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Accounting for Fixed & Intangible Assets Flashcards

Accounting for Fixed & Intangible Assets Flashcards
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Goodwill

In accounting, this represents the money paid above asset book value when one company purchases another.

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Fair Value

This is the market price of an item, business, or intangible asset.

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You bought a patent for your new soda company for $50,000. It is good for 25 years. What will be your cost of amortization for the first year?

50,000 / 25 = 2,000 in amortization per year.

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Finding Annual Amortization: Formula

Initial Cost of the Asset / Years of Remaining Useful Life = Yearly Amortization

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Amortization

You use this process to find the expenses related to intangible assets over the course of their useful lifespan.

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11 cards in set

Flashcard Content Overview

This set of flashcards was designed to help you review the process of determining amortization for an intangible object. You can focus on the definitions of fixed assets and intangible assets. These cards also cover fair value and book value. You'll be able to consider the function of goodwill in accounting as well as the process of writing an asset off.

Additional Study

Keep building up your understanding of these accounting concepts by checking out some of these engaging lessons:

Studying with Flashcards

Quickly get ready for upcoming quizzes or exams by checking out this set of flashcards. You can quiz yourself on formulas and practice solving example problems with these cards.

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Amortization

You use this process to find the expenses related to intangible assets over the course of their useful lifespan.

Finding Annual Amortization: Formula

Initial Cost of the Asset / Years of Remaining Useful Life = Yearly Amortization

You bought a patent for your new soda company for $50,000. It is good for 25 years. What will be your cost of amortization for the first year?

50,000 / 25 = 2,000 in amortization per year.

Fair Value

This is the market price of an item, business, or intangible asset.

Goodwill

In accounting, this represents the money paid above asset book value when one company purchases another.

Your company bought another company for $100,000. The company you purchased only has assets with a book value of $65,000. What was your company's goodwill in this transaction?

100,000 - 65,000 = 35,000.

Fixed Asset

These items are tangible and owned by a business over a long period of time. Businesses are significantly affected by them. Examples include buildings, machines, and land.

Intangible Asset

A type of asset that lacks any physical form. These cannot be touched but they still have value. Copyrights, patents, and trademarks are all examples.

Recording a Write-Off: Steps

Debit total accumulated depreciation

Debit your write off loss

Credit written-off object or building for the total initial cost

Book Value

Accountants consider this to be the historical cost of an asset minus any depreciation that has accumulated over time.

Write-Off

A reduction of something's book value. This is allowed by accounting standards when a fixed asset suffers permanent damage to its value.

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