Time left 2:10:21 Question 1 Not yet answered Marked out of 15 Flag question Question text Instruction: - Answer ALL questions. - Assess the correctness of each of the following pair of statements. 1. First: Depreciation, depletion, and amortization all involve the allocation of the cost of property, plant and equipment (PPE) to expense. Second: An accelerated depreciation method is appropriate when the asset’s economic usefulness is the same each year. Answer 1 Question 1 Both statements true 2. First: The declining-balance method does not deduct the residual value in computing the depreciation base. Second: The recoverable amount used to impairment test a long-lived tangible asset is defined as the asset’s fair value less costs to sell. Answer 2 Question 1 Both statements true 3. First: 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. Second: Land acquired for resale or disposal is more appropriately classified as inventory rather than property, plant and equipment. Answer 3 Question 1 Both statements true 4. First: The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned. Second: 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. Answer 4 Question 1 First statement false and second statement true 5. First: 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. Second: 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. Answer 5 Question 1 First statement false and second statement true 6. First: If the recoverable amount of an indefinite-life intangible other than goodwill is less than its carrying value, an impairment loss must be recognized. Second: Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Time left 2:10:21 Question 1 Not yet answered Marked out of 15 Flag question Question text Instruction: - Answer ALL questions. - Assess the correctness of each of the following pair of statements. 1. First: Depreciation, depletion, and amortization all involve the allocation of the cost of property, plant and equipment (PPE) to expense. Second: An accelerated depreciation method is appropriate when the asset’s economic usefulness is the same each year. Answer 1 Question 1 Both statements true 2. First: The declining-balance method does not deduct the residual value in computing the depreciation base. Second: The recoverable amount used to impairment test a long-lived tangible asset is defined as the asset’s fair value less costs to sell. Answer 2 Question 1 Both statements true 3. First: 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. Second: Land acquired for resale or disposal is more appropriately classified as inventory rather than property, plant and equipment. Answer 3 Question 1 Both statements true 4. First: The impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned. Second: 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. Answer 4 Question 1 First statement false and second statement true 5. First: 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. Second: 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. Answer 5 Question 1 First statement false and second statement true 6. First: If the recoverable amount of an indefinite-life intangible other than goodwill is less than its carrying value, an impairment loss must be recognized. Second: Research and development costs are recorded as an intangible asset if it is felt they will provide economic benefits in future years.
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