Chapter 8

Gains and losses are reported

as non-operating items on the income statement

Which of the following conveys an exclusive right to produce and sell the content contained in a textbook?

copyright

Which of the following is not a tangible asset?

copyright

Tangier Co. paid cash to purchase a long-term operational asset. The cost of the asset will be expensed (depreciated)

over the useful life of the asset

The MACRS method of determining depreciation expense has been established by the

Internal Revenue Service

The acronym MACRS stands for which the following?

Modified Accelerated Cost Recovery System

Which of the following is an intangible asset?

all of the answers are name of intangible assets. *(patent, copyright, trademark)

When reporting to the Internal Revenue System companies are most likely to use

an accelerated depreciation

All costs associated with a machine after it is operational are expensed the period they are incurred. This statement is

false

If a company has to change an estimate, such as the salvage value of an asset, the company is required to reissue prior yr statements that were based on the estimate. This statement is

false

The amount of depletion expense is accumulated in a contra asset account at the end of each accounting period. This statement is

false

The book value of most intangible assets is normally greater than the market value. This statement is

false

When the total estimated market value of assets acquired in a basket purchases greater than the cost of the purchase, the company making the purchase must recognize a gain. The statement is

false

Depletion is the term used to recognize expense associated with

natural resources

Computer equipment is a (an)

tangible asset

Which of the following is not an intangible asset?

timber

A franchise is an intangible asset that provides privileges related to other intangible assets. This statement is

true

Goodwill is recognized only when it is purchased. This statement is

true

Goodwill is the mix of variable that are unique to a particular company that enables it to produce average profits. This statement is

true

It is legal for a company to use one method of depreciation for tax reporting and a different method for financial reporting purposes. This statement is

true

Land is different from other tangible assets in that its utility is not diminished by its use. This statement is

true

The revenue stream for Marino Moving Co, fluctuates from yr to yr. Based on this information alone, Marino should use the

units-of-production method to compute depreciation expense