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Exam 11: Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

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Question 51

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Total depreciation is the same over the life of an asset regardless of the method of depreciation used.

A) True
B) False

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Question 52

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Briefly explain the disclosures that are required relative to depreciable assets.

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The note presenting the summary of signi...

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Question 53

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Using the straight-line method,depreciation for 2016 would be:

The normal treatment of litigation costs to successfully defend an intangible right under U.S.GAAP and International Financial Reporting Standards (IFRS),respectively,is:

Prego would report depreciation in 2016 of:

Briefly explain how to account for a change in depreciation method.

A change from the straight-line method to the sum-of-years'-digits method of depreciation is handled as:

Required: Determine the amount,if any,of the impairment loss that El Dorado must recognize on these assets.

By the replacement depreciation method,depreciation is recorded when assets are replaced.

On September 30,2016,Sternberg Company sold office equipment for $12,000.The equipment was purchased on March 31,2013,for $24,000.The asset was being depreciated over a five-year life using the straight-line method,with depreciation based on months in service.No residual value was anticipated. Required: Prepare the journal entries to record 2016 depreciation and the sale of the equipment.

A change in the estimated useful life and residual value of machinery in the current year is handled as:

Canliss Mining uses the replacement method to determine depreciation on its office equipment.During 2014,its first year of operations,office equipment was purchased at a cost of $14,000.Useful life of the equipment averages four years and no salvage value is anticipated.In 2016,equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000.Canliss would record 2016 depreciation of:

Briefly explain the following statement.Depreciation is a process of cost allocation,not valuation.

Required: Compute depreciation for 2016 and 2017 and the book value of the spooler at December 31,2016 and 2017,assuming the sum-of-the-years'-digits method is used.

According to International Financial Reporting Standards (IFRS) ,the revaluation of equipment when fair value exceeds book value,results in:

The factors that need to be determined to compute depreciation are an asset's:

Ellen's Antiques reported the following in its December 31,2016,balance sheet: Equipment $4,000,000 Accumulated depreciation-equipment $3,150,000 In a disclosure note,Ellen's indicates that it uses straight-line depreciation over eight years and estimates salvage value at 10% of cost. Required: Compute the average age of Ellen's equipment at 12/31/2015.

Advocates of accelerated depreciation methods argue that their use tends to level out the total cost of ownership of an asset over its benefit period if one considers both depreciation and repair and maintenance costs.

Using the straight-line method,depreciation for 2017 and book value at December 31,2017,would be:

Using the straight-line method,depreciation for 2017 and the equipment's book value at December 31,2017,would be: