost of an asset, not its market value. Also called book value."

Copyright "An exclusive right granted by the federal government to reproduce and sell literary, musical, and other artistic materials and computer programs for a period of the author’s life plus 70 years."

Customer list A list of customers or subscribers.






Declining-balance method An accelerated method of depreciation in which depreciation is computed by applying a fixed rate to the carrying value (the declining balance) of a tangible long-lived asset.

Depletion "The exhaustion of a natural resource through mining, cutting, pumping, or other extraction, and the way in which the cost is allocated."

Depreciable cost The cost of an asset less its residual value.

Depreciation The periodic allocation of the cost of a tangible long-lived asset (other than land and natural resources) over its estimated useful life.

Double-declining-balance method An accelerated method of depreciation in which a fixed rate equal to twice the straight-line percentage is applied to the carrying value (the declining balance) of a tangible long-lived asset.






Estimated useful life The total number of service units expected from a long-term asset.

Expenditure A payment or an obligation to make future payment for an asset or a service.

Extraordinary repairs Repairs that affect the estimated residual value or estimated useful life of an asset thereby increasing its carrying value.






Franchise The right or license to an exclusive territory or market.

Full-costing A method of accounting for the costs of exploring and developing oil and gas resources in which all costs are recorded as assets and depleted over the estimated life of the producing resources.






Goodwill The excess of the cost of a group of assets (usually a business) over the fair market value of the net assets if purchased individually.

Group depreciation The grouping of similar items to calculate depreciation.






Intangible assets Long-term assets with no physical substance whose value is based on rights or advantages accruing to the owner.






Leasehold A right to occupy land or buildings under a long-term rental contract.

Leasehold improvements Improvements to leased property that become the property of the lessor at the end of the lease.

License "The right to use a formula, technique, process, or design."

Long-term assets "Assets that have a useful life of more than one year, are acquired for use in the operation of a business, and are not intended for resale. Less commonly called fixed assets."






Modified Accelerated Cost Recovery System (MACRS) "A mandatory system of depreciation for income tax purposes, enacted by Congress in 1986, that requires a cost recovery allowance to be computed (1) on the unadjusted cost of property being recovered, and (2) over a period of years prescribed by the law for all property of similar types."






Natural resources Long-term assets purchased for the economic value that can be taken from the land and used up.

Noncompete covenant A contract limiting the rights of others to compete in a specific industry or line of business for a specified period.






Obsolescence "The process of becoming out of date, which is a factor in the limited useful life of tangible assets."

Ordinary repairs "Repairs necessary to maintain an asset in good operating condition, which are recorded as current period expenses."






Patent An exclusive right granted by the federal government for a period of 20 years to make a particular product or use a specific process or design.

Physical deterioration Limitations on the useful life of a depreciable asset resulting from use and from exposure to the elements.

Production method A method of depreciation that assumes depreciation is solely the result of use and that allocates depreciation based on the units of output or use during each period of an asset’s useful life.






Residual value "The estimated net scrap, salvage, or trade-in value of a tangible asset at the estimated date of disposal. Also called salvage value or disposal value."

Revenue expenditure "An expenditure related to repair, maintenance, and operation of a long-term asset, recorded by a debit to an expense account."






Straight-line method A method of depreciation that assumes depreciation depends only on the passage of time and that allocates an equal amount of depreciation to each accounting period in an asset’s useful life.

Successful efforts accounting A method of accounting for the costs of exploring and developing oil and gas resources in which successful exploration is recorded as an asset and depleted over the estimated life of the resource and all unsuccessful efforts are immediately written off as losses.






Tangible assets Long-term assets that have physical substance.

Technology "Capitalized costs associated with software developed for sale, lease, or internal use and amortized over the estimated economic life of the software."

Trademark A registered symbol or brand name that can be used only by its owner to identify a product or service.