FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 11: Long-Term Operating Assets: Acquisition, Cost Allocation

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 21

True/False

Review LaterAdd Note

Review Later

Under U.S. GAAP, companies are required to disclose the amount of accumulated depreciation either for each major class of fixed assets or in total for all fixed assets.

Correct Answer

verified

Show Answer

Question 22

Essay

Review LaterAdd Note

Review Later

How is derecognition of an asset recognized in the financial statements?

Correct Answer

verified

Derecognition requires that the firm rem...

View Answer

Show Answer

Question 23

Multiple Choice

Review LaterAdd Note

A fixed asset with a five-year estimated useful life and no scrap value is sold at the end of the second year of its useful life. How would using the straight-line method of depreciation instead of the double-declining balance method of depreciation affect a gain or loss on the sale of the plant asset?

Construction costs for fences and driveways are reported on the statement of financial position as ________.

Which of the following is a characteristic of intangible assets?

Bakiponi Corp. provides the following data from its recent financial statements: $\begin{array} { | l | r | r | } \hline \text { Dollars in millions) } & { \mathbf { 2 0 1 8 } } & { \mathbf { 2 0 1 9 } } \\\hline \text { Beginning Gross Fixed Assets } & \$ 2,440,000 & \$ 2,560,000 \\\hline \text { Ending Gross Fixed Assets } & 2,560,000 & 2,680,000 \\\hline \text { Beginning Accumulated Depreciation } & 910,000 & 1,110,000 \\\hline \text { Current-year Depreciation Expense } & 200,000 & 250,000 \\\hline \text { Current-year Sales Revenue } & 3,050,000 & 3,920,000 \\\hline\end{array}$ What is the average remaining life of the company's fixed assets as of the end of 2019? (Round your answer to two decimal places, X.XX.)

Which of the following is not a major characteristic of a fixed asset?

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

Under U.S. GAAP, the cost of internally developed intangible assets is charged as an expense of the period in which the costs are incurred.

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

Bakiponi Corp. provides the following data from its recent financial statements: $\begin{array} { | l | r | r | } \hline \text { Dollars in millions) } & { \mathbf { 2 0 1 8 } } & { \mathbf { 2 0 1 9 } } \\\hline \text { Beginning Gross Fixed Assets } & \$ 2,140,000 & \$ 2,260,000 \\\hline \text { Ending Gross Fixed Assets } & 2,260,000 & 2,380,000 \\\hline \text { Beginning Accumulated Depreciation } & 1,210,000 & 1,450,000 \\\hline \text { Current year Depreciation Expense } & 240,000 & 290,000 \\\hline \text { Current year Sales Revenue } & 3,750,000 & 4,620,000 \\\hline\end{array}$ What is the average age of the company's fixed assets as of the end of 2019? (Round your answer to two decimal places, X.XX.)

Candalibra Company incurred the following costs during the year ended December 31, 2018: $\begin{array} { | l | l | } \hline \text { Laboratory research aimed at discovery of new knowledge } & \$ 300,000 \\\hline \begin{array} { l } \text { Costs of testing prototype and design modifications (economic } \\\text { viability not achieved) }\end{array} & 55,000 \\\hline \begin{array} { l } \text { Quality control during commercial production, including routine } \\\text { testing of products }\end{array} & 210,000 \\\hline \begin{array} { l } \text { Construction of research facilities having an estimated useful life of } \\12 \text { years but no alternative future use }\end{array} & 440,000 \\\hline\end{array}$ What is the total amount to be classified and expensed as research and development in 2018 under U.S. GAAP?

A firm trades in an old machine with a carrying value of $20,000 for new machine that has a list price of $32,000 and a fair value of $33,000. The old machine was acquired 5 years ago at a cost of $40,000. At what value will the firm record the new machine?

When more than one different type of asset is acquired in one purchase transaction, the total purchase price is allocated among the assets in proportion to their fair values.

A company recognizes a gain on the income statement whenever it sells a fixed asset for more than the net book value of the asset.

IFRS permits capitalization of interest on specific borrowings related to both constructed and purchased assets.

Goodwill is recorded as an intangible asset when ________.

Following U.S. GAAP, companies are required to disclose the amount of depreciation expense for each major class of fixed assets.

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

When land is purchased and an old building thereon is demolished, the total purchase price plus the demolition cost is the total capitalized value of the land.