Accounting Smartbooks

The accounting treatment for a planned switch to straight-line depreciation from an accelerated method is the same as a change in method.

depreciation

Which of the following are noncurrent tangible assets?

equipment property

When assets are purchased in a group for a single sum, it is referred to as a

lump sum

Property, plant, and equipment typically include

machinery cars and trucks furniture

A lump-sum acquisition of assets requires that an allocation is made to each individual asset based on the asset's

relative fair value

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

It allocates an equal amount of depreciation to each year of the asset's service life.

At the beginning of year 1, Looby Corp. purchases equipment for $100,000. The equipment has a residual value of $20,000 and an expected useful life of 10 years. What is accumulated depreciation at the end of year 2 using straight-line depreciation?

16,000

Which are examples of intangibles that might be recognized and valued as assets apart from goodwill?

Copyrights Trademarks Patents

Match each term with its definition.

Depreciation matches Allocation of the cost of a tangible fixed asset Allocation of the cost of a tangible fixed asset Depletion matches Allocation of the cost of natural resources Allocation of the cost of natural resources Amortization matches Allocation of the cost of an intangible asset Allocation of the cost of an intangible asset

Under what circumstances are accelerated depreciation methods most appropriate?

For an asset that will be used extensively in earlier years of its life. For an asset that has high repair and maintenance costs later in life.

Match each factor to its definition.

Service life matches The estimated use that the company expects to receive from the asset Allocation method matches The pattern in which the usefulness is expected to be consumed Allocation base The cost of the asset that is expected to be consumed

The distinction between land and land improvements is that:

land has an indefinite life

An asset retirement obligation must be recognized

only if it is a legal obligation.

Land, building, machinery, furniture, and equipment are typically are reported as part of:

property, plant, and equipment