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    accounting true or false?

    1. All long-lived assets must be amortized for accounting purposes. 2. If paid by the purchaser, freight charges and insurance during transit are included in the cost of equipment. 3. The amortizable cost of a long-lived asset is its original cost minus obsolescence. 4. Residual value is not subtracted from a long-lived asset’s cost in determining amortization expense under the declining-balance method of amortization. 5. A change in the estimated useful life of a long-lived asset may cause a change in the amount of amortization recognized in the current and future periods, but not to prior periods. 6. Ordinary repairs should be recognized when incurred as operating expenditures. 7. Once an impairment loss has been recorded, the book value of the asset should not be adjusted for any subsequent increases in the fair market value of the asset. 8. A loss on disposal of long-lived assets can only occur if the cash proceeds received from the asset sale are less than the asset's net book value. 9. Conceptually, the cost allocation procedures for natural resources parallels that of property, plant, and equipment. 10. The cost of an intangible asset with a definite life must be amortized over a 40-year period.
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    1. All long-lived assets must be amortized for accounting purposes. FALSE. Land is a long-lived asset and it is not amortized. 2. If paid by the purchaser, freight charges and insurance during transit are included in the cost of equipment. TRUE 3. The amortizable cost of a long-lived asset is its original cost minus obsolescence. FALSE. It's its original cost minus its salvage or residual value. 4. Residual value is not subtracted from a long-lived asset’s cost in determining amortization expense under the declining-balance method of amortization. TRUE. Salvage value is initially ignored, but once accumulated depreciation reaches the amount of the depreciable base, then depreciation ceases. 5. A change in the estimated useful life of a long-lived asset may cause a change in the amount of amortization recognized in the current and future periods, but not to prior periods. TRUE. A change in the estimated useful life is a change in an accounting estimate and this is always treated prospectively, in contrast with a change in accounting principle which is dealt with retrospectively. 6. Ordinary repairs should be recognized when incurred as operating expenditures. TRUE 7. Once an impairment loss has been recorded, the book value of the asset should not be adjusted for any subsequent increases in the fair market value of the asset. FALSE. The book value should be adjusted upwards. The question is where to take the credit - to equity or to income statement. This depends on whether there is a revaluation surplus for this asset in the books. 8. A loss on disposal of long-lived assets can only occur if the cash proceeds received from the asset sale are less than the asset's net book value. TRUE (Actually the answer is FALSE if you want to be pedantic since the proceeds need not be in cash, but I don't think it's meant to be a trick question) 9. Conceptually, the cost allocation procedures for natural resources parallels that of property, plant, and equipment. TRUE 10. The cost of an intangible asset with a definite life must be amortized over a 40-year period. FALSE. It depends on what that definite life is.
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