Connect 1 Semester Access Card for Fundamentals of Financial Accounting
5th Edition
ISBN: 9781259128547
Author: Fred Phillips Associate Professor, Robert Libby, Patricia Libby
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 9, Problem 4MC
A company wishes to report the highest earnings possible according to GAAP. Therefore, when calculating
- a. It will follow the MACRS depreciation rates prescribed by the IRS.
- b. It will estimate the shortest lives possible for its assets.
- c. It will estimate the longest lives possible for its assets.
- d. It will estimate lower residual values for its assets.
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Which one of the following statements is true?
a. Financial statement readers cannot determine whether the depreciation method used by a company is appropriate.
b. Financial statement readers can determine the useful lives of assets depreciated during the reported period.
c. Financial statement readers cannot determine the depreciation expense for the reported period
d. Financial statement readers can accurately estimate the effect an alternative depreciation method would have on income.
Revenue Recognition: Explain the concept of revenue recognition in accounting. Provide examples of situations where revenue recognition might be challenging, and discuss the importance of adhering to appropriate accounting standards.
Depreciation Methods: Compare and contrast the straight-line and declining balance methods of depreciation. Discuss the advantages and disadvantages of each method, and explain how the choice of depreciation method can impact a company's financial statements.
How is the valuation of cuIrent assets affected if the company follows IFRS? (
OValuation is based on historical cost.
OValuation is based on market adjustments.
OValuation is based on LCM accounting.
O Assets are expensed immediately.
Aliability created for receiving cash for future services to be provided is termed
O service revenue.
O estimated warranty payable.
Ounearned revenue.
Oaccrued liability.
Chapter 9 Solutions
Connect 1 Semester Access Card for Fundamentals of Financial Accounting
Ch. 9 - Define long-lived assets. What are the two common...Ch. 9 - Under the cost principle, what amounts should be...Ch. 9 - What is the term for recording costs as assets...Ch. 9 - 4. Waste Management, Inc., regularly incurs costs...Ch. 9 - Distinguish between ordinary repairs and...Ch. 9 - Describe the relationship between the expense...Ch. 9 - Why are different depreciation methods allowed?Ch. 9 - In computing depreciation, three values must be...Ch. 9 - Prob. 9QCh. 9 - After merging with Northwest Airlines, Delta...
Ch. 9 - A local politician claimed, to reduce the...Ch. 9 - What is an asset impairment? How is it accounted...Ch. 9 - What is book value? When equipment is sold for...Ch. 9 - Prob. 14QCh. 9 - Prob. 15QCh. 9 - FedEx Corporation reports the cost of its aircraft...Ch. 9 - Prob. 17QCh. 9 - Prob. 18QCh. 9 - (Supplement 9A) How does depletion affect the...Ch. 9 - (Supplement 9B) Over what period should an...Ch. 9 - Prob. 1MCCh. 9 - Prob. 2MCCh. 9 - Prob. 3MCCh. 9 - A company wishes to report the highest earnings...Ch. 9 - Barber, Inc., depreciates its building on a...Ch. 9 - Thornton Industries purchased a machine on July 1...Ch. 9 - ACME. Inc., uses straight-line depreciation for...Ch. 9 - What assets should be amortized using the...Ch. 9 - Prob. 9MCCh. 9 - The Simon Company and the Allen Company each...Ch. 9 - Classifying Long-Lived Assets and Related Cost...Ch. 9 - Prob. 9.2MECh. 9 - Prob. 9.3MECh. 9 - Computing Book Value (Straight-Line Depreciation)...Ch. 9 - Computing Book Value (Units-of-Production...Ch. 9 - Computing Book Value (Double-Declining-Balance...Ch. 9 - Calculating Partial-Year Depreciation Calculate...Ch. 9 - Prob. 9.8MECh. 9 - Recording the Disposal of a Long-Lived Asset...Ch. 9 - Reporting and Recording the Disposal of a...Ch. 9 - Prob. 9.11MECh. 9 - Prob. 9.12MECh. 9 - Computing and Evaluating the Fixed Asset Turnover...Ch. 9 - (Supplement 9A) Recording Depletion for a Natural...Ch. 9 - Prob. 9.15MECh. 9 - Prob. 9.1ECh. 9 - Prob. 9.2ECh. 9 - Determining Financial Statement Effects of an...Ch. 9 - Prob. 9.4ECh. 9 - Prob. 9.5ECh. 9 - Computing Depreciation under Alternative Methods...Ch. 9 - Computing Depreciation under Alternative Methods...Ch. 9 - Prob. 9.8ECh. 9 - Demonstrating the Effect of Book Value on...Ch. 9 - Prob. 9.10ECh. 9 - Prob. 9.11ECh. 9 - Prob. 9.12ECh. 9 - Prob. 9.13ECh. 9 - Prob. 9.14ECh. 9 - Computing Depreciation and Book Value for Two...Ch. 9 - Prob. 9.16ECh. 9 - Prob. 9.17ECh. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Prob. 9.2CPCh. 9 - Analyzing and Recording Long-Lived Asset...Ch. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Recording and Interpreting the Disposal of...Ch. 9 - Prob. 9.3PACh. 9 - Prob. 9.4PACh. 9 - Computing Acquisition Cost and Recording...Ch. 9 - Recording and Interpreting the Disposal of...Ch. 9 - Analyzing and Recording Long-Lived Asset...Ch. 9 - Prob. 9.4PBCh. 9 - Accounting for Operating Activities (Including...Ch. 9 - Prob. 9.1SDCCh. 9 - Prob. 9.2SDCCh. 9 - Ethical Decision Making: A Mini-Case Assume you...Ch. 9 - Critical Thinking: Analyzing the Effects of...Ch. 9 - Prob. 9.7SDCCh. 9 - Accounting for the Use and Disposal of Long-Lived...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- 7. How is the valuation of current assets affected if the company follows IFRS? Valuation is based on historical cost. OValuation is based on market adjustments. OValuation is based on LCM accounting. O Assets are expensed immediately.arrow_forwardWhich of the following statements is false? A For tax purposes, companies can use the MACRS depreciation method. B When you change a depreciation estimate, such as salvage value, you need to make an adjustment to retained earnings. C If the expected future cash flow is less than the carrying amount, the asset is considered impaired. D If an impairment loss is recorded, depreciation must be recalculated since the book value changed.arrow_forwardTechnically, offsetting in financial statements is accomplished when a. Gains or losses from disposal of non-current assets are reported by deducting from the proceeds the carrying amount of the assets and the related selling expenses. b. The accumulated depreciation is deducted from property, plant and equipment. c. The allowance for bad debts is deducted from accounts receivable. d. The total liabilities are deducted from total assets to arrive at net assetsarrow_forward
- Depreciation is considered as accounting policy and operational expense for the accounting period. The value to be included in the financial statement is calculated based on the decision of the Board. Under what circumstances will you consider the reducing balance method as the most appropriate method in calculating depreciation?arrow_forwardWhich of the following statements related to long-lived assets is true? Depreciation is calculated the same for financial reporting purposes and income tax purposes. If a company changes a depreciation estimate, it does not require a prior period adjustment. Depreciation is the process to value an asset at its fair market value. There is only one test to record an asset's impairment.arrow_forwardDepreciation is considered as accounting policy and operational expense for the accounting period. The value to be included in the financial statement is calculated based on the decision of the Board. (a) You are re quire d to: (i) Explain the difference between capital expenditure and revenue expenditure, and how each type of expenditure will affect the financial statements of a business. (ii) Explain why it is important to distinguish between capital expenditure and revenue expenditure, and briefly explain the accounting treatment of each type of expenditure. (iii) Under what circumstances will you consider the reducing balance method as the most appropriate method of calculating depreciation? (iv) Does Depreciation decrease cash in business? Explain your answer.arrow_forward
- Which of the following statements are TRUE? a. The reason for including a treatment of depreciation in this book is to allow you to develop a reasonably accurate report to the owners of a business regarding its value at any given point in time. b. Depreciation spreads investment costs over the useful life of equipment purchased. c. Depreciation allowances can be treated as expenses because they are cash flows. d. Depreciation affects income taxes, which are cash flows.arrow_forwardWhich of the following statements is false? A For tax purposes, companies can use the MACRS depreciation method. B When you change a depreciation estimate, such as salvage value, you need to make an adjustment to retained earnings. C If the expected future cash flow is less than the carrying amount, the asset is considered impaired. D If an impairment loss is recorded, depreciation must be recalculated since the book value changed. The answer A is wrongarrow_forwardSometimes the value spent by a corporation is recorded as an asset and sometimes as an expense. Find appropriate professional research to answer the following: Define the two terms. How and why are these expenditures different from each other? How are they different from Liabilities? Describe the effects of assets and expenses on the company’s financial statements. In ACC1001 you studied about Current Assets. How do they affect the financial statements differently from fixed assets? Comment on the statement that “all assets are eventually expenses” Please do not copy and paste from other websites!arrow_forward
- Which of the following statements are true? Select one or more: a. MACRS must be used for book purposes if it is used for tax purposes. b. Managers often prefer the straight-line method because it helps to smooth earnings. c. Units of production method is not appropriate for natural resources. d. Double-declining balance recognizes more depreciation expense early in an asset's life. PreviousSave AnswersNextarrow_forwardWhat is depreciation, how is it calculated and how does it relate to the matching principle of accounting? Are there any estimates in depreciation and what are they? Why is it better to use these estimates than to not depreciate at all? What would be the alternatives to depreciation and what kinds of problems do they present? Please think about where we report equipment and similar items on the financial statements.arrow_forwardThe following statements relate to the depreciation of property, plant and equipment. Which statement is incorrect? A. the change in the expected pattern of consumption of economic benefits of a depreciation asset should be accounted for as a change in accounting policy and the effect is included in retained earnings. b. The change in the expected pattern of consumption of economic benefits of a depreciable asset should be accounted for as a change in accounting estimate and the effect is included in the determination of income or loss in the period of change and future periods. c The sum of unit method results in a charge based on the expected use or output of the asset D The useful life of an Item of property, plant and equipment should be reviewed periodically and it expectations are significantly different from previous estimates the depreciation charge for the current and future periods should be adjustedarrow_forward
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