ACC 131 Exam 3 ISU Questions and Answers Already Passed Latest Update

ACC 131 Exam 3 ISU Questions and Answers Already Passed Latest Update Capital Expenditures - Answers the purchase of long term assets that benefit many periods, spread the cost over useful life of the longterm asset, recorded as LTA on the B/S, larger amounts Revenue Expenditures - Answers made for daily business operations that benefit only the current period, record these as they are used up, record as an expense on the I/S, smaller amounts Depreciation - Answers an allocation of the cost of a LTA over the periods it benefits the business Depreciation does NOT - Answers 1. actual physical deterioration 2. changes in market value Limited - Answers most LTA have ________ useful lives BUD - Answers Buying - determining costs Using - depreciation expense Disposing Depreciable cost - Answers cost - residual value = 3 methods of determining depreciation - Answers 1. straight line method (passage of time) 2. units of production (how much was LTA used for the period) 3. double declining balance (accelerated method) Double declining balance formula - Answers book value x (100% / useful life) x 2 DO NOT USE RESIDUAL VALUE Units of Production formula - Answers cost - residual / total estimated activity Accounting for disposals - Answers 1. discard/ retire sell for cash 3. exchange Book value formula = - Answers Cost - Accumulated depreciation Gain - Answers If cash is greater than the ending book value there is a _____ on disposal Loss - Answers If cash is less than ending book value there is a _____ on disposal Straight Line - Answers Intangible assets are often amortized using the ______ method Patent - Answers 20 year legal life (useful life) Trademarks - Answers 10 year legal life, can be renewed indefinitely