Exam 9: Long-Lived Tangible and Intangible Assets

A) US income tax regulations require that a company use the same depreciation method for both financial reporting and income taxes.
B) Different depreciation methods might better reflect the pattern in which assets' economic benefits are used.
C) All companies do use the same depreciation method.
D) Only large companies are allowed to use some of the more complicated depreciation methods.

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A) Asset impairment losses appear on a company's income statement every year.
B) When a company records an asset impairment loss,it will increase net income for that period.
C) Impairment occurs when an asset's book value is less than its current value.
D) Asset impairment losses are reported on the income statement as an operating expense.

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A) Depreciation and maintenance are expenses associated with the use of tangible long-lived assets.
B) Assuming no additions,replacements,or extraordinary repairs,the carrying value of a long-lived asset is never more than its original cost.
C) The cost of a long-lived asset minus the Accumulated Depreciation is called the carrying value of the asset.
D) All long-lived assets are depreciated as they are used in the business.

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A) Assets that will be used for more than a year.
B) When a company writes down the value of an asset when estimated future cash flows fall below the original level estimated.
C) The numerator of the fixed asset turnover ratio.
D) The cost of financing an asset.
E) When costs are recorded as assets rather than expenses.
F) How expenses are reported in the income statement.
G) The denominator of the fixed asset turnover ratio.
H) The average proportion of a company's total assets that is long-lived.
I) A depreciation method that produces higher amounts of depreciation expense in the early years of an asset's life and lower amounts in the later years.
J) When a company writes down the value of an asset because estimated future cash flows fall below the book value.
K) Assets that have physical substance.
L) A depreciation method that spreads asset cost by use rather than time.
M) The process of transferring the cost of long-lived tangible assets to expenses.
N) Also known as book value.

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A) number of sales dollars generated by each dollar of total assets.
B) rate at which inventories are being rotated.
C) number of dollars in notes payable generated by each dollar in fixed assets.
D) number of sales dollars generated by each dollar of fixed assets.

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A) When a company expenses the entire cost of a long-lived asset in the first year of use.
B) When a company receives free publicity in return for charitable contributions.
C) A tax law dealing with how companies can depreciate their assets.
D) The acquisition cost of an asset minus its accumulated depreciation.
E) When a company expenses the cost of a long-lived asset by a constant annual amount.
F) The exclusive right to sell or use a product or process that is granted to encourage innovation.
G) Net income plus interest,taxes,depreciation and amortization expenses.
H) Tangible long-lived assets.
I) An intangible asset that represents the value of unidentifiable assets acquired.
J) Names or images that appear with a ® or ^TM.
K) What a company expects to receive when an asset is disposed of at the end of its useful life.
L) Assets whose values do not change over time.
M) When a company allocates the cost of a long-lived asset at a higher rate in the first years of use.
N) The estimated total use a company expects to receive from an asset.

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A) $1 in sales revenue,the firm acquired $4.30 of assets.
B) $1 in fixed assets,the firm earned $4.30 of net income.
C) $1 in assets,the firm paid $4.30 of expenses.
D) $1 in fixed assets,the firm generated $4.30 of net sales.

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A) $0.75
B) $0.875
C) $1.14
D) $0.625

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A) asset's book value is greater than the selling price.
B) asset's cost is greater than the asset's accumulated depreciation.
C) selling price is greater than the asset's book value.
D) accumulated depreciation is greater than the asset's book value.

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A) Company A purchases Company B and pays less than the net assets of Company B.
B) Company A purchases Company B and pays more than the fair value of Company B's assets and liabilities.
C) Company A discovers a new product or production process.
D) Company A sells its patents at a gain.

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A) Net sales revenue divided by average net fixed assets.
B) Costs that are expensed in the period incurred.
C) A contractual agreement that allows limited permission for use of a property.
D) Net income divided by average total assets.
E) An estimate of how long a tangible asset will last before it physically wears out.
F) Asset cost minus residual value.
G) Costs that are recorded as revenues.
H) An estimate of how long a company will use a particular asset.
I) Allocating the cost of tangible assets over their limited useful life.
J) A cumulative record of depreciation expense,accumulated depreciation and book value.
K) Asset cost minus accumulated depreciation.
L) Grants the exclusive right to sell or use a creative work.
M) The method whereby different parts of an asset may be depreciated over different useful lives under IFRS.
N) The principle that companies wish to pay the lowest possible tax at the last possible time.
O) Allocating the cost of intangible assets over their limited useful life.

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A) $20,000
B) $40,000
C) $10,000
D) $30,000

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A) a significant amount of charitable contributions.
B) a great reputation.
C) an established customer base.
D) successful business operations.

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A) When a company expenses the entire cost of a long-lived asset in the first year of use.
B) When a company receives free publicity in return for charitable contributions.
C) A tax law dealing with how companies can depreciate their assets.
D) The acquisition cost of an asset minus its accumulated depreciation.
E) When a company expenses the cost of a long-lived asset by a constant annual amount.
F) The exclusive right to sell or use a product or process that is granted to encourage innovation.
G) Net income plus interest,taxes,depreciation and amortization expenses.
H) Tangible long-lived assets.
I) An intangible asset that represents the value of unidentifiable assets acquired.
J) Names or images that appear with a ® or ^TM.
K) What a company expects to receive when an asset is disposed of at the end of its useful life.
L) Assets whose values do not change over time.
M) When a company allocates the cost of a long-lived asset at a higher rate in the first years of use.
N) The estimated total use a company expects to receive from an asset.

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A) It increases expenses and decreases both revenue and net income.
B) It decreases assets,stockholders' equity,and net income.
C) It increases expenses and decreases net income with no effect on any other items.
D) It increases liabilities and decreases stockholders' equity.

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A) I - Intangible long-lived asset
B) N - Not a long-lived asset
C) T - Tangible long-lived asset

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A) as an asset called Work in Process.
B) after construction is complete.
C) as an asset called Construction in Progress.
D) as a liability until construction is complete.

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