Tangible Assets
This tangible asset is never depreciated because it is not “used up"
Land
This intangible gives exclusive rights to manufacture a product for 20 years.
Patent
The general rule: assets are recorded at original cost plus these
all costs necessary to get the asset ready for use
Depreciation is this type of process, not a valuation process.
allocation
The term for allocating the cost of intangible assets.
amortization
Costs like clearing, leveling, and removing old buildings are added to this asset’s cost.
land
This intangible protects creative works for the life of the creator plus 70 years.
Copyright
Cash received from selling salvaged materials does this to land cost.
Reduces it
The formula for depreciable cost.
Cost - Residual Value
Most companies use this method to amortize intangibles
Straight-line
Parking lots, fences, and lighting systems fall under this category
Land Improvements
A word, slogan, or symbol that identifies a company.
Trademark
When multiple assets are purchased together, this method allocates the purchase price.
Relative fair value method
The most commonly used depreciation method for financial reporting.
Straight-line
These intangibles are not amortized because they have indefinite lives.
goodwill and indefinite-life trademarks
This asset category includes machinery, computers, and vehicles.
Equipmemnt
The only intangible is recorded only when one company buys another.
Goodwill
Annual insurance and annual property taxes on equipment are treated this way.
Expensed as incurred
The depreciation method that allocates cost based on usage.
Activity-based depreciation
Legal defense costs of a patent are capitalized only if this occurs.
The defense is successful
Timber, oil, and natural gas fall under this category of long‑term assets.
Natural Resources
These intangible costs are always expensed because future benefits are too uncertain.
Research and Development
These expenditures are capitalized only if they increase future benefits.
Major repairs, additions, or improvements
Under double‑declining balance, depreciation in the final year equals this.
the amount needed to reach residual value
The amortization period for a patent is based on this.