T, F. Intangible assets differ from property, plant and equipment assets because they lack physical substance. T, F. The sum-of-years digits method is the only depreciation method that does not consider salvage value at the beginning of depreciation computation. T, F. The amount of depreciation expense for the first full year of use of a fixed asset costing $65,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $20,000 by using the sum-of-years-digits method. T, F. The cost of a patent with a remaining legal life of 10 years and estimated useful life of 7 years is amortized over 10 years. T, F. Costs associated with normal research and development activities should be treated as intangible asset when they result in patentable products. T, F. Legal fees to defend a patent are expensed in the period incurred.
T, F. Intangible assets differ from property, plant and equipment assets because they lack physical substance. T, F. The sum-of-years digits method is the only depreciation method that does not consider salvage value at the beginning of depreciation computation. T, F. The amount of depreciation expense for the first full year of use of a fixed asset costing $65,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $20,000 by using the sum-of-years-digits method. T, F. The cost of a patent with a remaining legal life of 10 years and estimated useful life of 7 years is amortized over 10 years. T, F. Costs associated with normal research and development activities should be treated as intangible asset when they result in patentable products. T, F. Legal fees to defend a patent are expensed in the period incurred.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
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- T, F. Intangible assets differ from property, plant and equipment assets because they lack physical substance.
- T, F. The sum-of-years digits method is the only
depreciation method that does not consider salvage value at the beginning of depreciation computation. - T, F. The amount of depreciation expense for the first full year of use of a fixed asset costing $65,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $20,000 by using the sum-of-years-digits method.
- T, F. The cost of a patent with a remaining legal life of 10 years and estimated useful life of 7 years is amortized over 10 years.
- T, F. Costs associated with normal research and development activities should be treated as intangible asset when they result in patentable products.
- T, F. Legal fees to defend a patent are expensed in the period incurred.
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