When an asset is held for sale: Question 10 options: the asset is remeasured at the lower of carrying (book) value and fair value less costs to sell. it must related to discontinued operations. the company continues to record depreciation on the asset. the asset is remeasured at the lower of fair value and carrying (book) value.The matching principle is best demonstrated by: Question 11 options: measuring expenses correctly. not recognizing any expenses until some revenue has been received. recognizing prepaid rent as revenue. associating effort (expenses) with accomplishment (revenues).

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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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Put yes or no in front of each of the following statements: 1- () An inventory is the inventory of assets and liabilities in terms of quantity and peak 2- () The reducing premium represents a percentage of the net value of the fixed asset 3- () The imposition of the independence of the accounting unit states that the project has an independent legal personality over the personality of the owner 4- () One of the objectives of the inventory is to determine the real value of the liabilities and assets in the project 5- () Expenses paid in advance from other credit balances that appear on the right side of the balance sheet 6- () The principle of prudence and caution stipulates that one must be careful not to record potential expenses, other than potential revenues
Consolidated Balance Sheet Working Paper, Identifiable Intangibles International Auto (IA) acquires all of the stock of Genuine Parts (GP) and reports the acquisition as a stock investment on its own books. The acquisition involves the following payments. All amounts are in thousands. Cash paid to GP shareholders $10,000 2,400 Cash paid to consultants and lawyers Fair value of new IA stock issued, 1,000 shares, $4 par 72,000 1,800 500 Stock registration fees, paid in cash Fair value of earnings contingency The earnings contingency, if paid, will occur three years subsequent to the acquisition. The balance sheet accounts of GP and IA, just prior to the acquisition, are as follows: International Auto (in thousands) Current assets Fixed assets, net Trademarks Current liabilities Long-term liabilities Common stock, par value Additional paid-in capital Retained earnings Accumulated other comprehensive income Treasury stock Total Book Value Dr (Cr) $60,000 840,000 178,000 (50,000) (700,000)…
In determining the value in use, which of the following cash flow is excluded from the computation? I. Income tax receipts or payments. II. Net cash flows received or paid on the disposal of the asset at the end of its useful life in an arm's length transaction which is after using the asset. III. Future costs of improving or enhancing the asset's performance.
Fair value as a method of asset measurement is defined as: Multiple Choice O O the cost of an asset adjusted for the depreciation or amortization accumulated over its lifetime. price that would be received to sell assets in an orderly transaction between market participants on a given date. the net amount of cash into which an asset could be converted in the ordinary course of business. the value of what is given in exchange for the asset at its initial acquisition.
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. options : both statement false first statement true and second statement false fisrt statement false and second statement ttrue . both sttament true
• X assessed its purchase of Y and determined that they expect Y to continue increasing in value for the next several years. It is appropriate for X to: O Conclude that a qualitative test determined no impairment is necessary. Conduct a two-step quantitative test. Record an impairment. O All of the above are acceptable.
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Which one of the following statements regarding the book value of an asset is correct? Multiple Choice О It reflects the original cost of the asset less accumulated depreciation. O It is the original cost at which the asset was purchased. It is the original cost of the asset minus the depreciation expense for that asset during the year. O It is the fair value of the asset if the asset is sold.
While calculating operating profit which will not be added back to net profit a. Preliminary Expenses Written off b. Depreciation c. Loss on Sale of Asset d. Rent Expenses
1. It is a depreciation method based on the assumption that the value of a property is directly proportional to its age. a. Straight Line Method b. Sinking Fund Method c. Declining Balance Method d. Service Output Method 2. Which of the following is NOT a requirement of a depreciation method? a. It should be simple b. It should recover the capital c. BIR approved d. The book value should be higher than the market value 3. The decrease in the purchasing power of money a. Devaluation b. Depreciation c. Inflation d. Depletion
A long-term asset that is retired from operations and held for disposal or sale is valued at ________. Group of answer choices value in use replacement cost lower of cost or market lower of carrying value or net realizable value
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.

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	the asset is remeasured at the lower of carrying (book) value and fair value less costs to sell.
	it must related to discontinued operations.
	the company continues to record depreciation on the asset.
	the asset is remeasured at the lower of fair value and carrying (book) value.

	measuring expenses correctly.
	not recognizing any expenses until some revenue has been received.
	recognizing prepaid rent as revenue.
	associating effort (expenses) with accomplishment (revenues).