Question 1

Discuss the distinction between capital and revenue expenditures for long-term assets.

Accepted Answer

In most cases,the decision to expense or capitalize plant and equipment expenditures subsequent to acquisition is fairly simple and is based on whether the cost incurred is "ordinary and necessary" or "prolongs future life." Expenditures in the first category are expensed while those in the second category are capitalized.

Question 2

A principal objection to the straight-line method of depreciation is that it

Accepted Answer

A) Provides for the declining productivity of an aging asset 
B) Ignores variations in the rate of asset use 
C) Tends to result in a constant rate of return on a diminishing investment base 
D) Gives smaller periodic write-offs than decreasing charge methods 
A) Provides for the declining productivity of an aging asset 
B) Ignores variations in the rate of asset use 
C) Tends to result in a constant rate of return on a diminishing investment base 
D) Gives smaller periodic write-offs than decreasing charge methods B

Question 3

Describe how cost is assigned to individual assets when they are acquired in a lump-sum group purchase.

Accepted Answer

When a group of assets is acquired for a lump-sum purchase price,such as the purchase of land,buildings,and equipment for a single purchase price,the total acquisition cost must be allocated to the individual assets so that an appropriate amount of cost can be charged to expense as the service potential of the individual assets expires.The most frequent,though arbitrary,solution to this allocation problem has been to assign the acquisition cost to the various assets on the basis of the weighted average of their respective appraisal values.Where appraisal values are not available,the cost assignment may be based on the relative carrying values on the seller's books.

Question 4

As generally used in accounting,depreciation

Accepted Answer

A) Is a process of asset valuation for balance sheet purposes 
B) Applies only to long-lived intangible assets 
C) Is used to indicate a decline in market value of a long-lived asset 
D) Is an accounting process that allocates long-lived asset cost to accounting periods 
A) Is a process of asset valuation for balance sheet purposes 
B) Applies only to long-lived intangible assets 
C) Is used to indicate a decline in market value of a long-lived asset 
D) Is an accounting process that allocates long-lived asset cost to accounting periods

Question 5

How did SFAS No.116,now FASB ASC 605-10-15-3,change the accounting for donated assets?

Accepted Answer

Previous practice required donated asset

Question 6

When a closely held corporation issues preferred stock for land,the land should be recorded at the

Accepted Answer

A) Total par value of the stock issued 
B) Total book value of the stock issued 
C) Appraised value of the land 
D) Total liquidating value of the stock issued 
A) Total par value of the stock issued 
B) Total book value of the stock issued 
C) Appraised value of the land 
D) Total liquidating value of the stock issued

Question 7

Discuss accounting for the impairment of assets as outlined in IAS No.36.

Accepted Answer

The purpose of IAS No.36 is to make sure

Question 8

A method that excludes salvage value from the base for the depreciation calculation is

Accepted Answer

A) Straight line 
B) Sum-of-the-year's digits 
C) Double-declining balance 
D) Productive output 
A) Straight line 
B) Sum-of-the-year's digits 
C) Double-declining balance 
D) Productive output

Question 9

Discuss the issue of allocating interest to self construction projects.That is,when should interest be allocated and how much interest should be allocated?

Accepted Answer

During the construction period,extra fin

Question 10

The theoretical justification for reporting depreciation expense is

Accepted Answer

A) Depreciation expense represents a decrease in the value of the asset that has occurred during the accounting period. 
B) Depreciation expense represents the impairment of the asset that has occurred during the accounting period. 
C) Depreciation expense represents the unrealized loss that has been incurred by using the asset during the accounting period. 
D) Depreciation expense represents the allocation of the historical cost of the asset that has been applied to the accounting period. 
A) Depreciation expense represents a decrease in the value of the asset that has occurred during the accounting period. 
B) Depreciation expense represents the impairment of the asset that has occurred during the accounting period. 
C) Depreciation expense represents the unrealized loss that has been incurred by using the asset during the accounting period. 
D) Depreciation expense represents the allocation of the historical cost of the asset that has been applied to the accounting period.

Question 11

Lyle,Inc.,purchased certain plant assets under a deferred payment contract on December 31,2014.The agreement was to pay $20,000 at the time of purchase and $20,000 at the end of each of the next five years.The plant assets should be valued at

Accepted Answer

A) The present value of a $20,000 ordinary annuity for five years 
B) $120,000 
C) $120,000 less imputed interest 
D) $120,000 plus imputed interest 
A) The present value of a $20,000 ordinary annuity for five years 
B) $120,000 
C) $120,000 less imputed interest 
D) $120,000 plus imputed interest

Question 12

A company using the group depreciation method for its delivery trucks retired one of its delivery trucks due to damage before the average service life of the group was reached.An insurance recovery was received.The net book value of these group asset accounts would be decreased by the

Accepted Answer

A) Original cost of the truck 
B) Original cost of the truck less the insurance recovery received 
C) Original cost of the truck less depreciation on the truck to the date of retirement 
D) Insurance recovery received 
A) Original cost of the truck 
B) Original cost of the truck less the insurance recovery received 
C) Original cost of the truck less depreciation on the truck to the date of retirement 
D) Insurance recovery received

Question 13

When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant,the cost incurred to tear down the building should be

Accepted Answer

A) Expensed as incurred 
B) Added to the cost of the plant 
C) Added to the cost of the land 
D) Amortized over the estimated time period between the tearing down of the building and the completion of the plant 
A) Expensed as incurred 
B) Added to the cost of the plant 
C) Added to the cost of the land 
D) Amortized over the estimated time period between the tearing down of the building and the completion of the plant

Question 14

How does IAS no.23 define borrowing costs?

Accepted Answer

IAS No.23 defines borrowing costs as int

Question 15

For income statement purposes,depreciation is a variable expense if the depreciation method used for book purposes is

Accepted Answer

A) Units of production 
B) Straight line 
C) Sum-of-the-year's-digits 
D) Declining balance 
A) Units of production 
B) Straight line 
C) Sum-of-the-year's-digits 
D) Declining balance

Question 16

A machine with a four-year estimated useful life and an estimated 15 percent salvage value was acquired on January 1,2012.On December 31,2014,the accumulated depreciation using the sum-of-year's digits method would be

Accepted Answer

A) Original cost less salvage value)multiplied by 9/10 
B) Original cost multiplied by 9/10 
C) Original cost multiplied by 9/10 less total salvage value 
D) Original cost less salvage value)multiplied by 1/10 
A) Original cost less salvage value)multiplied by 9/10 
B) Original cost multiplied by 9/10 
C) Original cost multiplied by 9/10 less total salvage value 
D) Original cost less salvage value)multiplied by 1/10

Question 17

Explain the concept of commercial substance originally outlined in SFAS No.158.

Accepted Answer

A nonmonetary exchange has commercial su

Question 18

Discuss the guidelines for accounting for property,plant and equipment outlined in IAS No.16.

Accepted Answer

IAS No.16 indicates that items of proper

Question 19

Property,plant,and equipment are conventionally presented n the balance sheet at

Accepted Answer

A) Replacement cost less accumulated depreciation 
B) Historical cost less salvage value 
C) Original cost adjusted for general price level changes 
D) Acquisition cost less depreciated portion thereof 
A) Replacement cost less accumulated depreciation 
B) Historical cost less salvage value 
C) Original cost adjusted for general price level changes 
D) Acquisition cost less depreciated portion thereof

Discuss the distinction between capital and revenue expenditures for long-term assets.

A principal objection to the straight-line method of depreciation is that it

Describe how cost is assigned to individual assets when they are acquired in a lump-sum group purchase.

As generally used in accounting,depreciation

How did SFAS No.116,now FASB ASC 605-10-15-3,change the accounting for donated assets?

When a closely held corporation issues preferred stock for land,the land should be recorded at the

Discuss accounting for the impairment of assets as outlined in IAS No.36.

A method that excludes salvage value from the base for the depreciation calculation is

Discuss the issue of allocating interest to self construction projects.That is,when should interest be allocated and how much interest should be allocated?

The theoretical justification for reporting depreciation expense is

Lyle,Inc.,purchased certain plant assets under a deferred payment contract on December 31,2014.The agreement was to pay $20,000 at the time of purchase and $20,000 at the end of each of the next five years.The plant assets should be valued at

A company using the group depreciation method for its delivery trucks retired one of its delivery trucks due to damage before the average service life of the group was reached.An insurance recovery was received.The net book value of these group asset accounts would be decreased by the

When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant,the cost incurred to tear down the building should be

How does IAS no.23 define borrowing costs?

For income statement purposes,depreciation is a variable expense if the depreciation method used for book purposes is

A machine with a four-year estimated useful life and an estimated 15 percent salvage value was acquired on January 1,2012.On December 31,2014,the accumulated depreciation using the sum-of-year's digits method would be

Explain the concept of commercial substance originally outlined in SFAS No.158.

Discuss the guidelines for accounting for property,plant and equipment outlined in IAS No.16.

Property,plant,and equipment are conventionally presented n the balance sheet at

The Development of Accounting Theory

The Pursuit of the Conceptual Framework

International Accounting

Research Methodology and Theories on the Uses of Accounting Information

Income Concepts

Financial Statement I: the Income Statement

Financial Statements Ii: the Balance Sheet and the Statement of Cash Flows

Working Capital

Long-Term Assets Ii: Investments and Intangibles

Long-Term Liabilities

Accounting for Income Taxes

Leases

Pensions and Other Postretirement Benefits

Equity

Accounting for Multiple Entities

Financial Reporting Disclosure Requirement and Ethical Responsibilities

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Exam 9: Long-Term Assets I: Property, Plant, and Equipment

Discuss the distinction between capital and revenue expenditures for long-term assets.

A principal objection to the straight-line method of depreciation is that it

Describe how cost is assigned to individual assets when they are acquired in a lump-sum group purchase.

As generally used in accounting,depreciation

How did SFAS No.116,now FASB ASC 605-10-15-3,change the accounting for donated assets?

When a closely held corporation issues preferred stock for land,the land should be recorded at the

Discuss accounting for the impairment of assets as outlined in IAS No.36.

A method that excludes salvage value from the base for the depreciation calculation is

Discuss the issue of allocating interest to self construction projects.That is,when should interest be allocated and how much interest should be allocated?

The theoretical justification for reporting depreciation expense is

Lyle,Inc.,purchased certain plant assets under a deferred payment contract on December 31,2014.The agreement was to pay $20,000 at the time of purchase and $20,000 at the end of each of the next five years.The plant assets should be valued at

A company using the group depreciation method for its delivery trucks retired one of its delivery trucks due to damage before the average service life of the group was reached.An insurance recovery was received.The net book value of these group asset accounts would be decreased by the

When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant,the cost incurred to tear down the building should be

How does IAS no.23 define borrowing costs?

For income statement purposes,depreciation is a variable expense if the depreciation method used for book purposes is

A machine with a four-year estimated useful life and an estimated 15 percent salvage value was acquired on January 1,2012.On December 31,2014,the accumulated depreciation using the sum-of-year's digits method would be

Explain the concept of commercial substance originally outlined in SFAS No.158.

Discuss the guidelines for accounting for property,plant and equipment outlined in IAS No.16.

Property,plant,and equipment are conventionally presented n the balance sheet at

The Development of Accounting Theory

The Pursuit of the Conceptual Framework

International Accounting

Research Methodology and Theories on the Uses of Accounting Information

Income Concepts

Financial Statement I: the Income Statement

Financial Statements Ii: the Balance Sheet and the Statement of Cash Flows

Working Capital

Long-Term Assets Ii: Investments and Intangibles

Long-Term Liabilities

Accounting for Income Taxes

Leases

Pensions and Other Postretirement Benefits

Equity

Accounting for Multiple Entities

Financial Reporting Disclosure Requirement and Ethical Responsibilities

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