S1: Government grant related to depreciable asset is usually recognized as income over the useful life of the asset and in proportion to the depreciation of the asset. S2: Government grant related to non-depreciable asset that requires fulfillment of certain conditions should be recognized as income immediately.

S1: Government grant related to depreciable asset is usually recognized as income over the useful life of the asset and in proportion to the depreciation of the asset. S2: Government grant related to non-depreciable asset that requires fulfillment of certain conditions should be recognized as income immediately.

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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Fixed assets donated to a governmental unit should be recorded a. at estimated fair value when received. b. at the lower of donor’s carrying amount or estimated fair value when received. c. at the donor’s carrying amount. d. as a memorandum entry only.
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If fair value of an impaired intangible asset recovers after an impairment has been recognized, a restoration gain may be recorded in a subsequent period. O a. True O b. False
6. When a capital lease is used to acquire general fixed assets, the governmental fund acquiring the fixed assets records a(n) at the a. expenditure, lease payment cost. b. fixed asset, lease payment cost. c. expenditure, present value of the minimum lease payments. d. fixed asset, present value of the minimum lease navments.
When a government orders equipment which is to be used by an activity accounted within the General Fund, it should be recorded in the General Fund as a(an): Multiple Choice Encumbrance. Capital asset. Expenditure. None of the choices are correct, the General Fund does not record capital assets purchases..
For purposes of capitalization of borrowing cost, which of the following is not a qualifying asset? Manufacturing Plant Power generation facility Asset that is ready for the intended use or sale Investment Property
Assets received in donation should Obe expensed upon receipt. O should not be depreciated. O be depreciated based on their fair value at the time of the donation. O be depreciated based on the their book value at the time of the donation.
Identify the term being referred to: An agreement where one party conveys to the another party the right to use an asset for an agreed period of time, in return for periodic payments.
6. Statement 1: An entity that borrows funds specifically for the purpose of obtaining a qualifying asset shall determine the amount of borrowing costs eligible for capitalization by applying a capitalization rate to the expenditure of that asset. Statement 2: An entity that borrows funds generally and uses them for the purpose of obtaining a qualifying asset shall determine the amount of borrowing costs eligible for capitalization as the actual borrowing costs incurred on that borrowing during the period less any investment income on the temporary investment of those borrowings. a. Only the first statement is correct. b. Only the second statement is correct. C. Both statements are correct. d. Neither of the statements is correct.
PAS 16 defines depreciation as “the decrease in the value of an asset.”
Government grants related to income are presented preferably as Other income in the income statement Addition to the beginning balance of retained earnings Deduction from the related expense Additional paid in capital
Under U.S. GAAP, litigation costs to successfully defend an intangible right are capitalized and amortized over the remaining useful life of the related intangible. How are these costs typically accounted for under IFRS?