Question 1

Factors considered in determining an intangible asset's useful life include all of the following except ________.

Accepted Answer

A) legal provisions 
B) effects of technological advances 
C) contractual factors 
D) the amortization method 
A) legal provisions 
B) effects of technological advances 
C) contractual factors 
D) the amortization method

Question 2

The debit for a sales tax paid on the purchase of machinery would be a charge to ________.

Accepted Answer

A) accumulated depreciation for machinery 
B) a deferred liability account 
C) the machinery account 
D) miscellaneous tax expense 
A) accumulated depreciation for machinery 
B) a deferred liability account 
C) the machinery account 
D) miscellaneous tax expense

Question 3

A franchise grants a franchisor the right to conduct business under the name of the franchisee.

Accepted Answer

A) True 
 B)False

Question 4

Accumulated depreciation is a contra-expense account that represents total depreciation taken over the life of an asset.

Accepted Answer

A) True 
 B)False

Question 5

Depreciation is the systematic allocation of the cost of both tangible and intangible assets to expense over the asset's expected useful lives.

Accepted Answer

A) True 
 B)False

Question 6

A customer list may be classified as either a finite-life asset or an indefinite-life asset.

Accepted Answer

A) True 
 B)False

Question 7

During 2016,Dosekis Co.incurred average accumulated expenditures of $400,000 during construction of assets that qualified for capitalization of interest.The only debt outstanding during 2016 was a $500,000,10%,5-year note payable dated January 1,2013.What is the amount of interest that should be capitalized by Dosekis during 2016?

Accepted Answer

A) $10,000 
B) $40,000 
C) $50,000 
D) $80,000 
A) $10,000 
B) $40,000 
C) $50,000 
D) $80,000

Question 8

To determine the amount of interest to capitalize,the interest rate on specific borrowings to finance construction of the asset is multiplied times the total weighted-average accumulated expenditures.

Accepted Answer

A) True 
 B)False

Question 9

Candalibra Company incurred the following costs during the year ended December 31,2017:   What is the total amount to be classified and expensed as research and development in 2017?

Accepted Answer

A) $285,000 
B) $685,000 
C) $775,000 
D) $995,000 
A) $285,000 
B) $685,000 
C) $775,000 
D) $995,000

Question 10

Under what circumstances,if any,may R&D costs be capitalized instead of expensed?

Accepted Answer

IFRS allows firms to capitalize developm

Question 11

Capitalization is the process of recording an expenditure as an asset.

Accepted Answer

A) True 
 B)False

Question 12

Double-declining balance method charges twice the amount of straight-line depreciation expense each period.

Accepted Answer

A) True 
 B)False

Question 13

All intangible assets with material values are recognized on a company's balance sheet.

Accepted Answer

A) True 
 B)False

Question 14

The useful life of a patent is 20 years or less.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements about the double-declining-balance (DDB)method is true?

Accepted Answer

A) Companies that use the DDB method do not use partial-year depreciation. 
B) Companies that use the DDB method generally do not use scrap value to calculate current-year depreciation expense. 
C) Using the DDB method,the amount of depreciation expense varies from year to year depending on usage of the asset. 
D) All of the above statements are true. 
A) Companies that use the DDB method do not use partial-year depreciation. 
B) Companies that use the DDB method generally do not use scrap value to calculate current-year depreciation expense. 
C) Using the DDB method,the amount of depreciation expense varies from year to year depending on usage of the asset. 
D) All of the above statements are true.

Question 16

Fixed asset turnover ratio is computed as total sales revenue divided by ________.

Accepted Answer

A) average net fixed assets 
B) ending net fixed assets 
C) average gross fixed assets 
D) ending gross fixed assets 
A) average net fixed assets 
B) ending net fixed assets 
C) average gross fixed assets 
D) ending gross fixed assets

Question 17

A company will never recognize a gain on abandonment of a fixed asset.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not a method for determining depreciation expense for a specific asset?

Accepted Answer

A) net method 
B) units-of-output method 
C) declining-balance method 
D) straight-line method 
A) net method 
B) units-of-output method 
C) declining-balance method 
D) straight-line method

Question 19

IFRS requires companies to reconcile the historical cost and accumulated depreciation at the beginning of the period with amounts at the end of the period.

Accepted Answer

A) True 
 B)False

Question 20

Intangible assets are assets without physical substance or economic value.

Accepted Answer

A) True 
 B)False

Exam 12: Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Factors considered in determining an intangible asset's useful life include all of the following except ________.

The debit for a sales tax paid on the purchase of machinery would be a charge to ________.

A franchise grants a franchisor the right to conduct business under the name of the franchisee.

Accumulated depreciation is a contra-expense account that represents total depreciation taken over the life of an asset.

Depreciation is the systematic allocation of the cost of both tangible and intangible assets to expense over the asset's expected useful lives.

A customer list may be classified as either a finite-life asset or an indefinite-life asset.

To determine the amount of interest to capitalize,the interest rate on specific borrowings to finance construction of the asset is multiplied times the total weighted-average accumulated expenditures.

Candalibra Company incurred the following costs during the year ended December 31,2017: What is the total amount to be classified and expensed as research and development in 2017?

Under what circumstances,if any,may R&D costs be capitalized instead of expensed?

Capitalization is the process of recording an expenditure as an asset.

Double-declining balance method charges twice the amount of straight-line depreciation expense each period.

All intangible assets with material values are recognized on a company's balance sheet.

The useful life of a patent is 20 years or less.

Which of the following statements about the double-declining-balance (DDB)method is true?

Fixed asset turnover ratio is computed as total sales revenue divided by ________.

A company will never recognize a gain on abandonment of a fixed asset.

Which of the following is not a method for determining depreciation expense for a specific asset?

IFRS requires companies to reconcile the historical cost and accumulated depreciation at the beginning of the period with amounts at the end of the period.

Intangible assets are assets without physical substance or economic value.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Revenue Recognition

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

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