Fin 461: Final Exam |64 Questions and Answers
Which costs incurred with the purchase of property and equipment are expensed? - -
Training required to use the property and equipment
-When constructing an asset for sale, directly related borrowing costs are most likely.... - -
Capitalized as part of inventory
-Intangible assets with finite useful lives mostly differ from intangible assets with infinite
usefule lives with respect to accounting treatment of: - -Amortization
-Cost incurred for intangible assets are generally expensed when they are: - -Internally
developed
-Under US GAAP, when assets are acquired in business combination, goodwill most likely
arises from: - -Assets that are neither tangible nor identifiable intangible assets
-All else equal, in the fiscal year when long-lived equipment is purchased: - -Depreciation
expense increases
-Juan Martinez, CFO of VIRMIN, S.A., is selecting the depreciation method to use for a new
machine. The machine has an expected useful life of six years. Production is expected to be
relatively low initially but to increase over time. The method chosen for tax reporting must
be the same as the method used for financial reporting. If Martinez wants to minimize tax
payments in the first year of the machine's life, which of the following depreciation
methods is Martinez most likely to use?
Straight-line method.
Units-of-production method.
Double-declining balance method. - -Double-declining balance method
-Which of the following amortization methods is most likely to evenly distribute the cost of
an intangible asset over its useful life? - -Straight-line method
-Which of the following will cause a company to show a lower amount of amortization of
intangible assets in the first year after acquisition? - -A higher residual value
-A company purchases equipment for $200,000 with a five-year useful life and salvage
value of zero. It uses the double-declining balance method of depreciation for two years,
then shifts to straight-line depreciation expense under the double-declining balance
method, the resulting annual depreciation expense in year 4 is: - -Greater
, -Under IFRS, an impairment loss on a property, plant, and equipment asset is measured as
the excess of the carrying amount over the asset's:
fair value.
recoverable amount.
undiscounted expected future cash flows. - -Recoverable amount
-The impairment of intangible assets with finite lives affects: - -Both the balance sheet and
the income statement
-The gain or loss on a sale of a long-lived asset to which the revaluation model has been
applied is most likely calculated using sales proceeds less: - -carrying amount
-According to IFRS, all of the following pieces of information about property, plant, and
equipment must be disclosed in a company's financial statements and footnotes except for:
- -Acquisition dates
-According to the IFRS, all of the following pieces of information about intangible assets
must be disclosed in a company's financial statements and footnotes except for: - -Fair
Value
-Which of the following is a required financial statement disclosure for long-lived
intangible assets under US GAAP? - -Estimated amortization expense for the next five fiscal
years
-Which of the following characteristics is most likely to differentiate investment property
from property, plant, and equipment? - -Its earns rent
-If a company uses the fair value model to value investment property, changes in the fair
value of the asset are least likely to affect: - -Other comphrensive income
-Investment property is most likely to: - -Earn rent
-A company is most likely to: - -change from the fair value model when the company
transfers investment property to property, plant, and equipment.
-Under the revaluation model for property, plant, and equipment and the fair model for
investment property:
fair value of the asset must be able to be measured reliably.
net income is affected by all changes in the fair value of the asset.
net income is never affected if the asset increases in value from its carrying amount. - -Fair
value of the asset must be able to be measured reliable
Which costs incurred with the purchase of property and equipment are expensed? - -
Training required to use the property and equipment
-When constructing an asset for sale, directly related borrowing costs are most likely.... - -
Capitalized as part of inventory
-Intangible assets with finite useful lives mostly differ from intangible assets with infinite
usefule lives with respect to accounting treatment of: - -Amortization
-Cost incurred for intangible assets are generally expensed when they are: - -Internally
developed
-Under US GAAP, when assets are acquired in business combination, goodwill most likely
arises from: - -Assets that are neither tangible nor identifiable intangible assets
-All else equal, in the fiscal year when long-lived equipment is purchased: - -Depreciation
expense increases
-Juan Martinez, CFO of VIRMIN, S.A., is selecting the depreciation method to use for a new
machine. The machine has an expected useful life of six years. Production is expected to be
relatively low initially but to increase over time. The method chosen for tax reporting must
be the same as the method used for financial reporting. If Martinez wants to minimize tax
payments in the first year of the machine's life, which of the following depreciation
methods is Martinez most likely to use?
Straight-line method.
Units-of-production method.
Double-declining balance method. - -Double-declining balance method
-Which of the following amortization methods is most likely to evenly distribute the cost of
an intangible asset over its useful life? - -Straight-line method
-Which of the following will cause a company to show a lower amount of amortization of
intangible assets in the first year after acquisition? - -A higher residual value
-A company purchases equipment for $200,000 with a five-year useful life and salvage
value of zero. It uses the double-declining balance method of depreciation for two years,
then shifts to straight-line depreciation expense under the double-declining balance
method, the resulting annual depreciation expense in year 4 is: - -Greater
, -Under IFRS, an impairment loss on a property, plant, and equipment asset is measured as
the excess of the carrying amount over the asset's:
fair value.
recoverable amount.
undiscounted expected future cash flows. - -Recoverable amount
-The impairment of intangible assets with finite lives affects: - -Both the balance sheet and
the income statement
-The gain or loss on a sale of a long-lived asset to which the revaluation model has been
applied is most likely calculated using sales proceeds less: - -carrying amount
-According to IFRS, all of the following pieces of information about property, plant, and
equipment must be disclosed in a company's financial statements and footnotes except for:
- -Acquisition dates
-According to the IFRS, all of the following pieces of information about intangible assets
must be disclosed in a company's financial statements and footnotes except for: - -Fair
Value
-Which of the following is a required financial statement disclosure for long-lived
intangible assets under US GAAP? - -Estimated amortization expense for the next five fiscal
years
-Which of the following characteristics is most likely to differentiate investment property
from property, plant, and equipment? - -Its earns rent
-If a company uses the fair value model to value investment property, changes in the fair
value of the asset are least likely to affect: - -Other comphrensive income
-Investment property is most likely to: - -Earn rent
-A company is most likely to: - -change from the fair value model when the company
transfers investment property to property, plant, and equipment.
-Under the revaluation model for property, plant, and equipment and the fair model for
investment property:
fair value of the asset must be able to be measured reliably.
net income is affected by all changes in the fair value of the asset.
net income is never affected if the asset increases in value from its carrying amount. - -Fair
value of the asset must be able to be measured reliable
