Common terms associated with long-term assets follow.
a. Tangible assets g. Depreciation
b. Natural resources h. Depletion
c. Intangible assets i. Amortization
d. Additions j. Revenue expenditure
e. Betterments
f. Extraordinary repair
REQUIRED
I. For each of the statements that follow, identify the term with which it is associated. (If two terms apply, choose the one that is most closely associated.)
1. Periodic cost associated with intangible assets.
2. Cost of constructing a new wing on a building.
3. A group of assets encompassing property, plant, and equipment.
4. Cost associated with enhancing a building but not expanding it.
5. Periodic cost associated with tangible assets.
6. A group of assets that gain their value from contracts or rights.
7. Cost of normal repairs to a building.
8. Assets whose value derives from what can be extracted from them.
9. Periodic cost associated with natural resources.
10. Cost of a repair that extends the useful life of a building.
II. Accounting Connection- Assuming the company uses cash for all its expenditures, which of the terms listed above would you expect to see on the income statement? Which ones would not result in an outlay of cash?