ADVANCED ACCOUNTING-EBOOK ACCESS
14th Edition
ISBN: 9781264157068
Author: Hoyle
Publisher: MCG
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Chapter 3, Problem 39AP
To determine
Discuss the cost savings that may result from a private company electing to amortize
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Students have asked these similar questions
Indicate whether the following items are capitalized or expensed in the current year.
a.Purchase cost of a patent from a competitor.
b.Research costs.
c.Development costs (after achieving economic viability).
d.Organizational costs.
e.Costs incurred internally to create goodwill.
Indicate whether the following items are capitalized or expensed in the current year.
a. Purchase cost of a patent from a competitor.
b. Research and development costs.
c. Organizational costs.
d. Costs incurred internally to create goodwill.
5. Which of the following is an element of cost?
a. Cost of employee benefits not directly associated with the acquisition of PPE
b. Initial estimate of the cost of dismantling and removing the item and restoring the site on which it is located, the obligation of which an entity incurs.
c. Advertising and promotion
d. initial operating losses
e. Refundable purchase taxes
Chapter 3 Solutions
ADVANCED ACCOUNTING-EBOOK ACCESS
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- When a plant asset is traded for another of similar asset, losses on the asset traded are not recognized. ____ 7. Receiving payment prior to delivering goods or services causes a current liability to be incurred. ____ 8. One of the most popular defined benefit plans is the 401K plan. ____ 9. All long-term liabilities eventually become current liabilities. ____ 10. The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future True and false questions....arrow_forwardWhich of the following statements regarding IFRS impairment testing for goodwill is false? Group of answer choices If the impairment loss is greater than the book value of goodwill, the cash-generating unit proportionally reduces the carrying value of other assets. The firm reports an impairment loss when the recoverable amount of the cash-generating unit is less than the carrying value of the cash-generating unit, including goodwill. IFRS requires an impairment test for goodwill whenever there are significant impairment indicators. The firm can perform the fair value measurement for each cash-generating unit at any time during the fiscal year, as long as it uses the measurement date consistently.arrow_forwardThe following expenditures shall be expensed when incurred, except O Payment in advance of delivery of goods or the rendering of services. O Start up costs O Advertising and promotion costs O Business relocation or reorganization costs Which of the following items would qualify as an intangible asset? * College tuition fees paid to employees who decide to enroll in an executive MBA program while working with the company. O Legal costs paid to intellectual property lawyers to register a patent. O Advertising and promotion on the launch of a huge product. Operating losses during the initial stages of the project. Which is not considered a research and development activity? O Design, construction and operation of a pilot plant. O Laboratory research aimed at discovery of new knowledge. O Conceptual formulation and design of possible product or process. O Routine on-going effort to refine, enrich or improve quality of existing product. Which statement is correct concerning the amortization…arrow_forward
- If a company constructs a laboratory building to be used as a research and development facility, the cost of the laboratory building is matched against earnings as O depreciation expensed as part of research and development costs. O depreciation or immediate write-off depending on company policy. O research and development expense in the period(s) of construction. O an expense at such time as productive research and development has been obtained from the facility.arrow_forwardDistinguishing capital expenditures from revenue expenditures Consider the following expenditures: Classify each of the expenditures as a capital expenditure or a revenue expenditure related to machinery.arrow_forwardWhat is the systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life called (also thought of as the decline in usefulness of the fixed asset over time)? Group of answer choices fixing costing amortization depreciationarrow_forward
- Reproduction value is theA. Estimate of cost of reproducing, creating , developing or manufacturing a similar assetinternallyB. Salvage value of the assetC. Net value reflected in the company’s financial statementsD. Cost of similar assets that have the nearest equivalent value as of the valuation datearrow_forwardStatement 1: If there is an indication of impairment, it means that the remaining useful life, the depreciation/amortization method or the residual value for the asset needs to be reviewed and adjusted, even if no impairment loss is recognized for the asset. Statement 2: Replacement costs are generally appropriate in measuring the recoverable amount of the asset because replacement cost not only measures the cost of an asset but also measure the future economic benefits recoverable from its use and/or disposal. O Only Statement 1 is correct. O Only Statement 2 is correct. Both statements are correct. Both statements are incorrect.arrow_forwardSome intangible assets that companies may report on their balance sheets include patents, copyrights, trade names, software development costs, and goodwill. Required: Discuss which of these intangible assets would typically be amortized and which would not typically be amortized. Which of these intangibles must be reviewed for impairment annually?arrow_forward
- Current year’s depreciation charge relating to Equipment used for designing products should be included as an expense in the current year’s Statement of Comprehensive Income, within which of the headings stated below: Within other operating expenses, Within Distribution cost or Within Administrative expenses or Within Cost of sales.arrow_forwardWhich of the following statements is (are) correct?a. Accumulated depreciation represents a cash fund beingaccumulated for the replacement of plant assets.b. The cost of a machine includes the cost of repairingdamage to the machine during the installation process.c. A company may use different depreciation methods inits financial statements and its income tax return.d. The use of an accelerated depreciation method causesan asset to wear out more quickly than does use of thestraight-line method.arrow_forwardThe impairment test for goodwill is conducted based on the cash-generating unit to which the goodwill has been assigned. After an impairment loss is recorded for goodwill, the recoverable amount becomes the basis for the impaired asset and is used to calculate amortization in future periods. options : both statement false first statement true and second statement false fisrt statement false and second statement ttrue . both sttament truearrow_forward
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