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Definition of Equipment
The cost of equipment owned by the company.
Certificates issued by a trust that was formed to purchase an asset and lease it
Buildings and machines that firms use to produce output.
Assets such as land, buildings, machinery, and equipment that the business will use for several
This label is generally used in financial
This item is comprised of all types of fixed assets
A contra, or offset, account that is coupled
the use of equipment that has been programmed to sense certain conditions
The maximum volume of products or services that can be produced given limitations of space,
a) Physical capital: buildings, equipment, and any materials used to produce other goods and services in the future rather than being consumed today.
Expenditures Purchases of productive long-lived assets, in particular, items of property,
management’s plan for investments in longterm
Amount used during a particular period to acquire or improve long-term assets such as
Refers to investments by a business in long-term
The total amount of plant, equipment, and other physical capital.
When a cost is recorded originally as an increase
a cost related either to the long-term investment
Assets acquired to create money. May include plant, machinery and equipment, shares of another company etc.
Conditional sales contracts
Similar to equipment trust certificates except that the lender is either the
A technique by which a company recovers the high cost of its plant-and-equipment assets gradually during the number of years they’ll be used in the business. Depreciation can be physical, technological, or both.
The systematic and rational allocation of the cost of property, plant, and equipment
Amortization of fixed assets, such as plant and equipment, so as to allocate the cost over their depreciable life.
Depreciation tax shield
The value of the tax write-off on depreciation of plant and equipment.
Lease in which the lessor purchases new equipment from the manufacturer and leases it to the
A cross-border lease in which the disparate rules of the lessor's and lessee's countries let
A factor that has a direct impact on the incurring of a cost. For example, adding
Lease in which the service provided by the lessor to the lessee is limited to financing equipment. All other responsibilities related to the possession of equipment, such as maintenance, insurance, and taxes, are borne by the lessee. A financial lease is usually noncancellable and is fully paid out amortized over its term.
Long-lived property owned by a firm that is used by a firm in the production of its income.
An informal term that refers to the variety of long-term operating
Land, buildings, plant, equipment, and other assets acquired for carrying on the business of a company with a life exceeding one year. Normally expressed in financial accounts at cost, less accumulated depreciation.
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
Also called rental lease. Lease in which the lessor promises to maintain and insure the
Lease (Credit Insurance)
Contract granting use of real estate, equipment or other fixed assets for a specified period of time in exchange for payment. The owner or a leased property is the lessor and the user the lessee.
The consideration paid by the lessee to the lessor in exchange for the use of the leased equipment/property. Payments are usually made at fixed intervals.
Contract granting use of real estate, equipment, or other fixed assets for a specified time in exchange for payment, usually in the form of rent. The owner of the leased property is called the lessor, the user the lessee.
Value of property, equipment and other capital assets minus the depreciation. This is an
MACRS (Modified Accelerated Cost Recovery System)
A depreciation method created by the IRS under the Tax Reform Act of 1986. Companies must use it to depreciate all plant and equipment assets installed after December 31, 1986 (for tax purposes).
mark to market
Refers to the accounting method that records increases
Short-term, cancelable lease. A type of lease in which the period of contract is less than the
the number of total units that could be
Identifiable assets, such as buildings, equipment, patents, and trademarks, as distinguished from a
RETURN ON INVESTMENT (ROI)
In its most basic form, the rate of return equals net income divided by the amount of money invested. It can be applied to a particular product or piece of equipment, or to a business as a whole.
An arrangement whereby a firm leases its own equipment, such as IBM leasing its own
Lease accounting used by a manufacturer who is also a lessor. Up-front gross
Scrap value of plant and equipment.
The amount management estimates a piece of equipment will be worth at the end of its useful life, either as a trade-in or if it were sold for scrap.
The time required to make ready a machine or process for production, e.g. changing equipment
the direct or indirect cost of getting equipment
The cost of transportation equipment owned by the company.
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