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

Gabraile Company acquired Itsy Inc.for a price that was substantially less than the fair value of the identifiable asset acquired.The difference between the fair value of the assets and the bargain purchase price is ________.

Under IFRS,there is no need to use the weighted-average accumulated expenditures to determine capitalizable interest.

Goodwill is the difference between fair value and book value for all assets a company owns.

Adding new offices to an existing office building would qualify as a capital expenditure.

A production machine which cost $2,200,000 is acquired on October 1,2016.Its estimated residual value is $200,000 and its expected life is 10 years or about 80,000 operating hours.During 2016,the machine was used to produce products for 3,000 operating hours during 2016 and 8,100 operating hours during 2017.Lorny does not use the half-year convention for depreciating any assets. Calculate depreciation expense for 2015 and 2016 by each of the following methods: (a)Straight-line method (b)Double-declining balance method (c)Units-of-output method

Depreciation is the systematic and rational allocation of the cost of a finite-life intangible asset to expense.

Bakiponi Corp.provides the following data from its recent financial statements: What is the fixed asset turnover ratio for 2017?

The cost of land does not include ________.

Which of the following costs are capitalized as the asset value of an internally-developed patent?

What is meant by a bargain purchase and how is it recorded?

During its first year of operation,Dovery Company incurred $345,000 of research costs undertaken with the prospect of gaining new technical understanding about a new nanotechnology procedure.An additional $515,000 was incurred to develop a production process to use that new technology to produce a new lubricant product.Under IFRS,which of the following is the appropriate accounting for these costs?

IFRS permits the use of full-cost accounting to allocate a proportionate share of indirect costs to a constructed asset.

Companies are required to disclose the amount of depreciation expense for each major class of fixed assets.

Rinky-Dink Inc.incurred research and development costs of $200,000 and legal fees of $100,000 to acquire a patent.The patent has a legal life of 20 years and a useful life of 10 years.What amount should the company record as patent amortization expense in the first year?

A cost that is recorded as an asset is ________.

When land is purchased and landscaping improvements are made,the total purchase price plus the improvement cost is the total capitalized value of the land.

The cost of land includes the purchase price and land improvement costs.

The average remaining life of a company's assets is computed as the balance of ending net fixed assets divided by depreciation expense.

An intangible asset with an estimated useful life of 30 years was acquired on January 1,2006,for $540,000.On January 1,2016,a review was made of intangible assets and their expected service lives.It was determined that this asset had an estimated useful life of 30 more years from the date of the review.What is the amount of amortization for this intangible in 2016?

Kow-Pow Company purchased a limited-life intangible asset for $150,000 on May 1,2015.It has a useful life of 10 years.What total amount of amortization expense should have been recorded on the intangible asset by December 31,2017?