Financial And Managerial Accounting
15th Edition
ISBN: 9781337902663
Author: WARREN, Carl S.
Publisher: Cengage Learning,
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Chapter 26, Problem 7DQ
To determine
Indicate the meaning of the $7,900
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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 others
What is proper time or time period over which to match the cost of an intangible asset with revenues if it is likely that the benfit of the asset will last fro an indefinite period?
a. 40 yrs
b. 50 yrs
c. immediately
d. at such time as reduction in value can be quantitatively determined
e. either a or b
f. none from the choices given
In 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.
Chapter 26 Solutions
Financial And Managerial Accounting
Ch. 26 - What are the principal objections to the use of...Ch. 26 - Discuss the principal limitations of the cash...Ch. 26 - Why would the average rate of return differ from...Ch. 26 - Prob. 4DQCh. 26 - Prob. 5DQCh. 26 - Prob. 6DQCh. 26 - Prob. 7DQCh. 26 - Two projects have an identical net present value...Ch. 26 - Prob. 9DQCh. 26 - What are the major disadvantages of the use of the...
Ch. 26 - Prob. 11DQCh. 26 - Prob. 12DQCh. 26 - Average rate of return Determine the average rate...Ch. 26 - Cash payback period A project has estimated annual...Ch. 26 - Prob. 3BECh. 26 - Internal rate of return A project is estimated to...Ch. 26 - Net present valueunequal lives Project 1 requires...Ch. 26 - Average rate of return The following data are...Ch. 26 - Average rate of returncost savings Maui...Ch. 26 - Average rate of returnnew product Hana Inc. is...Ch. 26 - Determine cash flows Natural Foods Inc. is...Ch. 26 - Prob. 5ECh. 26 - Cash payback method Lily Products Company is...Ch. 26 - Prob. 7ECh. 26 - Prob. 8ECh. 26 - Net present value methodannuity for a service...Ch. 26 - Net present value methodannuity Jones Excavation...Ch. 26 - Prob. 11ECh. 26 - Prob. 12ECh. 26 - Net present value method and present value index...Ch. 26 - Average rate of return, cash payback period, net...Ch. 26 - Prob. 15ECh. 26 - Internal rate of return method The internal rate...Ch. 26 - Prob. 17ECh. 26 - Internal rate of return methodtwo projects Munch N...Ch. 26 - Net present value method and internal rate of...Ch. 26 - Identify error in capital investment analysis...Ch. 26 - Prob. 21ECh. 26 - Prob. 22ECh. 26 - Prob. 1PACh. 26 - Cash payback period, net present value method, and...Ch. 26 - Prob. 3PACh. 26 - Net present value method, internal rate of return...Ch. 26 - Alternative capital investments The investment...Ch. 26 - Capital rationing decision for a service company...Ch. 26 - Prob. 1PBCh. 26 - Prob. 2PBCh. 26 - Net present value method, present value index, and...Ch. 26 - Net present value method, internal rate of return...Ch. 26 - Prob. 5PBCh. 26 - Clearcast Communications Inc. is considering...Ch. 26 - San Lucas Corporation is considering investment in...Ch. 26 - Assume San Lucas Corporation in MAD 26-1 assigns...Ch. 26 - Prob. 3MADCh. 26 - Prob. 4MADCh. 26 - Home Garden Inc. is considering the construction...Ch. 26 - Assume Home Garden Inc. in MAD 26-5 assigns the...Ch. 26 - Ethics in Action Danielle Hastings was recently...Ch. 26 - Prob. 4TIFCh. 26 - Prob. 5TIFCh. 26 - Prob. 6TIFCh. 26 - Foster Manufacturing is analyzing a capital...Ch. 26 - Staten Corporation is considering two mutually...Ch. 26 - Prob. 3CMACh. 26 - Prob. 4CMA
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- The Company provided the following data: Value of biological asset at acquisition cost on 12/31/19, P 600,000 Fair valuation surplus on initial recognition at fair value on 12/31/19 P 700,000 Change in fair value to 12/31/20 due to growth and price fluctuation, P 100,000 Decrease in fair value due to harvest, P 90,000 What is the carrying amount of the biological asset on December 31, 2020? What is the gain from change in fair value of biological assets in 2020?arrow_forwardWhich of the following values for an intangible asset would a company capitalize and amortize? a.) purchase price b.) research costs c.) residual value d.) development costsarrow_forwardUnder 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_forward
- Which of the following statements regarding the acquisition of PP&E is false? 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. D. The acquisition cost of land should include all things that prepared it for it's use including excavation. In interest capitalization related to self constructed assets, all of the following must occur before the capitalization window begins except: A. Expenditures for the assets have been incurred B. Depreciation of the asset being built has been recognized C. Activities that are necessary to get the asset ready for its intended use are in progress D.Interest has to be incurredarrow_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_forwardWhich of the following is NOT a requirement for an investment to be classified as “held for sale”? a. A buyer or potential buyer has been located. b. The asset is expected to be sold within a year. c. There is a committed plan by management to sell. d. The asset must be marketed at a reasonable price.arrow_forward
- For entities that report using IFRS, how are exploration and evaluation assets subsequently measured? Question 18 options: a) Using the cost or revaluation model. b) Using the cost model or fair value model. c) Using the cost model. d) Using the cost model or depreciation model.arrow_forward- What is the investment carrying amount at December 31, 2021? A. P1,920,000 B. P1,790,000 C. P1,730,000 D. P1,700,000 - Assume the excess of acquisition cost over the underlying equity acquired is due to a piece of equipment with remaining life of 5 years on the date of investment acquisition, and a straight-line depreciation basis, what is the investment carrying amount at December 31, 2021? A. P1,920,000 B. P1,790,000 C. P1,745,000 D. P1,730,000arrow_forwardA fixed asset with a cost of $25,974 and accumulated depreciation of $23,377 is traded for a similar asset priced at $40,828 (fair market value) in a transaction with commercial substance. Assuming a trade-in allowance of $4,683, the cost basis of the new asset is Select the correct answer. $43,425 $38,742 $40,828 $36,145arrow_forward
- Why 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_forwardTrue or False _____ PAS 16 defines depreciation as "the decrease in the value of an asset." ______ According to PAS 16, items of PPE are initially measured at cost and subsequently measured using either the cost model or the fair value model. _______ an entity acquires an asset for P120k. The asset is estimated to have a useful life of 10 years and a residual value P20K. tHE STRAIGHT LINE DEPRECIATION RATE BASED ON DEPRECIABE AMOUNT IS 10% _______ An entity acquires an asset for P1M. A P200k residual value is estimated for the asset. Ar the end of the asset's useful life, the accumulated depreciation wil be equal to P1M. _______ A machine acquired on the 20th of Julyv(and ready for its intended use as at this date) would most likely be depreciated starting on the 1st of August. _______ A change in the depreciation method, useful life or residual value of a PPE is accounted for retrospectively.arrow_forwardThe acquisition of a new machine with a purchase price of $96,072, transportation costs of $7,638, installation costs of $6,963, and special acquisition fees of $2,105, would be journalized with a debit to the asset account for a.$96,072 b.$112,778 c.$105,140 d.$103,035arrow_forward
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