Which one of the following types of losses is excluded from the determination of net income in the income statement? material losses resulting from write off of intangibles O material losses resulting from sale of investments O material losses resulting from sale of assets not originally acquired for resale O material losses resulting from correction of errors related to prior periods

Which one of the following types of losses is excluded from the determination of net income in the income statement? material losses resulting from write off of intangibles O material losses resulting from sale of investments O material losses resulting from sale of assets not originally acquired for resale O material losses resulting from correction of errors related to prior periods

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 13MC: Which of the following represents an event that is less routine when accounting for long-term...

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The following statements relate to the depreciation of property, plant and equipment. Which statement is incorrect? A. the change in the expected pattern of consumption of economic benefits of a depreciation asset should be accounted for as a change in accounting policy and the effect is included in retained earnings. b. The change in the expected pattern of consumption of economic benefits of a depreciable asset should be accounted for as a change in accounting estimate and the effect is included in the determination of income or loss in the period of change and future periods. c The sum of unit method results in a charge based on the expected use or output of the asset D The useful life of an Item of property, plant and equipment should be reviewed periodically and it expectations are significantly different from previous estimates the depreciation charge for the current and future periods should be adjusted
Which of the following most accurately reflects the concept of depreciation as used in accounting? The proccess of charging the decline in value of an economic resource to income in the period in which the benefit occured. O The proccess of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. OA method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved. O An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording fair market value of tangible assets.
The depreciation expense is generally estimated based on some assumption such as percentage of sales or from a depreciation schedule. True False
When a loss contingency is recognized, where is it reported on the income statement?
Provide an explanation of how impairment losses on intangible assets should be recorded in income.
Under the historical accounting system, depreciation is calculated on the original cost of fixed assets with the result that only an amount equivalent to the original cost of the fixed assets is available for its replacement when its life is over. This results in which of the following problem? a. Mixing up of the holding gains and operating gains b. Fixed assets values are unrealistic c. Return on capital employed misleading d. Insufficient provision of depreciation
What is the purpose of charging depreciation in financial statements? A To allocate the cost of a non-current asset over the accounting periods expected to benefit from its use B To ensure that funds are available for the eventual replacement of the asset C To reduce the cost of the asset in the statement of financial position to its estimated market value D To account for the ‘wearing-out’ of the asset over its life
Which one of the following disclousures is required by generally accepted accounting principle? a. Depreciation expense for each major class of asset b. Balances of major classes of depreciable assets, by nature or function c. Accumulated depreciation on each depreciable asset d. An explanation of why the depreciation method used was selected by management
Which statement about depreciation is false?a. A major objective of depreciation accounting is to allocate the cost of using an assetagainst the revenues it helps to generate.b. Depreciation should not be recorded in years in which the market value of the asset hasincreased.c. Obsolescence as well as physical wear and tear should be considered when determiningthe period over which an asset should be depreciated.d. Depreciation is a process of allocating the cost of an asset to expense over its usefullife.
Explain the accounting treatment in the event that an impairment review of a non-current asset which has been previously revalued with a revaluation surplus revealed that the non-current asset has suffered an impairment loss.
Which of the following would appear as a prior period adjustment? Group of answer choices a correction in the calculation of earnings per share of a prior period a material difference between the actual and estimated uncollectible accounts receivable a material loss resulting from the sale of fixed assets which were acquired in a prior period material error in the computation of depreciation expense in the Year 1 that was discovered and corrected in the Year 3
Which of the following most accurately reflects the concept of depreciation as used in accounting? - The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred. - A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved. - The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. - An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.