What has been the trend, over time, in FASB and IASB pronouncements with regard to values used in financial statements? ○ They have insisted on staying with historical cost They have announced that all assets and liabilities will be stated at current fair value starting in 2028 They have decided that all items now valued at fair value should be revalued at replacement cost

What has been the trend, over time, in FASB and IASB pronouncements with regard to values used in financial statements? ○ They have insisted on staying with historical cost They have announced that all assets and liabilities will be stated at current fair value starting in 2028 They have decided that all items now valued at fair value should be revalued at replacement cost

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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US GAAP generally follows historical cost accounting in reporting property, plant, and equipment (PP&E). IFRS is moving towards fair value accounting with respect to reporting PP&E. Which approach do you think is preferable? What are the pros & cons of each? In your analysis, keep in mind the point of view's of the public users, internal users, and practitioners.
Summarize the accounting rules that allow some but not all potential intangibles to be capitalized on the balance sheet. Using the reading of the Accounting's 21st century challenge explain why current accounting for intangibles is problematic and why the problem is difficult to address.
Place T or F in front of each of the following statements. 1. The straight-line method of depreciation is based on the assumption that depreciation expense can be regarded as a constant function of time. 2. Plant assets should be written down (below cost) when their market value has declined temporarily. 3. The accounting profession has developed specifically recommended procedures for recording appraisal increases with respect to plant assets. 4. An asset's cost minus its accumulated depreciation equals its book value. 5. The sum-of-the-years'-digits method of depreciation ignores salvage value in the computation of an asset's depreciable base. 6. When using the double-declining balance method of determining depreciation, a declining percentage is applied to a constant book value. 7. The book value of plant assets initially declines more rapidly under decreasing-charge methods than under the straight-line method. 8. Accounting depreciation is computed by…
In accounting, which statement accurately reflects the Historical Cost Accounting concept and its implications for financial reporting? a ) Historical Cost Accounting records assets at their original purchase price. b) Historical Cost Accounting adjusts asset values based on current market prices. c) Historical Cost Accounting emphasizes future projected values for assets. d) Historical Cost Accounting disregards the original purchase price of assets.
Which of the following is true? O The book value at the end of an asset's useful life will be the same under all the depreciation methods allowed under generally accepted accounting principles. The annual depreciation expense will usually differ under the various depreciation methods. The total depreciation in the accumulated depreciation account will be the same at the end of the asset's useful life under all the methods allowed under generally accepted accounting principles. O All are true.
TRUE OR FALSE FIFO produces a better matching of expenses and revenue when prices are rising. US GAAP requires LIFO when prices are rising. Accumulated depreciation is a liability account. Net book value and fair value are interchangeable. Land and land improvements are depreciated in the same way.
One of the main differences between U.S. GAAP and IAS/IFRS is the measurement of property, plant & equipment subsequent to initial recognition. Read IAS 16 and answer the following questions. Provide a list of the references you have used to search this topic. 1) What are the accounting models accepted under IFRS for the measurement of property, plant & equipment subsequent to initial recognition? 2) How often should the company revalue its property, plant & equipment under the revaluation model? 3) How should the revaluation gains and losses be accounted for and reported in the financial statements? 4) How should any claim for compensation from third parties for impairment be accounted for? 5) How should the recoverability of the carrying amount of property, plant & equipment be accounted for?
4. The order of the 'fair value hierarchy' nominated by the FASB's SFAS 157 is: i. Quoted prices for similar assets or liabilities in active markets, adjusted ii. Quoted prices for identical assets and liabilities in active reference markets, unadjusted iii. Multiple valuation techniques consistent with the market, income and cost approaches a. Levels ii, i, iii b. b. Levels i, ii, iii c. Levels iii, ii, i d. Levels ii, iii, it
IFRS requires annual reviews of long-lived assets (other than goodwill) for reversal indicators. A loss may be reversed up to the newly estimated recoverable amount, not to exceed the initial carrying amount adjusted for depreciation. This is a significant departure from GAAP, so what are the financial statement implications? Is it a good thing or bad?
Which of the following best describes depreciation?A It is a means of spreading the payment for the asset over its total estimated lifeB It represents the decline in the market value of the assetC It is a means of spreading the cost of an asset over its estimated useful lifeD It is a way of estimating the cash needed to replace the asset in the future
Which of the following statements is false? A.For a self constructed asset, capitalized interest should never exceed actual interest cost. B.A loss on exchange will always be recognized regardless of commercial substance. C.The cost to build an addition to an existing building should be expensed immediately. D.If a long-lived asset is acquired and will be paid over a number of years, the time value of money should be considered.
The generally accepted accounting principle that supports recording the value of a property at the purchase price when the market value is higher is the: O monetary principle O going concern principle O conservatism principle O cost principle