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Retirement of Plant Assets (No Proceeds) definitions Flashcards

Retirement of Plant Assets (No Proceeds) definitions
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  • Plant Asset
    Long-term tangible resource used in operations, such as equipment or machinery, subject to depreciation over its useful life.
  • Depreciation
    Systematic allocation of an asset's cost over its estimated useful life, reflecting wear, usage, or obsolescence.
  • Accumulated Depreciation
    Total amount of depreciation expense recorded against an asset since its acquisition, shown as a contra-asset on the balance sheet.
  • Net Book Value
    Asset's original cost minus accumulated depreciation, representing its carrying amount on the books at a given time.
  • Salvage Value
    Estimated residual amount expected to be recovered at the end of an asset's useful life, after full depreciation.
  • Useful Life
    Estimated period over which an asset is expected to be productive and contribute to company operations.
  • Straight Line Method
    Depreciation approach allocating equal expense amounts to each year of an asset's useful life.
  • Disposal
    Process of removing an asset from company records, typically when it is no longer in use or has no future economic benefit.
  • Retirement
    Permanent removal of a plant asset from service and the accounting records, often with no proceeds received.
  • Loss on Disposal
    Amount recorded when an asset's net book value exceeds any proceeds received, reducing net income and equity.
  • Equipment Account
    Ledger account tracking the historical cost of machinery or other plant assets owned by a company.
  • Journal Entry
    Formal accounting record documenting the removal of an asset and related accounts during disposal or retirement.
  • Contra Account
    Account used to offset a related asset account, such as accumulated depreciation reducing the equipment account balance.
  • Income Statement
    Financial report where losses from asset disposals are recorded, impacting net income and ultimately equity.
  • Equity
    Residual interest in company assets after liabilities, affected by losses recognized during asset retirement.