Accounting Principles 7th Canadian Edition, (Volume 2) 7e
Weygandt Donald Kieso Kimmel Trenholm Warren Novak (Test Bank
All Chapters, 100% Original Verified, A+ Grade) (Chapter 9-18)
Answers At The End Of Each Chapter latest 2026 update
https://www.stuvia.com/user/nursecare
, Accounting Principles 7th Canadian Edition, (Volume 2) 7e Weygandt
Donald Kieso Kimmel Trenholm Warren Novak (Test Bank All
Chapters, 100% Original Verified, A+ Grade) (Chapter 9-18) Answers At
The End Of Each Chapter
CHAPTER 9
LONG-LIVED ASSETS
CHAPTER STUDY OBJECTIVES
1. Calculate the cost of property, plant, and equipment. The cost of property,
plant, and equipment includes all costs that are necessary to acquire the asset and
make it ready for its intended use. All costs that benefit future periods (that is,
capital expenditures) are included in the cost of the asset. When applicable, cost
also includes asset retirement costs. When multiple assets are purchased in one
transaction, or when an asset has significant components, the cost is allocated to
each individual asset or component using their relative fair values.
2. Apply depreciation methods to property, plant, and equipment. After
acquisition, assets are accounted for using the cost model or the revaluation
model. Depreciation is recorded and assets are carried at cost less accumulated
depreciation. Depreciation is the allocation of the cost of a long-lived asset to
expense over its useful life (its service life) in a rational and systematic way.
Depreciation is not a process of valuation and it does not result in an
accumulation of cash. There are three commonly used depreciation methods:
Effect on Annual
Method Depreciation Calculation
Straight-line Constant amount (Cost − residual value) ÷
estimated useful
life (in years)
Diminishing- Diminishing Carrying amount at
, balance amount beginning of year ×
diminishing-balance
rate
Units-of- Varying (Cost − residual value) ÷
production amount total estimated
units-of-
production × actual
activity during the
year
Each method results in the same amount of depreciation over the asset’s useful
life. Depreciation expense for income tax purposes is called capital cost allowance
(CCA).
3. Explain the factors that cause changes in periodic depreciation and
calculate revised depreciation for property, plant, and equipment. A revision
to depreciation will be required if there are (a) capital expenditures during the
asset’s useful life; (b) impairments in the asset’s fair value; (c) changes in the
asset’s fair value when using the revaluation model; and/or (d) changes in the
appropriate depreciation method, estimated useful life, or residual value. An
impairment loss must be recorded if the recoverable amount is less than the
carrying amount. Revisions of periodic depreciation are made in present and
future periods, not retroactively. The new annual depreciation is determined by
using the depreciable amount (carrying amount less the revised residual value),
and the remaining useful life, at the time of the revision.
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9-2 Exercises for Accounting Principles, Seventh Canadian Edition
4. Demonstrate how to account for property, plant, and equipment
disposals. The accounting for the disposal of a piece of property, plant, or
equipment through retirement or sale is as follows:
(a) Update any unrecorded depreciation for partial periods since depreciation was last recorded.
(b) Calculate the carrying amount (cost – accumulated depreciation).
(c) Calculate any gain (proceeds > carrying amount) or loss (proceeds <
carrying amount) on disposal.
(d) Remove the asset and accumulated depreciation accounts at the date of
disposal. Record the proceeds received and the gain or loss, if any.
An exchange of assets is recorded as the purchase of a new asset and the sale of an
old asset. The new asset is recorded at the fair value of the asset given up plus any
cash paid (or less any cash received). The fair value of the asset given up is
compared with its carrying amount to calculate the gain or loss. If the fair value
of the new asset or the asset given up cannot be determined, the new long-lived
asset is recorded at the carrying amount of the old asset that was given up, plus
any cash paid (or less any cash received).
5. Record natural resource transactions and calculate depletion. The units-
of-production method of depreciation is generally used for natural resources. The
depreciable amount per unit is calculated by dividing the total depreciable
amount by the number of units estimated to be in the resource. The depreciable
amount per unit is multiplied by the number of units that have been extracted to
determine the annual depreciation. The depreciation and any other costs to
extract the resource are recorded as inventory until the resource is sold. At that
time, the costs are transferred to cost of resource sold on the income statement.
Revisions to depreciation will be required for capital expenditures during the
asset’s useful life, for impairments, and for changes in the total estimated units of
the resource.
6. Identify the basic accounting issues for intangible assets and goodwill.
The accounting for tangible and intangible assets is much the same. Intangible
assets are reported at cost, which includes all expenditures necessary to prepare
the asset for its intended use. An intangible asset with a finite life is amortized
over the shorter of its useful life and legal life, usually on a straight-line basis.
The extent of the annual impairment tests depends on whether IFRS or ASPE is
followed and whether the intangible asset had a finite or indefinite life.
Intangible assets with indefinite lives and goodwill are not amortized and are
tested at least annually for impairment. Impairment losses on goodwill are never
reversed under both IFRS and ASPE.
Weygandt Donald Kieso Kimmel Trenholm Warren Novak (Test Bank
All Chapters, 100% Original Verified, A+ Grade) (Chapter 9-18)
Answers At The End Of Each Chapter latest 2026 update
https://www.stuvia.com/user/nursecare
, Accounting Principles 7th Canadian Edition, (Volume 2) 7e Weygandt
Donald Kieso Kimmel Trenholm Warren Novak (Test Bank All
Chapters, 100% Original Verified, A+ Grade) (Chapter 9-18) Answers At
The End Of Each Chapter
CHAPTER 9
LONG-LIVED ASSETS
CHAPTER STUDY OBJECTIVES
1. Calculate the cost of property, plant, and equipment. The cost of property,
plant, and equipment includes all costs that are necessary to acquire the asset and
make it ready for its intended use. All costs that benefit future periods (that is,
capital expenditures) are included in the cost of the asset. When applicable, cost
also includes asset retirement costs. When multiple assets are purchased in one
transaction, or when an asset has significant components, the cost is allocated to
each individual asset or component using their relative fair values.
2. Apply depreciation methods to property, plant, and equipment. After
acquisition, assets are accounted for using the cost model or the revaluation
model. Depreciation is recorded and assets are carried at cost less accumulated
depreciation. Depreciation is the allocation of the cost of a long-lived asset to
expense over its useful life (its service life) in a rational and systematic way.
Depreciation is not a process of valuation and it does not result in an
accumulation of cash. There are three commonly used depreciation methods:
Effect on Annual
Method Depreciation Calculation
Straight-line Constant amount (Cost − residual value) ÷
estimated useful
life (in years)
Diminishing- Diminishing Carrying amount at
, balance amount beginning of year ×
diminishing-balance
rate
Units-of- Varying (Cost − residual value) ÷
production amount total estimated
units-of-
production × actual
activity during the
year
Each method results in the same amount of depreciation over the asset’s useful
life. Depreciation expense for income tax purposes is called capital cost allowance
(CCA).
3. Explain the factors that cause changes in periodic depreciation and
calculate revised depreciation for property, plant, and equipment. A revision
to depreciation will be required if there are (a) capital expenditures during the
asset’s useful life; (b) impairments in the asset’s fair value; (c) changes in the
asset’s fair value when using the revaluation model; and/or (d) changes in the
appropriate depreciation method, estimated useful life, or residual value. An
impairment loss must be recorded if the recoverable amount is less than the
carrying amount. Revisions of periodic depreciation are made in present and
future periods, not retroactively. The new annual depreciation is determined by
using the depreciable amount (carrying amount less the revised residual value),
and the remaining useful life, at the time of the revision.
https://www.stuvia.com/user/nursecare
,https://www.stuvia.com/user/nursecare
9-2 Exercises for Accounting Principles, Seventh Canadian Edition
4. Demonstrate how to account for property, plant, and equipment
disposals. The accounting for the disposal of a piece of property, plant, or
equipment through retirement or sale is as follows:
(a) Update any unrecorded depreciation for partial periods since depreciation was last recorded.
(b) Calculate the carrying amount (cost – accumulated depreciation).
(c) Calculate any gain (proceeds > carrying amount) or loss (proceeds <
carrying amount) on disposal.
(d) Remove the asset and accumulated depreciation accounts at the date of
disposal. Record the proceeds received and the gain or loss, if any.
An exchange of assets is recorded as the purchase of a new asset and the sale of an
old asset. The new asset is recorded at the fair value of the asset given up plus any
cash paid (or less any cash received). The fair value of the asset given up is
compared with its carrying amount to calculate the gain or loss. If the fair value
of the new asset or the asset given up cannot be determined, the new long-lived
asset is recorded at the carrying amount of the old asset that was given up, plus
any cash paid (or less any cash received).
5. Record natural resource transactions and calculate depletion. The units-
of-production method of depreciation is generally used for natural resources. The
depreciable amount per unit is calculated by dividing the total depreciable
amount by the number of units estimated to be in the resource. The depreciable
amount per unit is multiplied by the number of units that have been extracted to
determine the annual depreciation. The depreciation and any other costs to
extract the resource are recorded as inventory until the resource is sold. At that
time, the costs are transferred to cost of resource sold on the income statement.
Revisions to depreciation will be required for capital expenditures during the
asset’s useful life, for impairments, and for changes in the total estimated units of
the resource.
6. Identify the basic accounting issues for intangible assets and goodwill.
The accounting for tangible and intangible assets is much the same. Intangible
assets are reported at cost, which includes all expenditures necessary to prepare
the asset for its intended use. An intangible asset with a finite life is amortized
over the shorter of its useful life and legal life, usually on a straight-line basis.
The extent of the annual impairment tests depends on whether IFRS or ASPE is
followed and whether the intangible asset had a finite or indefinite life.
Intangible assets with indefinite lives and goodwill are not amortized and are
tested at least annually for impairment. Impairment losses on goodwill are never
reversed under both IFRS and ASPE.
