Chp. 11 Smartbook

Depletion Base

The cost of a natural resource less its anticipated residual value is called the?

Straight-line method

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

Assets to be sold

The excess of book value over fair value less costs to sell

Goodwill

The excess of book value over implied fair value

Assets to be held and used

The excess of book value over the fair value

Service life

Which of the following terms is equivalent to an asset's useful life to a particular company? Life expectancy Service life Base life Physical life

On a prospective basis in the current year and future years.

A change in accounting estimate requires a company to account for the change As an error in the previous periods. By retroactively restating the financial statements. On a prospective basis in the current year and future years. As a prior period adjustment.

Depreciation

Allocation of the cost of a tangible fixed asset?

Amortization

Allocation of the cost of an intangible asset?

Depletion

Allocation of the cost of natural resources?

book value over the fair value less costs to sell.

An asset impairment for assets to be held for sale is measured as the excess of the? historical cost less fair value. accumulated depreciation less fair value. book value over the fair value less costs to sell.

True

Assets held for sale are not depreciated or amortized while classified as held for sale TorF?

Materiality

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?

units-of-production

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.

Reporting Unit

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.

credit to assets of $52,000. debit to loss on impairment of $12,000. debit to accumulated depreciation of $40,000.

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.)

debit to loss on impairment of $12,000.

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? debit impairment loss of $40,000. debit to assets of $48,000. debit to loss on impairment of $12,000. credit to impairment expense of $12,000.

Intangible assets with indefinite lives.

No amortization is recorded for? intangible assets valued at fair value. intangible assets with indefinite lives. intangible assets with finite lives. intangible assets used in production.

$10,000 Reason: The depreciation rate is 1/5 x 2 = 40%. $100,000 x 40% x 1/4 = $10,000 depreciation expense in year 1.

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?

$5,000 Reason: $100,000/5 years = $20,000 per year x 1/4 year = $5,000 depreciation expense in year 1.

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?

Book Value

To determine whether an impairment loss should be recorded for goodwill, a company should determine if the fair value of the reporting unit is less than its? net present value. book value. discounted future cash flows. net realizable value.

impairment

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

Book value

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.

Trademarks

Which of the following intangible assets are usually considered to have indefinite lives? Franchises Patents Trademarks Copyrights

Units-of-production method

Which of the following is an activity-based depreciation method? Double-declining-balance method Straight-line method Units-of-production method Sum-of-the-years'-digits method