the månner 4. Costs incurred after a PPE is operating in originally intended by management are capitalized. 5. Costs incurred that are directly attributable to the acquisition of a PPE may be capitalized in full as cost of the asset or allocated in part to normal operations. 6. When the cost of a self-constructed asset is greater than the cost to acquire it from outside sources, the difference is recognized as loss if there is reliable evidence indicating that the cost is materially excessive because of construction inefficiencies or failures. 7. If the fair value of the asset given up in an exchange transaction that has commercial substance is not reliably determinable, the asset received is measured at its fair value, adjusted for any cash received or paid in the exchange. 3. If a party in an exchange transaction recognizes gain, this presupposes a loss on the part of the other contracting party. • PPE acquired by issuing securities are always recognized at the fair value of the securities issued. 0. A PPE acquired from donation is initially recognized at the fair value of the asset given up.

the månner 4. Costs incurred after a PPE is operating in originally intended by management are capitalized. 5. Costs incurred that are directly attributable to the acquisition of a PPE may be capitalized in full as cost of the asset or allocated in part to normal operations. 6. When the cost of a self-constructed asset is greater than the cost to acquire it from outside sources, the difference is recognized as loss if there is reliable evidence indicating that the cost is materially excessive because of construction inefficiencies or failures. 7. If the fair value of the asset given up in an exchange transaction that has commercial substance is not reliably determinable, the asset received is measured at its fair value, adjusted for any cash received or paid in the exchange. 3. If a party in an exchange transaction recognizes gain, this presupposes a loss on the part of the other contracting party. • PPE acquired by issuing securities are always recognized at the fair value of the securities issued. 0. A PPE acquired from donation is initially recognized at the fair value of the asset given up.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4MC: Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers...

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True or false _________ Costs incurred that are directly attributable to the acquisition of a PPE may be capitalized in full cost of the asset or allocated in part to noraml operations.__________ When cost of a self-constructed assets is greater than the cost to acquire it from outside sources, the difference is recognized as loss if there is reliable evidences indicating that the cost is materially excessive, because of construction inefficiencies or failures.
Which of the following is INCORRECT regarding depreciation? Select one: O a. It is not a matter of valuation. O b. It is a means of cost allocation. Oc. O d. It is an attempt to reflect the fair market values of the related assets. It is part of the matching of revenues and expenses.
True or False 1. charges directly related to construction of an asset may be charged in full to the cost of the assest or allocated in part to normal operations. 2. When the cost of a self-construct asset is greater than the cost acquire it from outside sources , the difference is recognize as loss if there is evidence indicating that the cost is materially excessive because of construction inefficies .
In which of the following situations would a cost incurred after an asset’s acquisition be capitalized? A.The useful life of the asset is increased. B.The amount of the expenditure must be immaterial. C.The expenditure is necessary to maintain the working order of the asset. D.There is no increase in the useful life of an asset.
All of the following are true regarding recovery of impairments for intangible assets except a. After a recovery of impairment has been recognized, the carrying value of the asset reported on the statement of financial position will be the higher of the fair value less cost to sell or the value-in-use. O b. A recovery of impairment will be reported in the "Other income and expense" section of the income statement. C. The amount of the recovery is limited to the carrying value of the asset that would have been reported had no impairment occurred. O d. No recovery of impairment is allowed for goodwill.
An entity that acquires an intangible asset may use the revaluation modelfor subsequent measurement only if A. The useful life of the intangible asset can be reliably determined.B. An active market exists for the intangible asset.C. The cost of the intangible asset can be measured reliably.D. The intangible asset is a monetary asset.
Which of the following is a false statement regarding revaluation of PPE?A. Revalued amount is either fair value or depreciated replacement cost.B. If simultaneous revaluation is not possible, revaluation can be done on arolling basis provided revaluation of the class of assets is completed withina short period of time and provided the revaluations are kept up to date.C. The difference between the PPE’s carrying amount and its revalued amount isknown as revaluation surplus and should be presented in the statement ofcomprehensive income, net of applicable tax.D. When an asset's carrying amount is increased as a result of revaluation, theincrease shall always be credited to revaluation surplus regardless of theexistence of previous impairment loss recognized. Which of the following should be included as cost of inventory?A. Depreciation expense of the delivery equipment.B. Depreciation expense of the factory machinery.C. Storage cost of finished goods.D. None from the choices. In…
Which statement is correct regarding derecognition of financial assets? A. Transfer of risks and rewards is evaluated by determining the transferee’s ability to sell the asset. B. A sale and repurchase transaction where the repurchase price is a fixed price is a transfer of financial asset that qualifies for derecognition. C. The entity shall continue to recognize the transferred asset in its entirety if the transfer does not qualify for derecognition because the entity has retained substantially all the risks and rewards of ownership of the transferred asset. D. If an entity neither transfers nor retains substantially all the risks and rewards of ownership of a transferred asset, the entity shall continue to recognize the transferred asset to the extent of its continuing involvement.
The general rule in the accounting treatment of research and development costs is A. Capitalize all costs as assets when incurred and amortized when revenue is earned. B. Treat all costs as current expenses as incurred. C. Capitalize selectively, and predetermine the conditions that would require capitalization as well as those that would be written off as current expenses. D. Accumulate all costs in a special intangible asset account until a determination can be made as to the degree of future benefits.
When a destroyed business asset is replaced, which of the following is true? a. The excess replacement cost over the carrying value of the destroyed asset is capitalized. b. The replacement cost is capitalized and the carrying value is deductible as loss. c. The replacement cost is capitalized and the carrying value is disregarded. d. Answer not given
IFRS: permits reversal of impairment losses when there has been a change in economic conditions. O requires expensing of all R&D costs. O permits revaluation for goodwill. O permits capitalization of all internally generated intangible assets.
4. In full cost and successful efforts accounting, costs are amortized over either proved reserves (PR) or proved developed reserves (PDR). Fill in the following table to indicate which reserves (PR or PDR) should be used to amortize the costs under each accounting method. If the costs should not be amortized, put an X to indicate no amortization. Cost a. Proved property acquisition b. Unproved property acquisition c. Successful exploratory drilling d. Successful development drilling e. Unsuccessful exploratory drilling f. Unsuccessful development drilling g. G&G costs h. Wells-in-progress-proved property SE FC