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.
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