ACCT 301 Smartbook Chapter 11 Property, Plant, and Equipment and Intangible Assets solutions answers

ACCT 301 Smartbook Chapter 11 Property, Plant, and Equipment and Intangible Assets Utilization solutions complete answers 

 

The allocation of the cost of a tangible fixed asset is referred to as       , whereas the allocation of the cost of an intangible asset is referred to as        . (Enter one word per blank.)

 

The service life or useful life of an asset is

 

The depreciation method that allocates an equal amount of the depreciable base to each year of the asset's service life is the

 

If a company bases depreciation expense on the life of a machine in hours, and depreciates the machine for the number of hours used during the year, it is using the ______ method of depreciation.

 

On October 1, year 1, Kirby Corp. purchased equipment for $100,000. The equipment has a useful life of 5 years with no residual value. Kirby uses the straight-line method of depreciation. The partial year depreciation for year 1 is

 

Match each term with its definition.

 

Which of the following terms is equivalent to an asset's useful life to a particular company?

 

When selling a fixed asset, the seller recognizes a gain or loss for the difference between the consideration received and the ______ value of the asset sold.

 

Which statement is true about the straight-line method of depreciation?

 

Group and composite depreciation commonly is used to

 

Which of the following is an activity-based depreciation method?

 

The cost of a natural resource less its anticipated residual value is called the              . (Enter one word per blank.)

 

On October 1, year 1, Johnson Corp. purchased equipment for $100,000. The equipment has a useful life of 5 years with no residual value. Johnson uses the double-declining-balance method of depreciation. The partial year depreciation for year 1 is

 

Allocation of the cost of an intangible asset is called

 

The gain or loss on disposal of an asset is calculated as

 

If obsolescence were expected to limit the longevity of a protected product, the useful life of a patent might be _________ its legal life.

 

What is the purpose of group or composite depreciation?

 

Which of the following intangible assets are usually considered to have indefinite lives?

 

For natural resources the depletion base is

 

If there is a change in an intangible asset's estimated useful life, the change is treated

 

The allocation of the cost of an intangible asset over its useful life is called

 

A change in depreciation method is treated as a change in estimate that is achieved by a change in accounting principle, and is accounted for

 

Which of the following are required when a material error is discovered in a subsequent accounting period that impacts retained earnings? (Select all that apply.)

 

The useful life of an intangible asset may be limited by what type of provisions? (Select all that apply.)

 

No amortization is recorded for

 

In accounting, the term impairment refers to

 

Which items are considered changes in estimates that would be treated on a prospective basis in the current period and future periods? (Select all that apply.)

 

True or false: When accounting for impairments, the two categories for recognizing and measuring the loss are tangible and intangible assets.

 

Which of the following accounting changes must be justified in the notes to the financial statements?

 

What are the issues when accounting for impairments? (Select all that apply.)

 

What is the accounting treatment for the discovery of a material error in a previous year?

 

The measurement of an impairment loss in step 2 is the difference between

 

When an asset has a significant decline in value and is written down, this is called ______.

 

Under U.S. GAAP, if a company recognizes an impairment loss,

 

When accounting for impairments, the two categories for recognizing and measuring the loss are

 

Marston acquired assets for $100,000. At the end of year 3, the assets had accumulated depreciation of $40,000. An impairment loss was indicated, and the fair value of the assets was $48,000. The journal entry to record the impairment loss will include (Select all that apply.)

 

For plant, property, and equipment, U.S. GAAP requires the investigation of possible impairment

 

In determining whether an impairment loss should be recognized for goodwill, a company compares the book value of the reporting unit with

 

An impairment occurs when the

 

A subsequent expenditure for an asset increases the future benefits of the asset if it (Select all that apply.)

 

The acronym "MACRS" refers to a(n) _____ method that may be used for ______ purposes.

 

If an impairment loss is recognized for an intangible asset with a finite life, which of the following occurs? (Select all that apply.)

 

The retirement method for recording depreciation expense records depreciation

 

Marston acquired assets for $100,000. At the end of year 3, the assets had accumulated depreciation of $40,000. An impairment loss was indicated, and the fair value of the assets was $48,000. The journal entry to record the impairment loss will include a

 

A(n)               is an operating segment of a company or a component of an operating segment for which discrete financial information is available and management regularly reviews the operating results of that component. (Enter one word per blank.)

 

Expenditures subsequent to acquisition may be properly capitalized when they increase the asset's useful life or increase its productive capacity. However, most companies set thresholds for capitalizing these expenditures based on

 

The acronym MACRS stands for

 

The retirement depreciation method assumes a        cost approach in determining depreciation expense at the time the assets are disposed.

 

 

Accounting for impairment of value of assets with finite lives and those with indefinite lives              

Amortization is appropriate for intangible assets with            

The amount of use that the company expects to obtain from an asset before disposing of it is referred to as the _____ life of the asset.                   

An asset impairment for assets to be held for sale is measured as the excess of the              

Assets held for use that have a significant impairment of value should be                

At the beginning of year 1, Kuhn Corp. purchases equipment for $22,000. The equipment has a residual value of $2,000 and an expected useful life of 5 years. What is straight-line depreciation expense for year 3?             

At the beginning of Year 1, Mitchell Company purchased office equipment for $15,000. The machine has an estimated residual value of $1,000 and an estimated service life of 5 years. If Mitchell uses straight-line depreciation, it will make which of the following entries related to depreciation at the end of Year 1?              

At the beginning of year 1, Valerie Corp. purchases equipment for $10,000. The equipment has a residual value of $4,000 and an expected useful life of 4 years. What is straight-line depreciation expense for year 1?             

A change in accounting estimate requires a company to account for the change                  

The cumulative amount of a tangible asset's cost that has been depreciated in all prior years plus the current year is called            

Declining balance depreciation methods multiply _____ by an annual rate that is a multiple of the straight-line rate.                   

Depletion                 

Depreciation              

Emil Company expects that its asset will be more useful during early years of its life than during later years. In addition, the company estimates that repair costs will increase over time. Which method(s) may help equalize total expenses recognized over the service life of this asset?            

Expenditures classified as ______ involve the replacement of a major component of an asset.             

Expenditures for repairs and maintenance should be             

An expenditure that qualifies as an addition should be          

For assets using the group or composite method of depreciation, the assets will be depreciated over            

The formula for calculating declining balance depreciation is the depreciation rate per year times                

The group and composite methods of depreciation are similar because they both                

Group depreciation is calculated by               

The group depreciation method defines the collection of depreciable assets as those that                

Identify the correct treatment of recovered impairment losses relating to indefinite-life intangible assets under IFRS                   

If a company replaces a major component of an asset with a new component with the same characteristics of an old component, it is classified as             

An impairment loss for intangible assets with indefinite lives is calculated as the book value less the             

In calculating present value, a traditional approach incorporates what items into the discount rate?              

In measuring an impairment loss, the difference between the asset's book value and its fair value is             

Intangible assets with indefinite useful lives should be tested for impairment             

An intangible asset that is measured as the consideration paid less the fair value of the net identifiable assets is called                   

In Year 1, Orange Company determines that it will depreciate its equipment using the group method. The cost of equipment purchased, along with its residual values and estimated lives by type of equipment are as follows:

 

Over what term will the group be depreciated?          

JM Mining has a coal mine with a depletion base of $1,000,000. It is estimated that 500,000 tons will be extracted over the mine's useful life. During year 1, JM extracted 20,000 tons of coal. The depletion expense for year 1 is                 

The journal entry to recognize a loss on impairment of goodwill would include a                 

The journal entry to record an impairment loss on goodwill includes which of the following entries?             

The journal entry to record depreciation expense includes                

The key factor in classifying items as repairs and maintenance is that            

Loss on impairment of goodwill is typically reported as          

The measurement of an impairment loss for intangible assets with indefinite useful lives is a(n) ____ process.             

A new major component that is added to an existing asset is called              

On January 1, year 1, Clem Corp. purchased equipment for $160,000. The equipment has a residual value of $10,000, and has a life of 100,000 hours. Clem uses the units-of-production method of depreciation. In year 1, Clem used the machine 2,000 hours, and in year 2, Clem used the machine 3,000 hours. What is the depreciation expense for year 2?                 

On January 1, year 1, LaRose Corp. purchases equipment for $100,000. LaRose uses the double-declining-balance method of depreciation. The asset has a 5-year useful life and a $10,000 residual value. What is depreciation expense for year 1?                

On January 1, year 1, Mark Corp. purchases equipment for $300,000. The equipment has a 10-year life and a $50,000 residual value. Mark uses the double-declining-balance method of depreciation. What is depreciation expense for year 1?           

On January 1, year 1, Paisley Corp. purchases equipment for $200,000. Paisley uses the double-declining-balance method of depreciation. The asset has a 10-year useful life and a $10,000 residual value. What is the book value at the end of year 1?                

On January 1, year 1, Roark Corp. purchased equipment for $120,000. The equipment has a residual value of $20,000, and has a life of 1,000,000 hours. Roark uses the units-of-production method of depreciation. In year 1, Roark used the machine 30,000 hours, and in year 2, Roark used the machine 50,000 hours. What is the depreciation expense for year 2?                

The portion of a tangible asset's cost that is recognized as an expense in the current year is called               

Smith Company calculates annual depreciation of equipment by using the following formula: [(cost-residual value)/useful life]. Smith is applying the depreciation method referred to as              

Straight-line depreciation is calculated as the depreciable base divided by                

TR Mining has a mineral mine with a depletion base of $5,000,000. It is estimated that 20,000,000 tons will be extracted over the mine's useful life. During year 1, TR extracted 400,000 tons of minerals. The depletion expense for year 1 is                   

True or false: Assets held for sale are not depreciated or amortized while classified as held for sale.              

True or false: A write-down of an asset held and used can provide important information about the future cash flows a company expects to generate from using the asset.            

True or false: Expenditures that qualify as an addition should be expensed in the period incurred.                

True or false: Loss on impairment of goodwill is typically reported with amortization expense.           

True or false: Repairs and maintenance expenditures should be capitalized in the period incurred.                

The two categories for intangible assets are              

The types of expenditures that can occur subsequent to an asset's acquisition are                

Under IFRS reporting, an impairment loss for intangible assets with indefinite lives is the difference between the book value and the recoverable amount. The recoverable amount is the higher of the asset's value-in-use and its              

Under IFRS reporting, an impairment loss is measured as the difference between the book value and the:                

Under IFRS reporting, the level of testing of goodwill is at the           

Under U.S. GAAP an impairment loss is required when the undiscounted sum of estimated future cash flows from an asset is less than the asset's book value. Which of the following statements are true regarding recoverability under IFRS reporting?          

What item(s) are used to determine the present value of cash flows when the expected cash flow approach is used?                   

When using group depreciation, the total cost of the group is depreciated over the ___________ of the assets in the group.           

Which assets are required to be tested for impairment annually?                  

Which item qualifies as an addition and should be capitalized?          

Which of the following are accelerated methods of depreciation?                 

Which of the following are characteristics of goodwill?           

Which of the following are expenditures on assets subsequent to acquisition?           

Which of the following are not accelerated methods of depreciation?            

Which of the following are required disclosures for an impairment loss?                  

Which of the following are required disclosures for an impairment loss assuming the loss is not disclosed separately on the face of the income statement?            

Which of the following assets cannot be directly associated with any specific identifiable right and is not separable from the company as a whole?          

Which of the following characteristics are unique to goodwill?           

Which of the following events would require testing for possible impairment?           

Which of the following events would require the investigation of a possible impairment?                 

Which of the following expenditures are classified as repairs and maintenance for a vehicle?             

Which of the following would be considered "expenditures subsequent to acquisition" for a building?