An asset shall be classified as current whenit satisfies any of the following criteria(choose the incorrect one).It is expected to be realized in or isintended for sale or consumption in theentity's normal operating cycle.It is held primarily for the purpose of beingtraded.It is expected to be realized in more thantwelve months after the balance sheet date.It is cash or a cash equivalent which isunrestricted from being exchanged or usedto settle a liability for at least twelvemonths after the balance sheet date.

Current assets - Current assets are the assets of the company which are expected to be used up or…

Answered: An asset shall be classified as current…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following is correct about non-trade receivables being classified as current assets?a. non-trade receivables are classified as current assets if these are collectible within one year or the company's normal operating cycle. whichever is shorter.b. non-trade receivables are classified as current assets if these are collectible within the company's normal operating cyclec. non-trade receivables are classified as current assets if these are collectible within one yeard. non-trade receivables are classified as current assets if these are collectible within one year or the company's normal operating cycle, whichever is longer.e. non-trade receivables are never classified as current assets.
Under the impairment of assets, value-in-use is * a. The undiscounted present value of future cash flows arising from the continuing use of the asset and from its disposal. b. The discounted present value of future cash flows arising from the continuing use of the asset and from its disposal. c. The higher of an asset's fair value less cost to sell and its market value d. The amount at which the asset is recognized in the statement of financial position
1. An asset that is not expected to be converted to cash or consumed within one year or the operating cycle is:
1.Which of the following is not a criterion for classifying an asset as current? -It is expected to be realized within twelve months after the reporting period. -It is expected to be realized, or intended for sale or consumption in the normal course of the entity’s normal operating cycle. -It is a cash and cash equivalent restricted for the purchase of a non-current asset within 12 months after the reporting period. -It is held primarily for the purpose of being traded. 2.All of the following are essential characteristics of an intangible assets, except -Expected future economic benefits. -Controlled by the enterprise. -identifiability -Indefinite useful life. 3.The admission of a new partner to an existing partnership -requires purchasing the interest of one or more existing partners. -causes a legal dissolution of the existing partnership. -may be accomplished only by investing assets in the partnership. -is almost always accompanied by the…
Net book value is Select one: a. Amount of which an asset is recognized in the balance sheet after deducting any accumulated depreciation. b. Net amount which the entity expects to obtain for an asset at the end of its useful life. c. Amount of cash or cash equivalent paid or the fair value of the other consideration given to acquire an asset at the time of its acquisition or construction. d. Cost of an asset or the amount substituted for cost in the financial statements, less its residual value
An amortization schedule shows Group of answer choices A)how a company amortizes an intangible asset. b)the amount of goodwill a company will report on their balance sheet. c)a summary total of all interest paid to creditors. d)all of a company’s long-term notes payable. e)None of the above
Which statements are correct concerning measurement of cost of property, plant and equipment?I. The purchase price of an item of property, plant and equipment is the cash price equivalent at the date of recognitionII. If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and total payment is recognized as interest expense over the life of the asset.III. If an item of property, plant and equipment is acquired in exchange for a nonmonetary asset or a combination of monetary and nonmonetary asset, the cost of such item is measured at fair value unless the exchange transaction lacks commercial substance or fair value of either asset received or given up is not reliably determinable.IV. If an entity is able to determine reliably the fair value of both the asset given up and asset received in an exchange, the fair value of the asset given up is used to measure the cost of asset received in exchange.
1. Inventory should be stated at (a) Lower of cost and fair value. (b) Lower of cost and net realizable value. (c) Lower of cost and nominal value. (d) Lower of cost and net selling price. 2. Which of the following costs of conversion cannot be included in cost of inventory? (a) Cost of direct labor. (b) Factory rent and utilities. (c) Salaries of sales staff (sales department shares the building with factory supervisor). (d) Factory overheads based on normal capacity. 3. Inventories are assets (a) Used in the production or supply of goods and services for administrative purposes. (b) Held for sale in the ordinary course of business. (c) Held for long-term capital appreciation. (d) In the process of production for such sale. (e) In the form of materials or supplies to be consumed in the production process or the rendering of services. (f) Choices b and d. (g) Choices b, d, and e. 4. The cost of inventory should not include (a) Purchase price. (b) Import duties and other taxes. (c)…
1. IAS 36 applies to which of the following assets? (a) Inventories. (b) Financial assets. (c) Assets held for sale. (d) Property, plant, and equipment. 2. Value-in-use is (a) The market value. (b) The discounted present value of future cash flows arising from use of the asset and from its disposal. (c) The higher of an asset’s fair value less cost to sell and its market value. (d) The amount at which the asset is recognized in the balance sheet. 3. If the fair value less costs to sell cannot be determined (a) The asset is not impaired. (b) The recoverable amount is the value-in-use. (c) The net realizable value is used. (d) The carrying value of the asset remains the same. 4. If assets are to be disposed of (a) The recoverable amount is the fair value less costs to sell. (b) The recoverable amount is the value-in-use. (c) The asset is not impaired. (d) The recoverable amount is the carrying value. 5. Estimates of future cash flows normally would cover projections over a maximum…
Which of the following statements is false? [A] cash and cash equivalents is always presented under current assets [B] all economic resources that are sold, realized, or consumed more than 12 months after reporting date are always considered noncurrent assets [C] those assets held for trading are presented under current assets [D] assets are economic resources that are expected to provide probable future economic benefit and have a value or a cost that can be measured reliably
The primary measurement basis is A.The current market price if the asset currently held was sold on the open market. B. The current market price if the asset held was purchased on the open market. C. The present value of the cash flows that the asset is expected to generate. D. The market price at the date the asset was acquired.
Statement 1: In impairment loss, the discount rate being used is the current pretax rate that reflects the current assessment of the time value of money and the risks specific to the asset. It shall not reflect risk for which the future cash flow estimates have already been adjusted.Statement 2: In computing for impairment of intangible asset with indefinite life, future cash flows are divided by the risk-adjusted discount rate to get the present value. Statements 1 and 2 are true. Statement 1 is true while Statement 2 is false. Statement 1 is false while Statement 2 is true. Statements 1 and 2 are false.

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