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

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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)…
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.
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.
Once an asset has been determined to be impaired, the amount of impairment is measured as: The asset's cost minus the fair value The asset's future cash inflows minus the book value The asset's book value minus the fair value The asset's cost minus the book value
In a replacement analysis, the market value of the currently owned asset a. does not impact the cash flows of the replacement asset(s) in the opportunity cost approach b. does not impact the cash flows of the current asset in the cash flow approach if the current asset is kept c. is treated as a salvage value for the current asset in the cash flow approach if the current asset is kept d. is added to the first cost of the replacement asset(s) in the opportunity cost approach.
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
1. For each of the following scenarios, indicate whether a long-term asset has been impaired (Y for yes and N for no) and, if so, the amount of the loss that should be recorded. Prepare any necessary journal entry. Do you have to subtract the carrying amount and value in use amounts for each? For the journal entries, I don't understand which journal entries you have to do, can you please explain, thank you.
• 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.
4. The cost of an asset and its fair value are Select answer from the options below: a) irrelevant when the asset is used by the business in its operations. b)never the same. c) the same on the date of acquisition. d) the same when the asset is sold. 6. If the sum of the debit column equals the sum of the credit column in a trial balance, it indicates Select answer from the options below: a. no errors can be discovered. b. no errors have been made. c. the mathematical equality of the accounting equation. d . that all accounts reflect correct balances. 7. The final step in the recording process is to Select answer from the options below: a. enter the transaction in a journal. b. prepare a trial balance. c. transfer journal information to ledger accounts. d. analyze each transaction. 8. The time period assumption states that Select answer from the options below: a. the economic life of a business can be divided into artificial time periods. b. estimates should not be made if a…
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
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

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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).