Distinguish between measuring assets based on current cost and historical cost.

Q: Capital Expenditure and Depreciation

A: Carpet purchased is to be treated as a furniture under the heading of fixed assets.

Q: a) Describe the circumstances in which the revaluation model may be used in relation to non-current…

A: The revaluation model may be used in the following circumstances: 1)   If the fair value of the…

Q: how the value of the property is established through an appraisal?

A: Appraisal of a property is done to understand the highest probable price for a property and to…

Q: Define Asset turnover.

A: Ratio analysis  It is the financial analysis tool for measuring the profitability, liquidity,…

Q: Explain the difference in the accounting treatment of costs incurred to purchaseintangible assets…

A:

Q: Define current assets and list the typical asset categories included in this classification.

A:

Q: Define the term Accounting for Depreciation?

A: Depreciation:   It is the reduction in the value of an asset due to factors like normal usage or…

Q: Describe classifications of long term assets.

A: Long-term assets: Long – term assets are those assets that are generally held by a company for more…

Q: Discuss the rationale of using total assets as a basic in determining materiality.

A: The concept of materiality is fundamental to the entire audit process and is applied by auditor.  1.…

Q: Differentiate between permanent operating current assets andtemporary operating current assets.

A: Answer: Current assets are those assets that could be transformed into cash within a year, such as…

Q: What costs should be included when measuring the total cost to acquire a long-term asset?

A: Long-term assets: The assets which are used to generate revenue for the business operations for a…

Q: Which of the following terms describes expenditures made to repurpose an asset?

A: The asset is the future benefit of the company that would have to be sacrificed to pay off the…

Q: Briefly summarize the accounting treatment for intangible assets, explaining the difference between…

A: Intangible assets:

Q: Explain the difference between tangible and intangible long-lived, revenue-producing assets.

A: Tangible assets are those assets which appear in the physical form and it is measurable. Assets like…

Q: Describe how the value of any asset is determined.

A: An asset can be any tangible or intangible asset that can be owned by a business or individual to…

Q: Asset-Based approach in valuation

A: Assets are the future economic benefit of the company that is sacrificed in paying off the debt and…

Q: Define Asset turnover ratio.

A: Definition:   Asset turnover: This ratio analyzes the number of times sales or revenue generated…

Q: Match the following assets with its type. Current Asset, Fixed Asset, Contra Asset Accounts…

A: Current assets are assets that can be converted into cash in short period of time. Fixed assets are…

Q: Define the term depreciation expense.

A: Depreciation: Depreciation is a method of reducing the capitalized cost of long-lived operating…

Q: Explain Treatment of Depreciation Expenses?

A: Depreciation is the total charging of the cost of an asset over its normal valuable life. The method…

Q: Depreciation can be defined as the measure of cost or revalued amount of economic benefits of a…

A: Depreciation can also be defined as: It records the usage of a fixed asset over a period of time and…

Q: Define the term accumulated depreciation.

A:

Q: Distinguish between ‘Receipts and Payments Account’ and ‘Income and Expenditure Account’ on the…

A: Table showing difference between" Receipts and Payment Accounts" and "Income and Expenditure…

Q: Explain the term Treatment of Depreciation Expenses?

A: Depreciation is a charge calculated on the value of fixed assets, based on normal wear and tear due…

Q: Explain return on assets (ROA)

A: The formula to compute return on asset as follows:

Q: Distinguish between current assets and non-current assets, giving TWO examples of each type of…

A: Assets are the resources owned by an entity for running the daily operations of the business. These…

Q: The factors used to compute depreciation expense are an asset's: O Cost, residual value, and service…

A: Depreciation expense is the amount which shows the decrease in the value of asset over its useful…

Q: Determine an asset's depreciable life?

A: A tangible asset is a substantial resource. Tangible resources incorporate fixed resources including…

Q: Explain how to calculate asset turnover ratio.

A: Asset turnover ratio refers to how much sales is generated by every dollar invested in assets by the…

Q: How do we decide whether to capitalize (record as an asset) or expense a particular cost?

A: Expensing a cost implies that it is included on the income statement and is subtracted from revenue…

Q: What factors must be known or estimated in order to compute depreciation expense?

A: Definition: Depreciation: Depreciation is a decrease in the value of the fixed assets over a period…

Q: If a newly acquired asset is ‘held for sale’, the asset or disposal group will be measured at

A: A newly acquired asset is considered as a held for sale to a distributors when a non-current asset…

Q: What is meant by depreciation for the cost approach?

A: The cost of the property should not be more than the cost of acquiring and building the property.…

Q: Differentiate between tangible and intangible assets?

A: Tangible assets are those assets which appear in the physical form and it is measurable. Assets like…

Q: What are two advantages to basing the valuation of assets and liabilities on their historical cost?

A:

Q: Explain how long-lived assets are reported and analyzed.

A: Introduction:- long-lived assets means any asset which is expected to be used or hold more than one…

Q: Define the term the depreciable life of the asset?

A: Depreciation  is an accounting process through which allocation of an asset’s cost during its useful…

Q: How can we determine the unit profit of operating an asset?

A: Operating income: Operating income measures the organization’s profitability (includes all incomes…

Q: Evaluate the standard deviation factor's significance in comparing assets critically.

A: Answer: Concept: Standard deviation is the concept that helps us to analyze volatile market for…

Q: Explain how depreciation expense satisfies the definition of an expense

A: Depreciation is the amount with which an asset’s value decreases every year. Example:- Machinery…

Q: Analyze the disposal of long-lived tangible assets.

A: The long-lived tangible assets are the fixed assets of the company.

Liquidity Risk Exposure

Answer: c