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23 Cards in this Set
- Front
- Back
Natural Resources |
oil, gas deposits, timber tracts, and mineral deposits
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Intangible assets |
Lack physical substance and the extent and timing of their future benefits typically are highly uncertain; goodwill, trademarks, franchises, patents, copyrights |
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Property Plant and Equipment(PPE) |
land, buildings, equipment, machinery, furniture, autos, and trucks |
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Land improvements |
Costs are capitalized and depreciated; parking losts, driveways, private roads, fences, lawn and garden sprinkler systems |
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Natural Resources |
When bought from another company, valuation is simply purchase price plus any other costs necessary to bring it to condition and location for use. If developed, initial valuation: 1. acquisition costs 2. exploration costs 3. development costs 4. restoration costs |
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acquisition costs |
The amounts paid to acquire the rights to explore for undiscovered natural resources or to extract proven natural resources |
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Exploration costs |
Expenditures such as drilling a well, excavating a mine, or any other costs associated with searching for natural resources. |
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Development Costs |
Incurred after the resource has been discovered but before production begins, which includes costs such as expenditures for tunnels, wells, and shafts. |
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Restoration costs |
Costs to restore land or other property to its original condition after the natural resource has been extracted. |
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Asset Retirement obligations(AROs) |
Measured at fair value and is recognized as a liability and corresponding increase in asset valuation. |
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Expected Cash flow approach |
Cash flows are adjusted, not the discount rate for the uncertainty or risk of cash flows; incorporates specific probabilities of cash flows into analysis discount rate is equal to the credit-adjusted risk free rate; the higher a company's credit risk, the higher the discount rate. |
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Accretion expense |
Difference between asset retirement obligation and the probability-weighted expected cash outflow; an additional expense that accrues as an operating expense over the excavation period. |
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Patent |
Exclusive right to manufacture a product or to use a process. |
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copyright |
exclusive right of protection given to a creator of published work, such as a song, film, painting, photograph, or book. |
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Trademark(tradename) |
Exclusive right to display an emblem, symbol, or slogan, word, that distinctively identifies a company, a product, or a service. |
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Franchise |
Is a contractual arrangement under which the franchisor grants the franchisee the exclusive right to use the franchisor's trademark and may include product and formula rights, within a geographical area, usually for a specified period of time. |
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Capital budgeting |
Decisions related to PPE and intangible asset acquisition, which could influence a company's performance over many years. Requires management to forecast all future net cash flows(cash inflows minus cash outflows) generated by the asset(s). Cash flows are used in a model, such as the NPV model(which compares the present value of future net cash flows with the required initial acquisition cost of the assets)to determine if the future cash flows are sufficient to warrant the capital expenditure. |
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Fixed Asset Turnover Ratio |
Net Sales/Average Fixed Assets |
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Specific Interest method |
f |
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Weighted-average method |
Using the weighted-average rate of all interest bearing debt, including construction loans to determine capitalizable interest. |
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Start-up costs |
Costs incurred whenever a company introduces a new product or service, or commences business in a new territory or with a new customer. Includes organization costs |
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Organization costs |
Costs related to organizing a new entity, such as legal fees, and state filling fees to incorporate. |
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Technological feasibility |
GAAP requires that R&D be recorded as an expense, until technological feasibility has been established, for costs they incur to develop or purchase computer software to be sold, leased, or otherwise marketed. |