T, F. Any difference between the fair value of the asset surrendered and its book value should be recognized only if there is gain on the exchange. T, F. Exploration and development costs are expensed under the successful effort method in the oil and petroleum industry. T, F. The acquisition costs of property, plant and equipment should include all normal, reasonable and necessary costs to get the assets ready for use. T, F. When land is purchased for construction of a new building, the cost of removing any structures on the land should be charged to the building account. T, F. The cost of computer equipment should not include the consultant’s fee to supervise the installation of the equipment. T, F. The cost of new equipment is called a revenue expenditure because it will help generate revenue for the company in the future. T, F. Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are capitalized under betterments. T, F. Taking a periodic physical inventory of fixed assets is an important internal control measure. T, F. The method used to calculate depletion expense of a natural resource is the straight-line method. T, F. Intangible assets differ from property, plant and equipment assets because they lack physical substance. T, F. The sum-of-years digits method is the only depreciation method that does not consider salvage value at the beginning of depreciation computation. T, F. The amount of depreciation expense for the first full year of use of a fixed asset costing $65,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $20,000 by using the sum-of-years-digits method. T, F. The cost of a patent with a remaining legal life of 10 years and estimated useful life of 7 years is amortized over 10 years. T, F. Costs associated with normal research and development activities should be treated as intangible asset when they result in patentable products. T, F. Legal fees to defend a patent are expensed in the period incurred.

T, F. Any difference between the fair value of the asset surrendered and its book value should be recognized only if there is gain on the exchange. T, F. Exploration and development costs are expensed under the successful effort method in the oil and petroleum industry. T, F. The acquisition costs of property, plant and equipment should include all normal, reasonable and necessary costs to get the assets ready for use. T, F. When land is purchased for construction of a new building, the cost of removing any structures on the land should be charged to the building account. T, F. The cost of computer equipment should not include the consultant’s fee to supervise the installation of the equipment. T, F. The cost of new equipment is called a revenue expenditure because it will help generate revenue for the company in the future. T, F. Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are capitalized under betterments. T, F. Taking a periodic physical inventory of fixed assets is an important internal control measure. T, F. The method used to calculate depletion expense of a natural resource is the straight-line method. T, F. Intangible assets differ from property, plant and equipment assets because they lack physical substance. T, F. The sum-of-years digits method is the only depreciation method that does not consider salvage value at the beginning of depreciation computation. T, F. The amount of depreciation expense for the first full year of use of a fixed asset costing $65,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $20,000 by using the sum-of-years-digits method. T, F. The cost of a patent with a remaining legal life of 10 years and estimated useful life of 7 years is amortized over 10 years. T, F. Costs associated with normal research and development activities should be treated as intangible asset when they result in patentable products. T, F. Legal fees to defend a patent are expensed in the period incurred.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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T, F. Any difference between the fair value of the asset surrendered and its book value should be recognized only if there is gain on the exchange.
T, F. Exploration and development costs are expensed under the successful effort method in the oil and petroleum industry.
T, F. The acquisition costs of property, plant and equipment should include all normal, reasonable and necessary costs to get the assets ready for use.
T, F. When land is purchased for construction of a new building, the cost of removing any structures on the land should be charged to the building account.
T, F. The cost of computer equipment should not include the consultant’s fee to supervise the installation of the equipment.
T, F. The cost of new equipment is called a revenue expenditure because it will help generate revenue for the company in the future.
T, F. Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are capitalized under betterments.
T, F. Taking a periodic physical inventory of fixed assets is an important internal control measure.
T, F. The method used to calculate depletion expense of a natural resource is the straight-line method.
T, F. Intangible assets differ from property, plant and equipment assets because they lack physical substance.
T, F. The sum-of-years digits method is the only depreciation method that does not consider salvage value at the beginning of depreciation computation.
T, F. The amount of depreciation expense for the first full year of use of a fixed asset costing $65,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $20,000 by using the sum-of-years-digits method.
T, F. The cost of a patent with a remaining legal life of 10 years and estimated useful life of 7 years is amortized over 10 years.
T, F. Costs associated with normal research and development activities should be treated as intangible asset when they result in patentable products.
T, F. Legal fees to defend a patent are expensed in the period incurred.

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