Acquiring Assets
These three types of property, plant, and equipment have physical substance and are considered tangible assets
What are land, buildings, and equipment?
This is the formula for calculating annual depreciation expense using the straight-line method.
What is (Asset Cost − Residual Value) ÷ Service Life?
These are defined as obligations that a company must pay or satisfy within one year from the balance sheet date.
What are current liabilities?
This is calculated by multiplying the Face Value by the Annual Interest Rate and the Fraction of the Year.
What is interest?
These two payroll taxes, abbreviated as FUTA and SUTA, are paid solely by the employer.
What are federal and state unemployment taxes?
Besides the purchase price, these types of expenditures are capitalized as part of an asset's cost to include everything necessary to get it ready for use.
What are costs like sales tax, shipping, and installation?
This is the only tangible long-term asset that is not depreciated because its service life is considered to be indefinite.
What is land?
This current liability represents cash received in advance from a customer for products or services to be provided in the future.
What is deferred revenue?
This is the debit side of the journal entry made on the day a company first borrows money by signing a note.
What is cash?
These taxes are withheld from the employee's paycheck and also matched by the employer, effectively doubling the amount paid.
What are FICA (Social Security and Medicare) taxes?
This type of tax, along with clearing and leveling the land, is added to the Land account during acquisition.
What are back property taxes?
This is the financial result recorded when a company sells a piece of equipment for an amount greater than its current book value.
What is a gain (on sale)?
These amounts collected from customers by a seller are a current liability payable to the government.
What is sales tax payable?
According to accrual accounting, this is the timeframe in which interest expense must be recorded in the financial statements.
What is the period in which it is incurred?
This type of liability is recorded in the accounting records only if a loss is probable and the amount is reasonably estimable.
What is a contingent liability?
This is the accounting process used when a company buys multiple assets for a single price, allocating the cost based on relative fair values.
What is a basket purchase?
In the two-step impairment process, this is the specific test to determine if an asset's value is impaired.
What is checking if future cash flows are less than book value?
This type of short-term obligation involves a large corporation borrowing money directly from another company rather than a bank, often featuring a lower interest rate.
What is commercial paper?
If a note is issued on September 1, this is the number of months of interest that must be accrued by December 31.
What is four months?
This common type of contingency is recorded as an expense in the same period the related product is sold.
What is a warranty?
During the process of getting land ready for its intended use, any cash received from selling these items must be subtracted from the asset's total capitalized cost.
What are salvaged building materials?
This method of disposal occurs when a long-term asset is no longer useful and is removed from the books without being sold.
What is retirement?
When a customer uses a previously purchased gift card, this specific account is debited to recognize the sales revenue.
What is deferred revenue?
When a note is repaid at maturity, this account is debited for the interest that was accrued in a previous reporting period.
What is interest payable?
These specific amounts, which are subtracted from an employee's gross pay, are recorded as liabilities for the company but never appear as a separate payroll tax expense on the employer’s income statement.
What are employee income taxes?