Value-in-use is O a. The discounted present value of future cash flows arising from use of the asset and from its disposal. O b. The amount at which an asset is recognized in the statement of financial position. O C. The higher of amasset's fair value less cost to sell and its market value. O d. The market value.

Value-in-use is O a. The discounted present value of future cash flows arising from use of the asset and from its disposal. O b. The amount at which an asset is recognized in the statement of financial position. O C. The higher of amasset's fair value less cost to sell and its market value. O d. The market value.

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter5: Adjusting Entries And The Work Sheet

Section: Chapter Questions

Problem 1MC: LO1 The purpose of depreciation is to (a) spread the cost of an asset over its useful life. (b) show...

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LO1 The purpose of depreciation is to (a) spread the cost of an asset over its useful life. (b) show the current market value of an asset. (c) set up a reserve fund to purchase a new asset. (d) expense the asset in the year it was purchased.
(5). Intangible assets are initially recorded at (a). cost (b). expected future value (c). expected present value of expected cash flows (d). present fair value
1. IAS 36 applies to which of the following assets? (a) Inventories. (b) Financial assets. (c) Assets held for sale. (d) Property, plant, and equipment. 2. Value-in-use is (a) The market value. (b) The discounted present value of future cash flows arising from use of the asset and from its disposal. (c) The higher of an asset’s fair value less cost to sell and its market value. (d) The amount at which the asset is recognized in the balance sheet. 3. If the fair value less costs to sell cannot be determined (a) The asset is not impaired. (b) The recoverable amount is the value-in-use. (c) The net realizable value is used. (d) The carrying value of the asset remains the same. 4. If assets are to be disposed of (a) The recoverable amount is the fair value less costs to sell. (b) The recoverable amount is the value-in-use. (c) The asset is not impaired. (d) The recoverable amount is the carrying value. 5. Estimates of future cash flows normally would cover projections over a maximum…
The basic principle of valuation states that the value of any asset is: O The sum of the present value of all cash flows generated by the assetO The sum of all future cash flows generated by the assetO The present value of next year's cash flow onlyO The degree of cash flow riskiness is not a relevant factor in valuation
The primary measurement basis is a.) The current market price if the asset currently held was sold on the open market. b.)The current market price if the asset held was purchased on the open market. c.) The present value of the cash flows that the asset is expected to generate. d.) The market price at the date the asset was acquired.
The primary measurement basis is A.The current market price if the asset currently held was sold on the open market. B. The current market price if the asset held was purchased on the open market. C. The present value of the cash flows that the asset is expected to generate. D. The market price at the date the asset was acquired.
b. Disregard the assumptions in Part a. What is the depreciable basis? What are the annual depreciation expenses? c. Calculate the annual sales revenues and costs (other than depreciation). Why is it important to include inflation when estimating cash flows? d. Calculate annual net operating profit after sales (NOPAT). Then calculate the operating cash flows.
Under IFRS, value-in-use is defined as: a. net realizable value. b. fair value. c. future cash flows discounted to present value. d. total future undiscounted cash flows.
Statement 1: In impairment loss, the discount rate being used is the current pretax rate that reflects the current assessment of the time value of money and the risks specific to the asset. It shall not reflect risk for which the future cash flow estimates have already been adjusted.Statement 2: In computing for impairment of intangible asset with indefinite life, future cash flows are divided by the risk-adjusted discount rate to get the present value. Statements 1 and 2 are true. Statement 1 is true while Statement 2 is false. Statement 1 is false while Statement 2 is true. Statements 1 and 2 are false.
Which of the following statements is true for historical cost valuations? (Select one or more) a. Present value of cash flows using historical interest rates is an item in which cash receipts or cash payments will occur over time, these future cash flows are then discounted at the interest rate in effect at the time of the initial transaction. Balance sheet examples include notes receivable and notes payable. b. Acquisition cost is the amount paid initially to acquire the asset, examples include prepayments, land, and intangibles with indefinite lives. c. Acquisition cost is the amount paid initially to acquire the asset, examples include amounts invested in research and development for intellectual property. d. Adjusted acquisition cost is the amount paid initially to acquire an asset less accumulated depreciation and amortization, examples include equipment and intangible assets with limited lives.
15. Intangible assets are initially recorded ata. expected future value.b. fair value.c. cost.d. present value
Under IFRS, the recoverable amount of an asset is The higher of an asset’s value in use or its fair value minus costs to sell. The estimated selling price in the ordinary course of business minus the estimated costs of completion and the estimated costs necessary to make the sale. The present value of the future cash flows expected to be derived from an asset. The amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties, minus the costs of disposal.