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Glossary – Chapter 11

 

  • The process used to allocate the cost of an intangible asset to the accounting periods benefited
  • Expenditures that improve or increase the service potential of an asset even beyond its original new condition; such costs may be capitalized by increasing the asset's cost
  • Term used to describe additional monetary consideration that may accompany an exchange transaction
  • The quality of an exchange transaction such that it changes the future cash flow potential of the entity
  • The process used to allocate the cost of a natural resource asset to the accounting periods benefited
  • Trading one asset for another; to be booked at fair value if the transaction has commercial substance
  • When the carrying amount of an asset is not recoverable from its future cash flow
  • Long-term asset that lacks physical existence; contract rights, copyrights, patents, trademarks, etc.
  • Oil and gas reserves, mineral deposits, thermal energy sources, and standing timber are just a few examples of such assets that a firm may own
  • A restoration of an asset, at least partially, to its original condition; such costs may be capitalized by reducing accumulated depreciation
  • Not a capital expenditure; to be expensed as incurred