Recent Question

Grant Company has decided to change the estimate of the useful life of an asset 1. Palmer Company purchased equipment for $45,000 on January 1, 2001, and will use the doubledeclining-balance method of amortization. It is estimated that the equipment will have a 3-year life and a $2,000 residual value at the end of its useful life. The amount of amortization expense recognized in the year 2003 will be a. $5,000. b. $3,000. c. $5,444 ...

Other / Other 20 Apr 2016

Which of the following methods of calculating amortization 1. A company purchased factory equipment for $100,000. It is estimated that the equipment will have a $10,000 residual value at the end of its estimated 5-year useful life. If the company uses the doubledeclining-balance method of amortization, the amount of annual amortization recorded for the second year after purchase would be a. $40,000. b. $24,000. c. $36,000. d. ...

Other / Other 20 Apr 2016

The net book value of an asset will equal its fair market value 1. If a fully amortized capital asset is still used by a company, the a. estimated remaining useful life must be revised to calculate the correct revised amortization. b. asset is removed from the books. c. accumulated amortization account is removed from the books but the asset account remains. d. asset and the accumulated amortization continue to be reported on ...

Other / Other 20 Apr 2016

The return on assets is calculated by dividing net income by total assets TRUE OR FALSE: 1. Goodwill is classified as a natural resource. 2. The cost of internally generated goodwill is amortized, whereas the cost of purchased goodwill is not. 3. All research costs should be capitalized and certain development costs with reasonably assumed benefits should be expensed. 4. It is not necessary to disclose the amount of accumulat ...

Other / Other 20 Apr 2016

An asset that cannot be sold individually in the market place 1. Intangible assets are the rights and privileges that result from ownership of long-lived assets that a. must be generated internally. b. are amortizable natural resources. c. have been exchanged at a gain. d. do not have physical substance. 2. Identify the item below where the terms are not related. a. Equipment—amortization b. Patent—wastin ...

Other / Other 20 Apr 2016

A basket purchase of capital assets requires that the fair market values be assigned TRUE OR FALSE: 1. If management’s objective is to report the highest net income, it would use the double declining-balance method of amortization. 2. A basket purchase of capital assets requires that the fair market values be assigned as the cost of each asset. 3. A basket purchase of capital assets requires an allocation of the cost using a ...

Other / Other 20 Apr 2016

The declining-balance method of amortization is called an accelerated amortization method because TRUE OR FALSE: 1. The declining-balance method of amortization is called an accelerated amortization method because it amortizes an asset in a shorter period of time than the asset's useful life. 2. If you use the straight-line rate on a declining-balance basis, the asset’s net worth will never reach its expected residual value. ...

Other / Other 20 Apr 2016

A characteristic of capital expenditures is that the expenditures occur frequently TRUE OR FALSE: 1. A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership. 2. Once an asset is fully amortized, no additional amortization can be taken even though the asset is still being used by the business. 3. The fair market value of a capital asset is always the same as its net book v ...

Other / Other 20 Apr 2016

Recording amortization each period is necessary 1. Accountants do not attempt to measure the change in a capital asset's market value during ownership because a. the assets are not held for resale. b. capital assets cannot be sold. c. losses would have to be recognized. d. it is management's responsibility to determine fair values. 2. Amortization is a process of a. asset devaluation. b. cost accumulation. c. cost ...

Other / Other 20 Apr 2016

All capital assets must be amortized for accounting purposes TRUE OR FALSE: 1. All capital assets must be amortized for accounting purposes. 2. When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account. 3. When purchasing delivery equipment, supplies and motor vehicle licences should be charged to Delivery Equipment. 4. Service charges are charged on commercial ...

Other / Other 20 Apr 2016