Test Bank for Accounting Principles 7th Canadian Edition Volume 2 | Weygandt, Kieso, Kimmel, Trenholm, Warren & Novak | Chapters 9–18 Complete Test Bank with Verified Questions & Answers 2026–2027

Test Bank for Accounting Principles 7th edition |
Weygandt, Kieso, Kimmel, Trenholm, Warren & Novak |
Chapters 9–18 | Verified Questions & Answers 2026–
2027
All chapters covered

,Accounting Principles 7th Canadian Edition, (Volume 2) 7e Weygandt Donald
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Kieso Kimmel Trenholm Warren Novak (Test Bank All Chapters, 100% Original
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Verified, A+ Grade) (Chapter 9-18) Answers At The End Of Each Chapter
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CHAPTER 9 s




LONG-LIVEDASSETS s




CHAPTER STUDY OBJECTIVES s s




1. Calculate the cost of property, plant, and equipment. The cost of property, plant, and
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equipment includes all costs that are necessary to acquire the asset and make it ready for its
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intended use. All costs that benefit future periods (that is, capital expenditures) are included in the
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cost of the asset. When applicable, cost also includes asset retirement costs. When multiple assets
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are purchased in one transaction, or when an asset has significant components, the cost is allocated
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to each individual asset or component using their relative fair values.
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2. Apply depreciation methods to property, plant, and equipment. After acquisition, assets are
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accounted for using the cost model or the revaluation model. Depreciation is recorded and assets
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are carried at cost less accumulated depreciation. Depreciation is the allocation of the cost of a
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long-lived asset to expense over its useful life (its service life) in a rational and systematic way.
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Depreciation is not a process of valuation and it does not result in an accumulation of cash. There
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are three commonly used depreciation methods:
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Effect on Annual s s




Method Depreciation Calculation s




Straight-line Constant amount (Cost − residual value) ÷ s s s s s




estimatedusefullife s s




(in years) s s




Diminishing- Diminishing Carrying amount at s s




balance amount beginning of year × s s s




diminishing-balance rate
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Units-of- (Cost − residual value) ÷ Varying s s s s




production totalestimatedunits-of- amount s s




production × actual s s s




activity during the year s s s s




Each method results in the same amount of depreciation over the asset’s useful life. Depreciation
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expense for income tax purposes is called capital cost allowance (CCA).
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3. Explain the factors that cause changes in periodic depreciation and calculate revised
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depreciation for property, plant, and equipment. A revision to depreciation will be required if
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there are (a) capital expenditures during the asset’s useful life; (b) impairments in the asset’s fair
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value; (c) changes in the asset’s fair value when using the revaluation model; and/or (d) changes in
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the appropriate depreciation method, estimated useful life, or residual value. An impairment loss
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must be recorded if the recoverable amount is less than the carrying amount. Revisions of periodic
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depreciation are made in present and future periods, not retroactively. The new annual depreciation
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is determined by using the depreciable amount (carrying amount less the revised residual value),
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and the remaining useful life, at the time of the revision.
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,
, 9-2 s s Exercises for Accounting Principles, Seventh Canadian Edition s s s s s s




4. Demonstrate how to account for property, plant, and equipment disposals. The accounting s s s s s s s s s s s




for the disposal of a piece of property, plant, or equipment through retirement or sale is as follows:
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(a) Update any unrecorded depreciation for partial periods since depreciation was last recorded.
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(b) Calculate the carrying amount (cost – accumulated depreciation). s s s s s s s




(c) Calculate any gain (proceeds > carrying amount) or loss (proceeds < carrying amount) on s s s s s s s s s s s s s




disposal.
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(d) Remove the asset and accumulated depreciation accounts at the date of disposal. Record the s s s s s s s s s s s s s




proceeds received and the gain or loss, if any.
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An exchange of assets is recorded as the purchase of a new asset and the sale of an old asset. The
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new asset is recorded at the fair value of the asset given up plus any cash paid (or less any cash
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received). The fair value of the asset given up is compared with its carrying amount to calculate the
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gain or loss. If the fair value of the new asset or the asset given up cannot be determined, the new
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long-lived asset is recorded at the carrying amount of the old asset that was given up, plus any cash
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paid (or less any cash received).
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5. Record natural resource transactions and calculate depletion. The units-of-production
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method of depreciation is generally used for natural resources. The depreciable amount per unit is
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calculated by dividing the total depreciable amount by the number of units estimated to be in the
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resource. The depreciable amount per unit is multiplied by the number of units that have been
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extracted to determine the annual depreciation. The depreciation and any other costs to extract the
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resource are recorded as inventory until the resource is sold. At that time, the costs are transferred
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to cost of resource sold on the income statement. Revisions to depreciation will be required for
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capital expenditures during the asset’s useful life, for impairments, and for changes in the total
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estimated units of the resource.
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6. Identify the basic accounting issues for intangible assets and goodwill. The accounting for
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tangible and intangible assets is much the same. Intangible assets are reported at cost, which
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includes all expenditures necessary to prepare the asset for its intended use. An intangible asset
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with a finite life is amortized over the shorter of its useful life and legal life, usually on a straight-line
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basis. The extent of the annual impairment tests depends on whether IFRS or ASPE is followed and
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whether the intangible asset had a finite or indefinite life. Intangible assets with indefinite lives and
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goodwill are not amortized and are tested at least annually for impairment. Impairment losses on
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goodwill are never reversed under both IFRS and ASPE.
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7. Illustrate the reporting and analysis of long-lived assets. It is common for property, plant, ands s s s s s s s s s s s s s




equipment, and natural resources to be combined in financial statements under the heading
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“property, plant, and equipment.” Intangible assets with finite and indefinite lives are sometimes
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combined under the heading “intangible assets” or are listed separately. Goodwill must be
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presented separately. Either on the balance sheet or in the notes, the cost of the major classes of
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long-lived assets is presented. Accumulated depreciation (if the asset is depreciable) and carrying
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amount must be disclosed either in the balance sheet or in the notes. The depreciation and
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amortization methods and rates, as well as the annual depreciation expense, must also be
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indicated. The company’s impairment policy and any impairment losses should be described and
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reported. Under IFRS, companies must include a reconciliation of the carrying amount at
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