Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
14th Edition
ISBN: 9781337541398
Author: Carl Warren; James M. Reeve; Jonathan Duchac
Publisher: Cengage Learning
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Chapter 11, Problem 7DQ
A
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Which one of the following is the proper dollar value of existing equipment to use in replacement analysis? A. Original cost B. Present market value if sold C. Present trade-in value D. Present book value E. Present market value if sold minus removal and selling expenses
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A. For a self constructed asset, capitalized interest can exceed actual interest cost.
B. If a long-lived asset is acquired and will be paid over a number of years, the time value of money should be considered.
C. The general rule of PP&E valuation is to value the asset received at the fair market value of what was given up.
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Chapter 11 Solutions
Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
Ch. 11 - What are the principal objections to the use of...Ch. 11 - Discuss the principal limitations of the cash...Ch. 11 - Prob. 3DQCh. 11 - Your boss has suggested that a one-year payback...Ch. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - A net present value analysis used to evaluate a...Ch. 11 - Two projects have an identical net present value...Ch. 11 - Prob. 9DQCh. 11 - What are the major disadvantages of the use of the...
Ch. 11 - Prob. 11DQCh. 11 - Prob. 12DQCh. 11 - Prob. 1BECh. 11 - Prob. 2BECh. 11 - Prob. 3BECh. 11 - Prob. 4BECh. 11 - Prob. 5BECh. 11 - Prob. 1ECh. 11 - Prob. 2ECh. 11 - Prob. 3ECh. 11 - Prob. 4ECh. 11 - Prob. 5ECh. 11 - Cash payback method Lily Products Company is...Ch. 11 - Prob. 7ECh. 11 - Prob. 8ECh. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Prob. 11ECh. 11 - Prob. 12ECh. 11 - Prob. 13ECh. 11 - Prob. 14ECh. 11 - Prob. 15ECh. 11 - Prob. 16ECh. 11 - Prob. 17ECh. 11 - Prob. 18ECh. 11 - Prob. 19ECh. 11 - Prob. 20ECh. 11 - Net present value-unequal lives Bunker Hill Mining...Ch. 11 - Prob. 22ECh. 11 - Average rate of return method, net present value...Ch. 11 - Prob. 2PACh. 11 - Net present value method, present value index, and...Ch. 11 - Net present value method, internal rate of return...Ch. 11 - Prob. 5PACh. 11 - Prob. 6PACh. 11 - Prob. 1PBCh. 11 - Prob. 2PBCh. 11 - Net present value method, present value index, and...Ch. 11 - Prob. 4PBCh. 11 - Prob. 5PBCh. 11 - Prob. 6PBCh. 11 - Prob. 1ADMCh. 11 - Prob. 2ADMCh. 11 - Prob. 3ADMCh. 11 - Ethics in Action Danielle Hastings was recently...
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- What costs should be included when measuring the total cost to acquire a long-term asset?arrow_forwardWhy is depreciation expense recognized? Select one: a. To provide a better estimate of the market value of the depreciated assets. b. So that the balance sheet value of plant assets will more accurately reflect the replacement cost of the assets. c. To ensure that cash will be available at the end of the assets' useful life in order to replace it. d. To match the cost of the asset against the revenue using a reasonable allocation. method. Save AnswersNextarrow_forwardwhich of the following statements in relation to the cost of the asset is true? A. all of the statements are true B. The cost includes cash equivalent paid C. The cost includes the fair value of any non monetary consideration given to acquire an asset D. The cost includes nonrefundable purchase taxesarrow_forward
- Which of the following research and development costs should always be capitalized? a. costs of intangibles purchased from othersb. costs of materials, equipment, and intangibles with alternative future uses purchased fromothersc. costs of equipment with an expected life greater than three yearsd. costs of contract services purchased from othersarrow_forwardWhich of the following best describes the higher of an asset's net selling price and its value in use? Select one: a. Recoverable amount b. Depreciable amount c. Revalued amount d. Carrying valuearrow_forwardUnder IFRS, research must be expensed but some development expenditures may be capitalized. To capitalize development expenditures, firms must demonstrate several factors that include all of the following except: Multiple Choice technical feasibility. length of time the intangible asset is expected to provide benefits. ability to use or sell the asset. how the intangible asset will generate probable future economic benefits.arrow_forward
- Under IFRS, a company that acquires an intangible asset may use the revaluation model for subsequent measurement only if a. The useful life of the intangible asset can be readily determined. b. An active market exists for the intangible asset. c. The cost of the intangible asset can be measured reliably. d. The intangible asset is a monetary asset.arrow_forwardWhat is the purpose of amortisation? To allocate the cost of an intangible non-current asset over its useful life To ensure that funds are available for the eventual purchase of a replacement non-current asset To reduce the cost of an intangible non-current asset in the statement of financial position to its estimated market value To account for the risk associated with intangible assetsarrow_forwardWhich of the following costs would be capitalized? a. Cost of research to determine whether a market for the product exists. b. Salaries of research staff. c. Engineering costs incurred to advance the product to the full production stage. d. Acquisition cost of equipment to be used on current research project only.arrow_forward
- Which of the following statements is true about assessing recoverability of property, plant and equipment? Group of answer choices If the sum of the undiscounted future cash flows exceeds the carrying value of the asset, then the asset is not impaired. If the sum of the undiscounted future cash flows exceeds the carrying value of the asset, then the asset is impaired. If the sum of the discounted future cash flows exceeds the carrying value of the asset, then the asset is not impaired. If the sum of the discounted future cash flows exceeds the carrying value of the asset, then the asset is impaired.arrow_forwardWhen determining the best time to replace an existing asset, for what reason would you need to use marginal analysis?a. To determine what the most appropriate tax rate for the project should beb. To estimate the cost of capital for the new assetc. To determine if the defender asset should be used beyond its ESL.d. To determine the length of time the challenger asset should be used once it is placed into service.arrow_forwardIn the summation (cost) method of valuation, which of the following steps is the ONLY one that a valuer would take in estimating value? a. Estimate the net operating income of the property. b. Determine the value of the land using the Assessed Annual Value and tax rate. c. Estimate the accrued depreciation. d. Calculate the acquisition price of the construction material used when the structure was built.arrow_forward
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Fixed Asset Replacement Decision 1235; Author: Accounting Instruction, Help, & How To;https://www.youtube.com/watch?v=LJRzn9K8Nwk;License: Standard Youtube License