Required: Determine if the fact relates to Tangible Assets, Intangible Assets, both or neither. Can be disposed Can incur ordinary maintenance Can capitalize all related costs to acquire Can utilize the straight-line method to expense Can utilize the units of production method to expense Asset intended for resale Management can decide on the method to expense Needs to be checked for impairment Includes some assets with unlimited lives Can be paid for with Cash Must be expensed at the time of purchase Classified as a productive asset Facts Related cash flows are recorded in the Investing section of the Statement of Cash flows Related cash flows are recorded in the Operating section of the Statement of Cash flows

Required: Determine if the fact relates to Tangible Assets, Intangible Assets, both or neither. Can be disposed Can incur ordinary maintenance Can capitalize all related costs to acquire Can utilize the straight-line method to expense Can utilize the units of production method to expense Asset intended for resale Management can decide on the method to expense Needs to be checked for impairment Includes some assets with unlimited lives Can be paid for with Cash Must be expensed at the time of purchase Classified as a productive asset Facts Related cash flows are recorded in the Investing section of the Statement of Cash flows Related cash flows are recorded in the Operating section of the Statement of Cash flows

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4MC: Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers...

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Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers to the process of converting assets to expenses. B. Only the purchase price of the asset is capitalized. C. Capitalizing a cost means to record it as an asset. D. Capitalizing costs results in an immediate decrease in net income.
Current Attempt in Progress Assuming there are no impairment losses, the balance in the Accumulated Depreciation account represents the R O amount charged to depreciation expense since the acquisition of the asset. O amount to be deducted from the cost of the asset to arrive at its fair value. O amount charged to depreciation expense in the current period. O cash fund to be used to replace assets. eTextbook and Media
What is the purpose of charging depreciation in financial statements? A To allocate the cost of a non-current asset over the accounting periods expected to benefit from its use B To ensure that funds are available for the eventual replacement of the asset C To reduce the cost of the asset in the statement of financial position to its estimated market value D To account for the ‘wearing-out’ of the asset over its life
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.
Revenue Expenditures are Select one: O a. Expenses related to Business Operation O b. None of the these O c. Have no direct effect on profit O d. Expenses incurred when purchasing non- current assets
Long term assets without any physical existence but, possessing a value are called Current assets O Fixed assets O Investments O Intangible assets O At the batance sheet date, the balance on the Accumutated Provision for Depreciation Account is Simply deducted from the asset in the Balance Sheet Transferred to Depreciation Account Transferred to the Asset Account O Transferred to Profit and Loss Account
Costs incurred internally to create intangibles are required to be a. expensed as incurred b. capitalized c. expensed only if they have a limited life O d. capitalized if they have an indefinite life
Valuing assets at the amount of cash or equivalents paid or the fair value of the consideration given to acquire them at the time of acquisition most closely describes which measurement of fi nancial statement elements? B . Historical cost.
Tangible assets are first recorded at: Multiple Choice cost minus residual (or salvage) value. the amount of cash paid for them. current market value or resale value. all costs to acquire them and prepare them for use.
Income earned from incidental operations before an asset is put to use is: deducted from the cost of the asset added to the cost of the asset immediately recognized in P/L together with related expense ignored
With reference to IAS 36, Impairment of Assets, a.Define a Cash generating units(CGU) and explain the purpose of an impairment test b)Allocate impairment loss between the assets of CGU and pass the journal to record the impairment loss
Which of the following best describes depreciation? A.ccounts for the market value of a physical asset B.Part of the cost of a physical asset allocated as an expense to each time period in which the asset is used. C.Shows the increase in value of a physical asset over the asset’s useful life D.Shows the drop in value of an asset when the asset is first used by an entity