Examine the several pronouncements by authoritative accounting bodies on: Cost Allocation; Asset Impairment and Depreciation
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Examine the several pronouncements by authoritative accounting bodies on: Cost Allocation; Asset Impairment and
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- Identify the accounting issues related to asset impairment.Which one of the following disclousures is required by generally accepted accounting principle? a. Depreciation expense for each major class of asset b. Balances of major classes of depreciable assets, by nature or function c. Accumulated depreciation on each depreciable asset d. An explanation of why the depreciation method used was selected by managementWhich of the following most accurately reflects the concept of depreciation as used in accounting? - The process of charging the decline in value of an economic resource to income in the period in which the benefit occurred. - A method of allocating asset cost to an expense account in a manner which closely matches the physical deterioration of the tangible asset involved. - The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. - An accounting concept that allocates the portion of an asset used up during the year to the contra asset account for the purpose of properly recording the fair market value of tangible assets.
- Outline the accounting treatment of financial asset impairments according to IFRS 9 Financial Instruments and discuss the potential benefits and drawbacks of this approach.Explain the key aspects of the ‘cost basis’ and ‘revaluation basis’ for non-current assets, and highlight the differences between them.Identify the factors that are relevant in determining the annual depreciation charge, and explain whether these factors are determined objectively or whether they are based on judgment.
- Access the FASB Accounting Standards Codification at the FASB website (asc.fasb.org). Determine the specific citation for each of the following items: 1. Depreciation involves a systematic and rational allocation of cost rather than a process of valuation. 2. The calculation of an impairment loss for property, plant, and equipment. 3. Accounting for a change in depreciation method. 4. Goodwill should not be amortized.Which of the following best describes the independent auditor's approach to obtaining satisfaction concerning depreciation expense in the income statement? a.Review the mathematical accuracy of the amounts charged to income as a result of depreciation expens b.Determine the method of computing depreciation expense and ascertain that it is in accordance with generally accepted accounting principle c.Support the basis of depreciable assets and the depreciation expens d.Reconcile the amount of depreciation expense to those amounts credited to accumulated depreciation account e.Select a sample of equipment items in the manufacturing facility and vouch back to the recorded subsidiary ledge r.s.e.s.e.ry ledger.Which of the following concepts is not related to depreciation? Select one: a. Historical cost concept b. Accrual concept c. Going concern concept d. Matching concept
- Discuss the overarching idea of Asset Liability Management and its key objectives. How does the process of Gap Analysis support Asset Liability Management?Depreciation is considered as accounting policy and operational expense for the accounting period. The value to be included in the financial statement is calculated based on the decision of the Board. Under what circumstances will you consider the reducing balance method as the most appropriate method in calculating depreciation?Provide an explanation of how impairment losses on intangible assets should be recorded in income.
