Raysion Company, a public corporation, owns equipment for which the following year-end information is available: \[\begin{array} { | l | r | } \hline \text { Carrying amount } & \$ 59,000 \\ \hline \text { Recoverable amount } & \$ 52,000 \\ \hline & \\ \hline \end{array}\] Which of the following best describes the proper accounting treatment for Magenta's equipment?

A) It is impaired, a loss must be recognized, and may not be reversed in future periods. B) It is impaired, a loss must be recognized, but may be reversed in future periods. C) The equipment is not impaired. D) It is not impaired and a loss should not be recognized Recoverable amount is lower than carrying amount therefore the asset must be written down, but may be reversed in the future. A) It is impaired, a loss must be recognized, and may not be reversed in future periods. B) It is impaired, a loss must be recognized, but may be reversed in future periods. C) The equipment is not impaired. D) It is not impaired and a loss should not be recognized Recoverable amount is lower than carrying amount therefore the asset must be written down, but may be reversed in the future.

Hershon Inc. acquires a new machine. It is comprised of 2 different identifiable components the P922 and the B14. Each of these components is expected to be overhauled at different intervals. The acquisition cost of the entire machine is as follows: $\begin{array}{|l|r|} \hline \text { Component P922: } & \$ 198,000 \\ \hline \text { Component R14: } & \$ 240,000 \\ \hline \text { Total } & \$ 438,000 \\ \hline \end{array}$ Component P922 is expected to have a useful life of five years and a residual value of $\$ 20,000$ before the first major overhaul is required. Component R14 is expected to have a useful life of seven years and a residual value of $\$ 15,000$ before its first overhaul. -Assuming, the double declining balance is used, what will be the net book value of component R14 at the end of year one?

A) $205,321 B) $179,455 C) $171,429 D) $140,000 A) $205,321 B) $179,455 C) $171,429 D) $140,000

Hilman Company purchased a truck on January 1, 20X1, at a cost of $34,000. The company estimated that the truck would have a useful life of four years and a residual value of $4,000. Required: 1. Complete the following table: \[\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Year Depreciation } \\ \text { Straight-line method } \end{array} & \begin{array} { l } \text {Depreciation } \\ \text { Declining balance method } \\ 200 \% \text { acceleration rate } \end{array} \\ \hline 20 X 1 & & \\ \hline 20 X 2 & & \\ \hline 20 X 3 & & \\ \hline 20X4 & & \\ \hline \end{array}\] 2. Which of the two methods in part 1 would result in: a. Lower profit in 20X1? ___________ b. Lower profit in 20X4? ___________

Please review the following information

Exam 8: Receivables, Bad Debt Expense, and Interest Revenue

Raysion Company, a public corporation, owns equipment for which the following year-end information is available: Carrying amount \ 59,000 Recoverable amount \ 52,000 Which of the following best describes the proper accounting treatment for Magenta's equipment?

(Multiple Choice)

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Question 81

A tangible asset must be fully depreciated before it can be removed from the books.

(True/False)

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Question 82

The cost principle should be applied in recording the acquisition of natural resources and intangible assets.

(True/False)

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Question 83

Acquisition cost of property, plant, and equipment is the cash-equivalent purchase price plus all reasonable and necessary expenditures made to acquire and prepare the asset for its intended use.

(True/False)

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Question 84

The cost of a major addition to an operational asset should be recorded as an asset and depreciated over its useful life.

(True/False)

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Question 85

If a second-hand machine is purchased for operational use in a business, all renovation and repair costs on the used machine incurred by the purchaser prior to its operational use should be excluded from the cost of the asset.

(True/False)

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Question 86

Research costs are an example of intangible assets.

(True/False)

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Question 87

A corporation may choose to list its operational assets in the current assets section of the statement of ﬁnancial position.

(True/False)

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Question 88

Hershon Inc. acquires a new machine. It is comprised of 2 different identifiable components the P922 and the B14. Each of these components is expected to be overhauled at different intervals. The acquisition cost of the entire machine is as follows: Component P922: \ 198,000 Component R14: \ 240,000 Total \ 438,000 Component P922 is expected to have a useful life of five years and a residual value of $\$ 20,000$ before the first major overhaul is required. Component R14 is expected to have a useful life of seven years and a residual value of $\$ 15,000$ before its first overhaul. -Assuming, the double declining balance is used, what will be the net book value of component R14 at the end of year one?

(Multiple Choice)

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Question 89

How should an expenditure for an ordinary repair to factory equipment be recorded?

(Multiple Choice)

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Question 90

A company purchased equipment for $800,000 and has depreciated it for the past 5 years Its original life was estimated to be 10 years with a $200,000 residual value. However, the equipment's utility to the company has since declined and they expect it to generate a net cash ﬂow over the remaining years of $200,000 from its operation. If the asset has been impaired, how much will be recorded as a loss in the current year?

(Essay)

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Question 91

An impairment loss is credited to accumulated depreciation.

(True/False)

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Question 92

Dionne Developments. owns a piece of land it had purchased in 20X4 for $600,000. When they started to develop the land in 20X5, they discovered that there were environmental problems with the land. It is now estimated to be worth only $250,000. Which of the following is the correct way to account for this?

(Multiple Choice)

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Question 93

On January 1, 20X2, Walton Corporation made a basket purchase of land, a building, and furniture and fixtures. The total purchase price was $313,000. Walton also paid $3,000 for title fees and $4,000 in legal fees related to the purchase. Appraised values at the time of the purchase were: land $70,000; building, $227,500; and furniture and ?xtures, $52,500. Required: 1. Make the journal entry to record the purchase of the assets, with cost based on appraised values. 2. The building had an estimated useful life of 20 years and residual value of $30,000. Make the journal entry to record depreciation for 20X2 using the declining-balance method and a 150% acceleration rate. 3. The furniture and fixtures are expected to have useful lives of 5 years and no residual value . What is the amount of depreciation on the furniture and fixtures for 20X2, assuming that Walton uses the straight-line method of depreciation for such assets? 4. Based on the information in part 3, what is the book value of the furniture and fixtures at the end of 20X2? 5. Under IFRS, would W alton be able to use the declining-balance method for the building and the straight-line method for furniture and fixtures? Discuss briefly.

(Essay)

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Question 94

When events or changes in circumstances reduce the estimated future cash ﬂows of long-lived assets below their book value, the book values should be written down (by recording a loss) to the fair value of the assets.

(True/False)

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Question 95

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours. Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be

(Multiple Choice)

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Question 96

Eastern Fisheries Co. purchased equipment on January 1, 20X1 for $22,500. The equipment had an estimated useful life of 10 years and an estimated residual value of $2,500. The company uses double-declining-balance depreciation. -Assuming Eastern uses straight-line depreciation, what would be the book value of the machine ten years later, on December 31

(Multiple Choice)

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Question 97

Hilman Company purchased a truck on January 1, 20X1, at a cost of $34,000. The company estimated that the truck would have a useful life of four years and a residual value of $4,000. Required: 1. Complete the following table: Year Depreciation Straight-line method Depreciation Declining balance method 200\% acceleration rate 20X1 20X2 20X3 20X4 2. Which of the two methods in part 1 would result in: a. Lower profit in 20X1? _ b. Lower profit in 20X4? _

(Essay)

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Question 98

Operational assets do not include which of the following kinds of assets?

(Multiple Choice)

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Question 99

Which of the following costs would normally not be included in the cost of equipment?

(Multiple Choice)

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Question 100

Showing 81 - 100 of 188

Raysion Company, a public corporation, owns equipment for which the following year-end information is available: Carrying amount \ 59,000 Recoverable amount \ 52,000 Which of the following best describes the proper accounting treatment for Magenta's equipment?

A tangible asset must be fully depreciated before it can be removed from the books.

The cost principle should be applied in recording the acquisition of natural resources and intangible assets.

Acquisition cost of property, plant, and equipment is the cash-equivalent purchase price plus all reasonable and necessary expenditures made to acquire and prepare the asset for its intended use.

The cost of a major addition to an operational asset should be recorded as an asset and depreciated over its useful life.

If a second-hand machine is purchased for operational use in a business, all renovation and repair costs on the used machine incurred by the purchaser prior to its operational use should be excluded from the cost of the asset.

Research costs are an example of intangible assets.

A corporation may choose to list its operational assets in the current assets section of the statement of ﬁnancial position.

How should an expenditure for an ordinary repair to factory equipment be recorded?

An impairment loss is credited to accumulated depreciation.

When events or changes in circumstances reduce the estimated future cash ﬂows of long-lived assets below their book value, the book values should be written down (by recording a loss) to the fair value of the assets.

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours. Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be

Operational assets do not include which of the following kinds of assets?

Which of the following costs would normally not be included in the cost of equipment?

Business Decisions and Financial Accounting

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Adjustments, Financial Statements, and Financial Results

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Merchandising Operations and the Multistep Income Statement

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