EBK FINANCIAL ACCOUNTING THEORY AND ANA
12th Edition
ISBN: 9781119299646
Author: CATHEY
Publisher: JOHN WILEY+SONS,INC.-CONSIGNMENT
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Question
Chapter 3, Problem 3.5C
a)
To determine
To discuss : Qualitative concept of comparability and comparability of US companies with financial statements of other countries.
b)
To determine
To discuss : Qualitative concept of reliability and reliability of amount for property plant and equipment in United States companies in comparison to other countries.
c)
To determine
To discuss : Qualitative concept of relevance and relevance of amount for property plant and equipment in United States companies in comparison to other countries.
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Students have asked these similar questions
Accounting for plant assets involves cost determination, depreciation, additional expenditures, and disposals. Is plant asset accounting broadly similar or dissimilar between IFRS and U.S. GAAP? Identify one notable difference between IFRS and U.S. GAAP in accounting for plant assets.
Which of the following refers to the similarity between the U.S. GAAP and IFRS regarding accounting for Long-Lived Assets?
Depreciation is based on the fair value of assets.
An impairment loss occurs if the carrying value exceeds the recoverable amount, defined as the higher of the asset’s fair value (less costs to sell) and its value in use, which is the discounted net cash flows.
For the purposes of determination which expenses may be capitalized, Research and Development expenditures are treated differently.
Intangible assets are acquired at amortized cost.
The main difference between U.S. accounting standards and international accounting standards when accounting for plant, property and equipment is
a.
international accounting standards require the use of current fair value with changes recognized in equity only.
b.
U.S. accounting standards do not allow the write-down of assets due to impairment.
c.
international accounting standards allow plant, property and equipment to be stated at current fair value with changes recognized in income or equity.
d.
U.S. accounting standards allow plant, property and equipment to be stated at current fair value with changes recognized in income or equity.
Chapter 3 Solutions
EBK FINANCIAL ACCOUNTING THEORY AND ANA
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Similar questions
- How should any claim for compensation from third parties for impairment be accounted for ?arrow_forwardWhen an intangible asset has a finite life, amortization should be taken over what period of time? The shorter of the asset’s useful life or its legal life. The longer of the asset’s useful life or its legal life. According to U.S. GAAP, all costs should be expensed. No amortization should be taken on intangible assets.arrow_forwardAll of the following are true regarding the revaluation model allowed under GAAP except; Select one: a. Once selected, the revaluation policy applies to an entire class of property, plant and equipment. b. When an asset is revalued, any increase in carrying amount is reported as miscellaneous revenue. c. After initial recognition, the revalued amount is fair value less subsequent depreciation and impairment losses. d. Revaluations must be made regularly to ensure that the carrying value is not materially different from fair value.arrow_forward
- Long-term operating assets can be reported on the balance sheet at fair value instead of historical cost. Does this statement apply to IFRS and U.S. GAAP? Group of answer choices It does not apply to IFRS and U.S. GAAP. It applies to U.S. GAAP only. It applies to both IFRS and U.S. GAAP. It applies to IFRS only.arrow_forwardLong-term operating assets can be reported on the balance sheet at fair value instead of historical cost. Does this statement apply to IFRS and U.S. GAAP? Group of answer choices It does not apply to IFRS and U.S. GAAP. It applies to U.S. GAAP only. It applies to IFRS only. It applies to both IFRS and U.S. GAAP.arrow_forwardWhat costs are capitalized, or added to the asset account when acquiring property and equipment? A. Only the ticketed list price of the asset purchased. B. Any cost that is considered normal and necessary to get the asset into position and condition to be used. C. The lower of cost or net realizable value. D. Any of the above are allowed by U.S. GAAP as the cost to capitalize when acquiring property and equipment.arrow_forward
- Indicate whether each of the following statements is true or false. If a new patent is acquired through modification of an existing patent, the remaining book value of the original patent may be amortized over the life of the new patent. If the recoverable amount of an indefinite-life intangible other than goodwill is less than its carrying value, an impairment loss must be recognized. Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.arrow_forwardUnder 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?arrow_forwardWhich of the following is a CORRECT statement about long-term asset impairment? A. Under U.S. GAAP, an asset that has been written down because of impairment can be written back up if it increases in value in the future. B. An asset is impaired if the net book value is less than the expected future cash flows. C. If an asset is impaired, the expected future cash flows will exceed the fair value of the asset. D. If an asset is impaired, the impairment loss is the difference between the net book value and the fair value.arrow_forward
- IFRS GAAP and U.S. GAAP agree most of the time. In which instance might their disagreement have a big impact on an investment decision? A. revenue recognition B. goodwill C. plant, property and equipment D. accelerated depreciationarrow_forwardDiscuss the primary differences between U.S. GAAP and IFRS with respect to theutilization and impairment of property, plant, and equipment and intangible assets.arrow_forwardIndicate whether each of the following statements is true or false. If an intangible asset has its fair value determined in an active market, IFRS permits the use of the revaluation model. Answer If an intangible asset has an indefinite life, no amortization is recorded and no test for impairment is required. Answer When dealing with internally developed intangibles, once the asset is ready for its intended use, any subsequent costs are capitalized.arrow_forward
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