Question 1

According to International Financial Reporting Standards (IFRS), biological assets are valued at:
A) Cost less accumulated depreciation.
B) Fair value less estimated costs to sell.
C) Cost less accumulated depletion.
D) None of these answer choices are correct.

Accepted Answer

According to IFRS, biological assets should be valued at fair value less estimated costs to sell, as they are considered to have a market value that can be reliably measured. This valuation method takes into account any changes in the biological asset's value, such as growth or value fluctuations, and reflects the amount that could be obtained from selling the asset. Therefore, option B is the correct answer.

Question 2

Canliss Mining uses the replacement method to determine depreciation on its office equipment. During 2016, 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 2018, equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000. Canliss would record 2018 depreciation of:
A) $3,500.
B) $4,400.
C) $5,400.
D) None of these answer choices are correct.

Accepted Answer

Cost of replacement equipment of $6,000 less proceeds of $600 = $5,400.

Question 3

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term.
-Percentage depletion
A)Triggers commencement of depreciation.
B)Cost less accumulated depreciation.
C)Expenditures made to restructure an asset without addition, replacement, or improvement.
D)Only used for tax purposes.
E)Three methods are employed to record these costs.

Accepted Answer

Percentage depletion is a method used exclusively for tax purposes, allowing a taxpayer to account for the reduction of a product's reserves.

Question 4

Kingston Corporation has $95 million of goodwill on its books from the 2016 acquisition of Reliant Motors. At the end of its 2018 fiscal year, management has provided the following information for its required goodwill impairment test ($ in millions):  Assuming that Reliant is considered a reporting unit for U.S. GAAP and a cash-generating unit for IFRS, the amount of goodwill impairment loss that Kingston should recognize according to U.S. GAAP and IFRS, respectively, is: 
A) option A
B) option B
C) option C
D) option D

Accepted Answer

U.S. GAAP: Since the book value of Reliant exceeds fair value, there is an impairment loss. The implied fair value of goodwill is $55 million, the difference between the fair value of Reliant of $655 million and fair value of net assets excluding goodwill of $600 million. The loss is then $40 million, the $95 million book value of goodwill less the implied fair value of $55 million.
IFRS: The impairment loss is $30 million, the difference between book value of Reliant of $700 million and the recoverable amount of $670 million. The recoverable amount is the greater of fair value less costs to sell ($655 million) and the present value of estimated future cash flows ($670 million).

Question 5

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term.
-Improvements
A)Triggers commencement of depreciation.
B)Cost less accumulated depreciation.
C)Expenditures made to restructure an asset without addition, replacement, or improvement.
D)Only used for tax purposes.
E)Three methods are employed to record these costs.

Accepted Answer

The answer of Listed below are five terms followed by...

Question 6

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term.
-Book value
A)Triggers commencement of depreciation.
B)Cost less accumulated depreciation.
C)Expenditures made to restructure an asset without addition, replacement, or improvement.
D)Only used for tax purposes.
E)Three methods are employed to record these costs.

Accepted Answer

Book value is defined as the cost of an asset minus its accumulated depreciation, representing the net value of the asset on the balance sheet.

Question 7

According to International Financial Reporting Standards (IFRS), the revaluation of equipment when fair value exceeds book value, results in:
A) An increase in net income.
B) A decrease in net income.
C) An increase in other comprehensive income.
D) A decrease in other comprehensive income.

Accepted Answer

Revaluation of equipment when fair value exceeds book value results in an increase in the value of the asset and therefore an increase in other comprehensive income, as it is considered a gain that is not part of the company's regular business activities. It does not impact net income.

Question 8

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Service life
A)Cost allocation for an intangible asset.
B)Cost allocation for a natural resource.
C)Cost less residual value.
D)Amount of use expected from plant and equipment asset.
E)Treated prospectively like a change in estimate

Accepted Answer

The answer of Listed below are five terms followed by...

Question 9

Canliss Mining uses the retirement method to determine depreciation on its office equipment. During 2016, 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 2018, equipment costing $5,000 was sold for $600 and replaced with new equipment costing $6,000. Canliss would record 2018 depreciation of:
A) $3,500.
B) $4,400.
C) $5,400.
D) None of these answer choices are correct.

Accepted Answer

Cost of equipment sold of $5,000 less proceeds of $600 = $4,400.

Question 10

According to International Financial Reporting Standards (IFRS), the level of testing for goodwill impairment is the:
A) Reporting unit.
B) Subsidiary companies.
C) Cash-generating unit.
D) None of these answer choices are correct.

Accepted Answer

Under IFRS, goodwill impairment testing is performed at the level of the cash-generating unit or group of cash-generating units to which goodwill has been allocated.

Question 11

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Amortization
A)Cost allocation for an intangible asset.
B)Cost allocation for a natural resource.
C)Cost less residual value.
D)Amount of use expected from plant and equipment asset.
E)Treated prospectively like a change in estimate

Accepted Answer

Amortization is the process of spreading out a loan into a series of fixed payments over time, but in accounting, it also refers to the practice of expensing the cost of an intangible asset over its useful life. This is why it is associated with recovering the investment in intangible assets.

Question 12

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Allocation base
A)Cost allocation for an intangible asset.
B)Cost allocation for a natural resource.
C)Cost less residual value.
D)Amount of use expected from plant and equipment asset.
E)Treated prospectively like a change in estimate

Accepted Answer

The answer of Listed below are five terms followed by...

Question 13

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Depreciation
A)Allocation of cost for plant and equipment.
B)Is a change in accounting estimate.
C)Results from subsequent year correction of a material error.
D)Expenditures made to maintain a given level of benefits from an asset.
E)Generate declining amounts of depreciation over time.

Accepted Answer

Depreciation is the accounting process of allocating the cost of tangible assets over their useful lives and is used to recover the investment in long-lived tangible business-use assets.

Question 14

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term.
-Rearrangements
A)Triggers commencement of depreciation.
B)Cost less accumulated depreciation.
C)Expenditures made to restructure an asset without addition, replacement, or improvement.
D)Only used for tax purposes.
E)Three methods are employed to record these costs.

Accepted Answer

Rearrangements refer to expenditures made to restructure an asset without addition, replacement, or improvement, which aligns with option C.

Question 15

According to International Financial Reporting Standards (IFRS), the impairment loss for property, plant, and equipment is the difference between book value and:
A) The undiscounted sum of estimated future cash flows.
B) The present value of future cash flows.
C) Fair value less costs to sell.
D) The higher of the present value of estimated future cash flows and the fair value less costs to sell.

Accepted Answer

Under IFRS, the impairment loss for property, plant, and equipment is determined as the difference between the asset's carrying amount and the higher of its fair value less costs to sell and its value in use (which is essentially the present value of the future cash flows expected to be derived from the asset).

Question 16

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Depletion
A)Cost allocation for an intangible asset.
B)Cost allocation for a natural resource.
C)Cost less residual value.
D)Amount of use expected from plant and equipment asset.
E)Treated prospectively like a change in estimate

Accepted Answer

Depletion is specifically related to the accounting process used for resources that are consumed over time through extraction, such as minerals, oil, and gas. This method helps in recovering the investment in such wasting assets.

Question 17

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

Accepted Answer

The answer of The normal treatment of litigation costs to...

Question 18

Rice Industries owns a manufacturing plant in a foreign country. Political unrest in the country indicates that Rice should investigate for possible impairment. Below is information related to the plant's assets ($ in millions):  The amount of impairment loss that Rice should recognize according to U.S. GAAP and IFRS, respectively, is: 
A) option A
B) option B
C) option C
D) option D

Accepted Answer

Under U.S. GAAP there is no impairment because the sum of future estimated cash flows exceeds book value. Under IFRS, the impairment loss is the difference between book value of $190 million and the recoverable amount of $180 million (the higher of the present value of future cash flows and fair value less costs to sell).

Question 19

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term.
-Change in depreciation method
A)Cost allocation for an intangible asset.
B)Cost allocation for a natural resource.
C)Cost less residual value.
D)Amount of use expected from plant and equipment asset.
E)Treated prospectively like a change in estimate

Accepted Answer

A change in depreciation method is treated as a change in accounting estimate and is therefore applied prospectively, meaning it affects the depreciation calculation from the point of the change forward and does not alter past financial statements.

Question 20

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term.
-Date placed in service
A)Triggers commencement of depreciation.
B)Cost less accumulated depreciation.
C)Expenditures made to restructure an asset without addition, replacement, or improvement.
D)Only used for tax purposes.
E)Three methods are employed to record these costs.

Accepted Answer

The date placed in service is significant because it marks the beginning of depreciation for an asset, indicating when the asset starts being used and thus begins to depreciate.

Quiz 11: Property, Plant, and Equipment and Intangible Assets: Utilization and Disposition

According to International Financial Reporting Standards (IFRS) , biological assets are valued at:

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term. -Percentage depletion

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term. -Improvements

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term. -Book value

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

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Service life

According to International Financial Reporting Standards (IFRS) , the level of testing for goodwill impairment is the:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Amortization

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Allocation base

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Depreciation

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term. -Rearrangements

According to International Financial Reporting Standards (IFRS) , the impairment loss for property, plant, and equipment is the difference between book value and:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Depletion

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

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms. Match each phrase with the correct term. -Change in depreciation method

Listed below are five terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term. -Date placed in service