Question 1

An impairment of property, plant, or equipment has occurred if

Accepted Answer

A)   The estimated salvage value is less than the actual proceeds received on disposal
B)   The revised estimated useful life is less than the original estimated useful life
C)   The expected future cash outflows exceed the asset's carrying value
D)   The sum of the expected future net cash flows is less than the asset's carrying value

Question 2

The rate of return on total assets is computed by dividing

Accepted Answer

A)   Net sales by ending total assets
B)   Net income by ending total assets
C)   Net income by average total assets
D)   Net sales by average total assets

Question 3

Property, plant, and equipment are conventionally presented n the balance sheet at

Accepted Answer

A)   Replacement cost less accumulated depreciation
B)   Historical cost less salvage value
C)   Original cost adjusted for general price level changes
D)   Acquisition cost less depreciated portion thereof

Question 4

When a closely held corporation issues preferred stock for land, the land should be recorded at the

Accepted Answer

A)   Total par value of the stock issued
B)   Total book value of the stock issued
C)   Appraised value of the land
D)   Total liquidating value of the stock issued

Question 5

Discuss accounting for the impairment of assets as outlined in IAS No. 36.

Accepted Answer

The purpose of IAS No. 36 is to make sure that assets are carried at no more than their recoverable amount, and to define how the recoverable amount is calculated. IAS No. 36 requires an impairment loss to be recognized whenever the recoverable amount of an asset is less than its carrying amount (its book value). The recoverable amount of an asset is the higher of its net selling price and its value in use. Both are based on present-value calculations.

Question 6

List the objectives of accounting for property, plant and equipment.

Accepted Answer

The objectives of plant and equipment ac...

Question 7

The most common method of recording depletion for accounting purposes is the

Accepted Answer

A)   Straight-line method
B)   Units-of-production method
C)   Percentage depletion method
D)   Decreasing charge method

Question 8

Define and discuss accounting for asset retirement obligations under SFAS No. 143 (FASB ASC 410-20)

Accepted Answer

At the time SFAS No. 143 was issued, the...

Question 9

When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building should be

Accepted Answer

A)   Expensed as incurred
B)   Added to the cost of the plant
C)   Added to the cost of the land
D)   Amortized over the estimated time period between the tearing down of the building and the completion of the plant

Question 10

When boot is involved in an exchange having commercial substance

Accepted Answer

A)   Only losses should be recognized
B)   Only gains should be recognized
C)   Gains or losses are recognized in their entirely
D)   A gain or loss is computed by comparing the fair value of the asset received with the fair value of the asset given up

Question 11

Describe how cost is assigned to individual assets when they are acquired in a lump-sum group purchase.

Accepted Answer

When a group of assets is acquired for a...

Question 12

A principal objection to the straight-line method of depreciation is that it

Accepted Answer

A)   Provides for the declining productivity of an aging asset
B)   Ignores variations in the rate of asset use
C)   Tends to result in a constant rate of return on a diminishing investment base 
D)  Gives smaller periodic write-offs than decreasing charge methods B

Question 13

Discuss the three approaches to allocating fixed overhead to a self-construction project.

Accepted Answer

The three approaches are:
a. Allocate no...

Question 14

When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to

Accepted Answer

A)   A cost of capital charge for stockholders' equity
B)   That portion of weighted-average accumulated expenditures on which no interest cost was incurred
C)   The total interest cost actually incurred
D)   That portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made

Question 15

The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at

Accepted Answer

A)   The fair value of the asset given up, and a gain but not a loss may be recognized
B)   The fair value of the asset given up, and a gain or loss is recognized
C)   The fair value of the asset received if it is equally reliable as the fair value of the asset given up
D)   Either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss)  to the company

Question 16

What three questions must be answered before the amount of the depreciation charge can be computed?

Accepted Answer

Before the amount of the depreciation ch...

Question 17

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

Accepted Answer

A)   Systematic and rational allocation
B)   Immediate recognition
C)   The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred.
D)   The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. A

Question 18

21.	Which of the following is not one of the basic questions that must be answered before the amount of depreciation charge can be computed?

Accepted Answer

A)  	What is the asset's useful life? 
B)   What method of cost apportionment is best for this asset?
C)   What product or service is the asset related to?
D)   What is the depreciation base to use for the asset?

Question 19

Discuss the issue of allocating interest to self-construction projects. That is, when should interest be allocated and how much interest should be allocated?

Accepted Answer

During the construction period, extra fi...

Question 20

Discuss the guidelines for accounting for property, plant and equipment outlined in IAS No. 16.

Accepted Answer

IAS No. 16 indicates that items of prope...

Exam 9: Long-Term Assets I: Property, Plant, and Equipment

An impairment of property, plant, or equipment has occurred if

Correct Answer
verified

The rate of return on total assets is computed by dividing

Correct Answer
verified

Property, plant, and equipment are conventionally presented n the balance sheet at

Correct Answer
verified

When a closely held corporation issues preferred stock for land, the land should be recorded at the

Correct Answer
verified

Discuss accounting for the impairment of assets as outlined in IAS No. 36.

List the objectives of accounting for property, plant and equipment.

Correct Answer
verified
The objectives of plant and equipment ac...
View Answer

The most common method of recording depletion for accounting purposes is the

Correct Answer
verified

Define and discuss accounting for asset retirement obligations under SFAS No. 143 (FASB ASC 410-20)

Correct Answer
verified
At the time SFAS No. 143 was issued, the...
View Answer

When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building should be

Correct Answer
verified

When boot is involved in an exchange having commercial substance

Correct Answer
verified

Describe how cost is assigned to individual assets when they are acquired in a lump-sum group purchase.

Correct Answer
verified
When a group of assets is acquired for a...
View Answer

A principal objection to the straight-line method of depreciation is that it

Correct Answer
verified
B

Discuss the three approaches to allocating fixed overhead to a self-construction project.

Correct Answer
verified
The three approaches are:
a. Allocate no...
View Answer

When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to

Correct Answer
verified

The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at

Correct Answer
verified

What three questions must be answered before the amount of the depreciation charge can be computed?

Correct Answer
verified
Before the amount of the depreciation ch...
View Answer

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

Correct Answer
verified
A

21. Which of the following is not one of the basic questions that must be answered before the amount of depreciation charge can be computed?

Correct Answer
verified

Discuss the issue of allocating interest to self-construction projects. That is, when should interest be allocated and how much interest should be allocated?

Correct Answer
verified
During the construction period, extra fi...
View Answer

Discuss the guidelines for accounting for property, plant and equipment outlined in IAS No. 16.

Correct Answer
verified
IAS No. 16 indicates that items of prope...
View Answer

Exam 9: Long-Term Assets I: Property, Plant, and Equipment

An impairment of property, plant, or equipment has occurred if

Correct AnswerverifiedShow Answer

The rate of return on total assets is computed by dividing

Correct AnswerverifiedShow Answer

Property, plant, and equipment are conventionally presented n the balance sheet at

Correct AnswerverifiedShow Answer

When a closely held corporation issues preferred stock for land, the land should be recorded at the

Correct AnswerverifiedShow Answer

Discuss accounting for the impairment of assets as outlined in IAS No. 36.

List the objectives of accounting for property, plant and equipment.

Correct AnswerverifiedThe objectives of plant and equipment ac...View AnswerShow Answer

The most common method of recording depletion for accounting purposes is the

Correct AnswerverifiedShow Answer

Define and discuss accounting for asset retirement obligations under SFAS No. 143 (FASB ASC 410-20)

Correct AnswerverifiedAt the time SFAS No. 143 was issued, the...View AnswerShow Answer

When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building should be

Correct AnswerverifiedShow Answer

When boot is involved in an exchange having commercial substance

Correct AnswerverifiedShow Answer

Describe how cost is assigned to individual assets when they are acquired in a lump-sum group purchase.

Correct AnswerverifiedWhen a group of assets is acquired for a...View AnswerShow Answer

A principal objection to the straight-line method of depreciation is that it

Correct AnswerverifiedB

Discuss the three approaches to allocating fixed overhead to a self-construction project.

Correct AnswerverifiedThe three approaches are:a. Allocate no...View AnswerShow Answer

When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to

Correct AnswerverifiedShow Answer

The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at

Correct AnswerverifiedShow Answer

What three questions must be answered before the amount of the depreciation charge can be computed?

Correct AnswerverifiedBefore the amount of the depreciation ch...View AnswerShow Answer

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

Correct AnswerverifiedA

21. Which of the following is not one of the basic questions that must be answered before the amount of depreciation charge can be computed?

Correct AnswerverifiedShow Answer

Discuss the issue of allocating interest to self-construction projects. That is, when should interest be allocated and how much interest should be allocated?

Correct AnswerverifiedDuring the construction period, extra fi...View AnswerShow Answer

Discuss the guidelines for accounting for property, plant and equipment outlined in IAS No. 16.

Correct AnswerverifiedIAS No. 16 indicates that items of prope...View AnswerShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The objectives of plant and equipment ac...
View Answer

Correct Answer
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Correct Answer
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At the time SFAS No. 143 was issued, the...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
When a group of assets is acquired for a...
View Answer

Correct Answer
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B

Correct Answer
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The three approaches are:
a. Allocate no...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Before the amount of the depreciation ch...
View Answer

Correct Answer
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A

Correct Answer
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Correct Answer
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During the construction period, extra fi...
View Answer

Correct Answer
verified
IAS No. 16 indicates that items of prope...
View Answer