The following would affect the net income on the last year of the useful life of a long-lived asset with a related dismantling cost, except a.) Salvage value of the long-lived asset b.) Interest expense on the decommissioning liability c.) Depreciation of the long-lived asset d.) Gain or loss on the settlement of decommissioning liability

The following would affect the net income on the last year of the useful life of a long-lived asset with a related dismantling cost, except a.) Salvage value of the long-lived asset b.) Interest expense on the decommissioning liability c.) Depreciation of the long-lived asset d.) Gain or loss on the settlement of decommissioning liability

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 9MC: A fixed asset with a 5-year estimated useful life is sold during the second year. How would the use...

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How are intangible assets with an indefinite life treated? A. They are depreciated. B. They are amortized. C. They are depleted. D. They are tested yearly for impairment.
The estimated economic life of an asset is also known as ________. A. residual value B. book value C. salvage life D. useful life
A fixed asset with a 5-year estimated useful life is sold during the second year. How would the use of the straight-line method of depreciation instead of the double-declining-balance method of depreciation affect the amount of gain or loss on the sale of the fixed asset?
The straight-line method of depreciation allocates the cost of an asset more rapidly than the sum-of-the-years-digits method.
Which of the following is not true about the MACRS depreciation system: A salvage value must be determined before depreciation percentages are applied to depreciable real estate. Residential rental buildings are depreciated over 27.5 years straight-line. Commercial real estate buildings are depreciated over 39 years straight-line. No matter when during the month depreciable real estate is purchased, it is considered to have been placed in service at mid-month for MACRS depreciation purposes.
Which of the following statements if not true? a. Depreciation is the process of allocating the purchase price of an asset minues its residual value to expense, for each period benefited by the asset. b. The cost of an asset includes all acquisition costs necessary to obtain the benefits to be derived from the asset. c. The service life of an asset is the measure of the number of years of service expected from the asset before its disposal. d. The residual value of an asset is the difference between the expected book value of the asset at the end of its service and the cost of disposal.
Which of the following is considered when depreciating an asset under the cost model? The cost of the asset. The change in the fair value of the asset. The useful life of the asset. Both a and b. Which of the following depreciation methods will most likely result in the highest amount of reported profit in the early years of an asset’s useful life? Straight line 150% declining balance Double declining balance Sum-of-the-years’ digits The most commonly used depreciation method is the straight-line method. replacement method. depreciation method based on revenue. inventory method.
Which of the following best describes an accelerated depreciation method? A. A method by which an equal amount of expense is assigned for every full year of use. B. A method by which depreciation is based on the level of actual usage rather than the passage of time. C. A method of determining depreciation which assigns larger expenses to the initial years of an asset’s service and smaller expenses to the later years. D. A method of allocating the cost of a wasting asset to expense over the periods during which the value is removed from the property.
Which of the following is not a requirement for an asset to be depreciable?a. It must have a life longer than 1 year b. It must have a basis(initial purchase plus installation cost) greater than $1,000 c. It must be held with the intent to produce income d. It must wear out or get used up.
which method of depreciation is used when the cost of an asset is written off in equal amounts over it's expected life
Which of the following best describes depreciation? A.ccounts for the market value of a physical asset B.Part of the cost of a physical asset allocated as an expense to each time period in which the asset is used. C.Shows the increase in value of a physical asset over the asset’s useful life D.Shows the drop in value of an asset when the asset is first used by an entity
A plant asset's book value equals its estimated salvage value: A. On the date of the asset's disposal B. At the end of the asset's useful life C. On each date the asset's depreciation is brought up to date. D. At any time throughout the asset's useful life E. None of these.