State which statement is true or false The declining-balance method does not deduct the residual value in computing the depreciation base. The recoverable amount used to impairment test a long-lived tangible asset is defined as the asset’s fair value less costs to sell. After an impairment loss is recorded, the recoverable amount becomes the basis for the impaired asset and is used to calculate depreciation in future periods. Land acquired for resale or disposal is more appropriately classified as inventory rather than property, plant and equipment. The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned. After an impairment loss is recorded for goodwill, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods. Internally generated goodwill associated with a business may be recorded as an asset when a firm offer to purchase that business unit has been received. 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. Delayed recognition of revenue is appropriate if the sale does not represent substantial completion of the earnings process. If the goods (services) that are exchanged in barter transactions are dissimilar in nature, the exchange is recorded as revenue. When services are delivered by performing more than one act, revenue should be recognized as the various acts that make up the entire transaction occur. Companies must use the percentage-of-completion method when estimates of progress toward completion can be estimated reliably. The Construction in Process account includes only construction costs under the percentage-of-completion method. In a multiple-deliverable arrangement, once the separate units of accounting are determined, the amount paid for the arrangement is allocated among the separate units based on relative fair value. The percentage-of-receivables approach of estimating uncollectible accounts emphasizes matching over valuation of accounts receivable. The percentage-of-sales method results in a more accurate valuation of receivables on the balance sheet. At the time of sales (on account), accounts receivable is initially measured at NRV. At the time of sales (on account), accounts receivable is initially measured at NBV. When accounting for accounts receivable as per the gross method, sales discounts are recognized only when the payment is received. When cash discounts, for example 2/10 n30 are offered as incentive, businesses use the net method to account for accounts receivable. The direct write-off method fails to state accounts receivable at the cash realizable value on the statement of profit and loss. The direct write-off method is considered appropriate to use when dealing with immaterial amounts of uncollectibles. The percentage of sales approach applied to accounting for accounts receivable results in a better matching of expenses and revenues. The percentage of sales approach always takes into consideration the current balance in the allowance for doubtful debts account. When accounting for uncollectibles under the allowance methods, bad expense increases when a write-off occurs. Under the direct write-off method of accounting for receivables, bad debt expense increases when a write-off occurs.

State which statement is true or false The declining-balance method does not deduct the residual value in computing the depreciation base. The recoverable amount used to impairment test a long-lived tangible asset is defined as the asset’s fair value less costs to sell. After an impairment loss is recorded, the recoverable amount becomes the basis for the impaired asset and is used to calculate depreciation in future periods. Land acquired for resale or disposal is more appropriately classified as inventory rather than property, plant and equipment. The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned. After an impairment loss is recorded for goodwill, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods. Internally generated goodwill associated with a business may be recorded as an asset when a firm offer to purchase that business unit has been received. 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. Delayed recognition of revenue is appropriate if the sale does not represent substantial completion of the earnings process. If the goods (services) that are exchanged in barter transactions are dissimilar in nature, the exchange is recorded as revenue. When services are delivered by performing more than one act, revenue should be recognized as the various acts that make up the entire transaction occur. Companies must use the percentage-of-completion method when estimates of progress toward completion can be estimated reliably. The Construction in Process account includes only construction costs under the percentage-of-completion method. In a multiple-deliverable arrangement, once the separate units of accounting are determined, the amount paid for the arrangement is allocated among the separate units based on relative fair value. The percentage-of-receivables approach of estimating uncollectible accounts emphasizes matching over valuation of accounts receivable. The percentage-of-sales method results in a more accurate valuation of receivables on the balance sheet. At the time of sales (on account), accounts receivable is initially measured at NRV. At the time of sales (on account), accounts receivable is initially measured at NBV. When accounting for accounts receivable as per the gross method, sales discounts are recognized only when the payment is received. When cash discounts, for example 2/10 n30 are offered as incentive, businesses use the net method to account for accounts receivable. The direct write-off method fails to state accounts receivable at the cash realizable value on the statement of profit and loss. The direct write-off method is considered appropriate to use when dealing with immaterial amounts of uncollectibles. The percentage of sales approach applied to accounting for accounts receivable results in a better matching of expenses and revenues. The percentage of sales approach always takes into consideration the current balance in the allowance for doubtful debts account. When accounting for uncollectibles under the allowance methods, bad expense increases when a write-off occurs. Under the direct write-off method of accounting for receivables, bad debt expense increases when a write-off occurs.

Name: State which statement is true or false The declining-balance method do
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Description: State which statement is true or false The declining-balance method does not deduct the residual value in computing the depreciation base. The recoverable amount used to impairment test a long-lived tangible asset is defined as the asset’s fair value

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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State which statement is true or false

The declining-balance method does not deduct the residual value in computing the depreciation base.
The recoverable amount used to impairment test a long-lived tangible asset is defined as the asset’s fair value less costs to sell.
After an impairment loss is recorded, the recoverable amount becomes the basis for the impaired asset and is used to calculate depreciation in future periods.
Land acquired for resale or disposal is more appropriately classified as inventory rather than property, plant and equipment.
The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned.
After an impairment loss is recorded for goodwill, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods.
Internally generated goodwill associated with a business may be recorded as an asset when a firm offer to purchase that business unit has been received.
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.
Delayed recognition of revenue is appropriate if the sale does not represent substantial completion of the earnings process.
If the goods (services) that are exchanged in barter transactions are dissimilar in nature, the exchange is recorded as revenue.
When services are delivered by performing more than one act, revenue should be recognized as the various acts that make up the entire transaction occur.
Companies must use the percentage-of-completion method when estimates of progress toward completion can be estimated reliably.
The Construction in Process account includes only construction costs under the percentage-of-completion method.
In a multiple-deliverable arrangement, once the separate units of accounting are determined, the amount paid for the arrangement is allocated among the separate units based on relative fair value.
The percentage-of-receivables approach of estimating uncollectible accounts emphasizes matching over valuation of accounts receivable.
The percentage-of-sales method results in a more accurate valuation of receivables on the balance sheet.
At the time of sales (on account), accounts receivable is initially measured at NRV.
At the time of sales (on account), accounts receivable is initially measured at NBV.
When accounting for accounts receivable as per the gross method, sales discounts are recognized only when the payment is received.
When cash discounts, for example 2/10 n30 are offered as incentive, businesses use the net method to account for accounts receivable.
The direct write-off method fails to state accounts receivable at the cash realizable value on the statement of profit and loss.
The direct write-off method is considered appropriate to use when dealing with immaterial amounts of uncollectibles.
The percentage of sales approach applied to accounting for accounts receivable results in a better matching of expenses and revenues.
The percentage of sales approach always takes into consideration the current balance in the allowance for doubtful debts account.
When accounting for uncollectibles under the allowance methods, bad expense increases when a write-off occurs.
Under the direct write-off method of accounting for receivables, bad debt expense increases when a write-off occurs.

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