Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
128 Cards in this Set
- Front
- Back
|
characteristics that intangible assets possess? |
Long-lived. |
|
|
what costs incurred internally to create an intangible asset are generally expensed? |
Research and development costs. |
|
|
what method of amortization is normally used for intangible assets? |
Straight-line |
|
|
The cost of an intangible asset includes what 3 things? |
-purchase price - legal fees - other incidental expenses. |
|
|
Companies should test indefinite life intangible assets at least annually for? |
impairment. |
|
|
Which intangible assets are amortized.... Limited-Life OR Indefinite-Life ? |
-Limited-Life: YES - Indefinite-Life: NO |
|
|
Wriglee, Inc. went to court this year and successfully defended its patent from infringe-ment by a competitor. The cost of this defense should be charged to? |
patents and amortized over the remaining useful life of the patent. |
|
|
a type of technology-related intangible asset? |
Patent |
|
|
Goodwill may be recorded when? |
one company acquires another in a business combination. |
|
|
Purchased goodwill should? |
not be amortized. |
|
|
3 major characteristics of a plant asset? |
- Acquired for use - Yields services over a number of years - Possesses physical substance |
|
|
The cost of land typically includes the purchase price and several other items except for? |
private driveways and parking lots. |
|
|
If a corporation purchases land and building and subsequently tears down the building and uses the property as a parking lot, the proper accounting treatment of the cost of the building would depend on? |
the intention of management for the property when the building was acquired. |
|
|
When computing the amount of interest cost to be capitalized, the concept of "avoidable interest" refers to? |
that portion of total interest cost which would not have been incurred if expenditures for asset construction had not been made. |
|
|
The period of time during which interest must be capitalized ends when? |
the asset is substantially complete and ready for its intended use. |
|
|
When a company purchases land as a site for a plant, interest costs capitalized during the period of construction are part of the? |
cost of the plant. |
|
|
When boot is involved in an exchange having commercial substance? |
gains or losses are recognized in their entirety. |
|
|
Plant assets purchased on long-term credit contracts should be accounted for at? |
the present value of the future payments. |
|
|
When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the? |
fair value of the stock. |
|
|
For a nonmonetary exchange of plant assets, accounting recognition should not be given to? |
part of a gain when the exchange has no commercial substance and cash is paid (cash paid/received is less than 25% of the fair value of the exchange). |
|
|
Which of the following most accurately reflects the concept of depreciation as used in accounting? |
The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. |
|
|
If an industrial firm uses the units-of-production method for computing depreciation on its only plant asset, factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will? |
vary with production. |
|
|
A principal objection to the straight-line method of depreciation is that it? |
ignores variations in the rate of asset use. |
|
|
A change in estimate should? |
be handled in current and future periods. |
|
|
Lamar Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should? |
include a credit to the equipment accumulated depreciation account. |
|
|
The most common method of recording depletion for accounting purposes is the? |
units-of-production method. |
|
|
The book value of a plant asset is? |
the asset's acquisition cost less the total related depreciation recorded to date. |
|
|
Falcon Company purchased a depreciable asset for $125,000. The estimated salvage value is $10,000, and the estimated useful life is 10 years. The straight-line method will be used for depreciation. What is the depreciation base of this asset? |
$115,000 ($125,000 – $10,000 = $115,000.) |
|
|
Slotkin Products purchased a machine for $39,000 on July 1, 2014. The company intends to depreciate it over 8 years using the double-declining balance method. Salvage value is $3,000. Depreciation for 2014 is? |
$4,875 (($39,000 – 0) × .25 × 6/12 = $4,875.) |
|
|
Carson Company purchased a depreciable asset for $280,000. The estimated salvage value is $14,000, and the estimated useful life is 10,000 hours. Carson used the asset for 1,500 hours in the current year. The activity method will be used for depreciation. What is the depreciation expense on this asset? |
$39,900 ([$280,000 – $14,000) ÷ 10,000] × 1,500 = $39,900.) |
|
|
Previn Brothers Inc. purchased land at a price of $33,800. Closing costs were $2,560. An old building was removed at a cost of $10,440. What amount should be recorded as the cost of the land? |
$46800 ($33,800 + $2,560 + $10,440 = $46,800) |
|
|
Fielder Company obtained land by issuing 3,270 shares of its $10 par value common stock. The land was recently appraised at $135,780. The common stock is actively traded at $40 per share.Prepare the journal entry to record the acquisition of the land. |
dr - land 130800 cr - Common Stock 32700 cr - Paid-in Capital in Excess of Par - Common Stock 98100 (Land = (3,270 × $40) = $130,800) (Common Stock = (3,270 × $10) = $32,700) |
|
|
Harrisburg Furniture Company started construction of a combination office and warehouse building for its own use at an estimated cost of $5,015,700 on January 1, 2014. Harrisburg expected to complete the building by December 31, 2014. Harrisburg has the following debt obligations outstanding during the construction period. Construction loan—12% interest, payable semiannually, issued December 31, 2013: $2,019,500 Short-term loan—10% interest, payable monthly, and principal payable at maturity on May 30, 2015: $1,616,900 Long-term loan—11% interest, payable on January 1 of each year; principal payable on January 1, 2018: $1,015,100 Assume that Harrisburg completed the office and warehouse building on December 31, 2014, as planned at a total cost of $5,212,500, and the weighted average amount of accumulated expenditures was $3,816,400. Compute the avoidable interest on this project. |
$429038 |
|
|
Deluxe Ezra Company purchases equipment on January 1, Year 1, at a cost of $1,144,360. The asset is expected to have a service life of 12 years and a salvage value of $97,600. Compute the amount of depreciation for Years 1 through 3 using the straight-line depreciation method. |
87,230 ( $1,144,360 – $97,600/12= $87,230) |
|
|
Deluxe Ezra Company purchases equipment on January 1, Year 1, at a cost of $1,144,360. The asset is expected to have a service life of 12 years and a salvage value of $97,600. Compute the amount of depreciation for each of Years 1 through 3 using the sum-of-the-years'-digits method. |
Depreciation for Year 1: $161040 Depreciation for Year 2: $147620 Depreciation for Year 3: $134200 depreciation Year 1 12/78 x ($1,144,360 – $97,600) = $161,040 depreciation Year 2 11/78 x ($1,144,360 – $97,600) = $147,620 depreciation Year 3 10/78 x ($1,144,360 – $97,600) = $134,200 |
|
|
Deluxe Ezra Company purchases equipment on January 1, Year 1, at a cost of $1,144,360. The asset is expected to have a service life of 12 years and a salvage value of $97,600. Compute the amount of depreciation for each of Years 1 through 3 using the double-declining-balance method. |
Depreciation for Year 1: $190765 Depreciation for Year 2: $158964 Depreciation for Year 3: $132465 depreciation Year 1 $1,144,360 x 16.67% = $190,765 depreciation Year 2 ($1,144,360 – $190,765) x 16.67% depreciation Year 3 ($1,144,360 – $190,765 – $158,964) x 16.67% |
|
|
Jon Seceda Furnace Corp. purchased machinery for $645,750 on May 1, 2014. It is estimated that it will have a useful life of 10 years, salvage value of $30,750, production of 492,000 units, and working hours of 25,000. During 2015, Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 52,275 units. From the information given, compute the depreciation charge for 2015 under each of the following methods. (a)Straight-line |
61500 (a)$645,750 – $30,750 = $615,000; $615,000 ÷ 10 yrs. = $61,500 |
|
|
Jon Seceda Furnace Corp. purchased machinery for $645,750 on May 1, 2014. It is estimated that it will have a useful life of 10 years, salvage value of $30,750, production of 492,000 units, and working hours of 25,000. During 2015, Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 52,275 units. From the information given, compute the depreciation charge for 2015 under each of the following methods. (b)Units-of-output |
65344 (b)$615,000 ÷ 492,000 units = $1.25; 52,275 units x $1.25 = $65,344 |
|
|
Jon Seceda Furnace Corp. purchased machinery for $645,750 on May 1, 2014. It is estimated that it will have a useful life of 10 years, salvage value of $30,750, production of 492,000 units, and working hours of 25,000. During 2015, Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 52,275 units.From the information given, compute the depreciation charge for 2015 under each of the following methods. (c)Working hours |
65190 (c)$615,000 ÷ 25,000 hours = $24.60 per hr.; 2,650 hrs. x $24.60 = $65,190 |
|
|
Jon Seceda Furnace Corp. purchased machinery for $645,750 on May 1, 2014. It is estimated that it will have a useful life of 10 years, salvage value of $30,750, production of 492,000 units, and working hours of 25,000. During 2015, Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 52,275 units.From the information given, compute the depreciation charge for 2015 under each of the following methods. (d)Sum-of-the-years'-digits |
104,364 (d) 10 + 9 + 8 + 7 + 6 + 5 + 4 + 3 + 2 + 1 = 55 10/55 x $615,000 x 1/3 = $37,273559 9/55 x $615,000 x 2/3 = 67,091 Total for 2015$104,364 |
|
|
Jon Seceda Furnace Corp. purchased machinery for $645,750 on May 1, 2014. It is estimated that it will have a useful life of 10 years, salvage value of $30,750, production of 492,000 units, and working hours of 25,000. During 2015, Seceda Corp. uses the machinery for 2,650 hours, and the machinery produces 52,275 units.From the information given, compute the depreciation charge for 2015 under each of the following methods. (e)Declining-balance (use 20% as the annual rate) |
111,930 (e) $645,750 x 20% x 1/3 = $43,050 [$645,750 – ($645,750 x 20%)] x 20% x 2/3 = 68,880 Total for 2015 $111,930 |
|
|
Land held for speculative purposes is classified as Property, Plant and Equipment but is not depreciated. true/false |
false |
|
|
Cayo Casta Cabins Corporation recently purchased Ship Island Resort and Casino and the land on which it is located with the plan to tear down the resort and build a new luxury hotel on the site. Cayo Casta Cabin Corporation salvaged fixtures and wood flooring from Ship Island prior to demolishing the building. The proceeds from the sale of the salvaged materials should be? |
recorded as a reduction of the cost of the land. |
|
|
A special assessment by the municipality for sidewalks and a drainage system would be included in the cost of land. true/false |
true |
|
|
The cost of property acquired by the issuance of securities which are actively traded on an organized exchange is equal to: |
the market value of the securities. |
|
|
Overhead costs related to self-constructed assets are accounted for by: |
assigning a pro rata portion of fixed overhead to the asset. |
|
|
The accounting for interest costs incurred during construction recommended under GAAP is to: |
capitalize the lesser of actual interest cost for the period or the amount of interest cost incurred during the period that the company could have avoided if expenditures for the asset had not been made. |
|
|
Avoidable interest is the lesser of actual interest cost incurred during a fiscal period or the amount of interest cost incurred during the construction period that a company could theoretically avoid if it had not made expenditures for the asset. true/false |
false |
|
|
The period of time during which interest must be capitalized ends when? |
the asset is substantially complete and ready for its intended use. |
|
|
Burchell Company purchased land and a building for a lump sum cost of $420,000. The land has a fair market value of $160,000 and the building has a fair market value of $320,000. The cost assigned to the land is? |
$140,000. |
|
|
If an exchange has commercial substance all losses should be recognized immediately and all gains should be deferred. true/false |
false |
|
|
Cash or other assets received in an exchange are referred to as “boot.” true/false |
false |
|
|
The receipt of an asset from a contribution should be recorded as additional paid-in capital. true/false |
false |
|
|
A plant site donated by a township to a manufacturer that plans to open a new factory should be recorded on the manufacturer's books at? |
its market value. |
|
|
Delta River Company sold manufacturing equipment with a cost of $44,000 and accumulated depreciation of $32,000 for $9,000. The journal entry to record this transaction will include: |
a debit to a loss account for $3,000. |
|
|
Plant assets purchased in exchange for a zero-interest-bearing note should be accounted for at the: |
present value of the note. |
|
|
Expenditures that extend the useful life of a plant asset without improving its quantity or quality are accounted for: |
by debiting Accumulated Depreciation. |
|
|
The entry to record the sale of a plant asset at a loss includes a credit to Accumulated Depreciation. true/false |
false |
|
|
what is not true of depreciation accounting? |
Depreciation lowers the book value of the asset as it ages and its fair value declines. |
|
|
The major difference between the service life of an asset and its physical life is that? |
service life refers to the time an asset will be used by a company and physical life refers to how long the asset will last. |
|
|
Total depreciation over an asset’s life cannot exceed an amount equal to cost minus estimated salvage value. true/false |
true |
|
|
The depreciation base for the sum-of-the-years digits method does not include the salvage value. true/false |
true |
|
|
Dixon Company purchased a depreciable asset for $32,000. The estimated salvage value is $4,000, and the estimated useful life is 4 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset? |
8,000 (The first year’s depreciation is (50% of $32,000) $16,000. The second year’s depreciation is [50% of ($32,000 - $16,000)] or $8,000.) |
|
|
Chattanooga Company purchased a depreciable asset for $80,000 on January 1, 2012. The estimated salvage value is $20,000, and the estimated useful life is 5 years. The straight-line method is used for depreciation. On January 1, 2014, the company made a capital expenditure of $16,000 for an addition to the asset. What is depreciation expense for 2014? |
$17,333 (($80,000 - $20,000) /5 years equals depreciation expense of $12,000/ year for 2010 and 2011. To compute the revised depreciation, calculate the new book value: $80,000 - $24,000 + 16,000 = $72,000 and divide the remaining book value $72,000 less salvage value $20,000 by the remaining useful life of 3 years to get depreciation expense of $17,333. ) |
|
|
In computing partial-year depreciation, depreciation is normally computed on the basis of: |
the nearest full month. |
|
|
Unless otherwise stipulated, depreciation is normally computed on the basis of: |
the nearest full month. |
|
|
Lundy Company purchased a depreciable asset for $99,000. The estimated salvage value is $18,000, and the estimated useful life is 9 years. The double-declining balance method will be used for depreciation. What is the depreciation expense for the second year on this asset? |
$16,988 (The first year’s depreciation is (22% of $99,000) $21,780. The second year’s depreciation is [22% of ($99,000 - $21,780)] or $16,988.) |
|
|
For the composite method, the composite? |
life is the total depreciable cost divided by the total annual depreciation. |
|
|
An impairment of property, plant, or equipment has occurred if? |
the expected future net cash flows is less than the asset’s carrying value. |
|
|
Erie Corporation owns machinery with a book value of $2,200,000. It is estimated that the machinery will generate future cash flows of $1,995,000. The machinery has a fair value of $1,915,000. The journal entry to record the impairment loss will? |
credit the asset’s Accumulated Depreciation account by $285,000. |
|
|
Lebanon Corporation owns equipment with a cost of $320,000 and accumulated depreciation at December 31, 2014 of $120,000. It is estimated that the machinery will generate future cash flows of $175,000. The machinery has a fair value of $155,000. If Lebanon uses IFRS, the company should recognize a loss on impairment of? |
$45,000. The asset would not fail the recoverability test under GAAP, but IFRS does not use this test. The impairment loss would be the $45,000 difference between the asset’s book value of $200,000 and its fair value of $155,000. |
|
|
Flannery Corporation owns machinery with a book value of $520,000. It is estimated that the machinery will generate future cash flows of $465,000. The machinery has a fair value of $415,000. Florence should recognize a loss on impairment of? |
$105,000. The future cash flows are less than book value, thus the book value is not recoverable. Book value, $520,000, less fair value, $415,000, results in a loss of $105,000 to be recognized. |
|
|
Depletion is normally calculated using the straight-line method. true/false |
false |
|
|
The total cost of natural resources includes what 3 things? |
-restoration costs -exploration costs -intangible development costs. |
|
|
For 2014, Lassiter Company reports beginning of the year total assets of $900,000, end of the year total assets of $1,100,000, net sales of $1,250,000, and net income of $250,000. Lassiter’s 2014 asset turnover ratio is? |
1.25 times. |
|
|
Under MACRS, what is 3 things are considered in determining depreciation? |
-Property recovery class -Cost of asset -Half-year convention |
|
|
what are 3 ways in which MACRS differs from GAAP depreciation? |
-assigned salvage value of zero. -cost recovery is accelerated. -estimated life is mandated by tax law. |
|
|
Intangible assets are normally classified as current assets. true/false |
false |
|
|
3 characteristics of intangible assets? |
-They lack physical existence. -They are not financial instruments. -They are long-term in nature. |
|
|
Expensing all R&D costs associated with internally created intangible assets results in? |
Understating assets and overstating expenses. |
|
|
what 3 factors need to be considered in determining a limited-life intangible asset’s useful life? |
-The expected useful life of any related asset. -Any legal provisions that may limit the useful life. -The effects of obsolescence. |
|
|
A purchased limited-life intangible asset ______ amortized and is impairment tested using _______________. |
is; the recoverability test and then the fair value test. |
|
|
Construction permits are? |
contract-related intangible assets. |
|
|
3 major categories of intangibles? |
-Artistic-related. -Marketing-related. -Contract-related. |
|
|
Marketing-related intangibles would include? |
a brand name. |
|
|
The difference between the price paid to acquire another company and the fair market value of that company’s net assets can be referred to as what 3 things? |
-a gap filler. -a master valuation account. -goodwill. |
|
|
The two principal types of patents issued by the U.S. Patent and Trademark Office are? |
process patents and product patents. |
|
|
On January 1, 2014, Bumper Corp. acquires a customer list for $400,000. Bumper estimates that this customer list will generate value for at least 5 years. At the end of 3 years, Bumper plans to sell the customer list to another company for $62,500. On Bumper’s income statement for the year ended December 31, 2014, how much amortization expense should it report? |
$112,500 (Customer lists should be amortized over their useful life: ($400,000 – 62,500)/ 3 years = $112,500 annual amortization expense.) |
|
|
Tiburon Corporation purchased a patent for $1,850,000 on November 30, 2012. It has a remaining legal life of 11 years. Tiburon estimates that the remaining useful life of the patent is useful life of 15 years. What balance will be reported on the December 31, 2014 balance sheet for the patent (if necessary, round your answer to the nearest dollar)? |
$1,499,621 (Total amortization expense charged between November 30, 2012 and December 31, 2014: $1,850,000/ 132 months X 25 months = $350,379. The balance in the Patent account would be: $1,850,000-$350,379 = $1,499,621) |
|
|
Which of the following costs of goodwill should be amortized over their estimated useful lives? Costs of goodwill from a business combination accounted for as a purchase OR Costs of developing goodwill internally |
Costs of goodwill from a business combination accounted for as a purchase: NO Costs of developing goodwill internally: NO |
|
|
St. Sebastian Company and A. Jamison Company were combined in a purchase transaction. St. Sebastian was able to acquire Jamison at a bargain price. The fair market value of Jamison’s net assets exceeded the price paid by St. Sebastian to acquire the company. Proper accounting treatment by St. Sebastian is to report the excess fair value over purchase price as? |
a gain. |
|
|
Impairment testing is performed in the same way for indefinite-life intangibles and limited-life intangibles. TRUE/FALSE |
false |
|
|
Truffle Inc. acquired a patent on January 1, 2011 for $7,800,000. It was expected to have a 10 year life and no residual value. Truffle uses straight-line amortization for its patents. On December 31, 2014, the expected future cash flows from the patent are $518,000 per year for the next six years. The present value of these cash flows, discounted at Truffle’s market interest rate, is $2,120,000. What amount, if any, of impairment loss will be reported on Truffle’s 2014 income statement? |
$2,560,000. (Amortization charged to date is $7,800,000/ 10 years X 4 years = $3,120,000 so the carrying value of the patent at December 31, 2014 is $4,680,000 ($7,800,000- $3,120,000). The impairment loss is the difference between the carrying value and the discounted expected future net cash flows: $4,680,000 - $2,120,000 = $2,560,000.) |
|
|
The impairment rule for goodwill involves how many steps? |
2 |
|
|
Which of the following principles best describes the current method of accounting for research and development costs? |
Immediate recognition as an expense |
|
|
Which of the following research and development costs may be capitalized? |
Research and development equipment to be used on current and future projects. |
|
|
The presentation of intangible assets in the financial statements? |
-Involves crediting amortization directly to the intangible asset account. -Includes the disclosure of the amortization expense for the next 5 years. -Includes reporting R & D costs as an expense in the income statement. |
|
|
3 true statements regarding IFRS accounting treatments for intangibles? |
-IFRS permits some capitalization of internally generated intangible assets. -IFRS permits revaluation on limited-life intangible assets. -IFRS allows reversal of impairment losses when there has been a change in economic conditions. |
|
|
Assets of a durable nature used in the regular operations of a business. Also called fixed assets and plant assets. |
property, plant, and equipment |
|
|
Assets of a durable nature used in the regular operations of a business. Also called property, plant, and equipment, and plant assets. |
fixed assets |
|
|
Costs to be included in the cost recorded in a fixed asset? |
land, buildings, equipment |
|
|
costs to be included in self-constructed assets? |
indirect costs of manufacturing, overhead |
|
|
3 major characteristics of property, plant, and equipment are? |
1) They are acquired for use in operations and not for resale. (2) They are long-term in nature and usually subject to depreciation. (3) They possess physical substance. |
|
|
A measure used in determining the amount of interest that can be capitalized. Computed by weighting construction expenditures by the amount of time (e.g., fraction of a year) that a company can incur interest cost on the expenditure. |
weighted average accumulated expenditures. |
|
|
The amount of interest cost in a period that a company could theoretically avoid if it had not made expenditures for an asset. When a company capitalizes interest expense, the amount of interest to capitalize is limited to the lower of actual interest cost incurred during the period or the amount of avoidable interest. |
avoidable interest |
|
|
rules for recording and valuing assets acquired in non-monetary exchanges |
1) compute the total gain or loss 2) if a loss, recognize the entire loss 3) if a gain, and has commercial substance, recognize the gain 4) if a gain, and lacks comm substance, and some cash is received , then a portion of gain is recognized |
|
|
Voluntary asset disposals. |
- take depreciation up to the date of disposition and then remove all accounts related to the retired asset - shown in the income statement |
|
|
involuntary asset disposals. |
- Gains or losses if unusual and infrequent, reported as extraordinary items. |
|
|
The process of allocating the cost of tangible assets to expense in a systematic and rational manner to those periods expected to benefit from the use of the asset. is not a matter of valuation but rather a means of cost allocation. |
depreciation |
|
|
The estimated amount that a company will receive when it sells an asset or removes it from service. It is the amount to which a company writes down or depreciates the asset during its useful life. |
salvage value |
|
|
The cost of a tangible asset that will be allocated to expense through depreciation. a function of two factors: an asset's original cost minus its salvage (disposal) value. |
depreciable base |
|
|
the duration for which the item will be useful(to the business), and not how long the property will actually last. factors include the frequency of use, the age when acquired and the repair policy and environmental conditions of the business. |
useful life. |
|
|
Depreciation method that uses a decreasing fraction of depreciable cost (original cost less salvage value), using the sum of the years of the asset's service life as a denominator and the number of years of estimated life remaining as of the beginning of the year as the numerator. The numerator decreases year by year, and the denominator remains constant, which results in a decreasing depreciation charge. At the end of the asset's service life, the balance remaining should equal the salvage value. |
sum of the years’ digits. |
|
|
Depreciation method that considers depreciation a function of time rather than of usage and thus charges the same amount for each year of the asset's service life. Companies widely use this method because of its simplicity. |
straight-line |
|
|
Declining-balance depreciation method in which a company depreciates assets at twice (200 percent) the straight-line rate. |
double declining balance |
|
|
A write-off of the carrying amount of a long-lived asset (property, plant, and equipment, or intangible asset) that is not recoverable. Companies use a recoverability test to determine whether an impairment has occurred and if it has, they then use a fair value test to measure the amount of the impairment loss. |
asset impairments and how they are recorded. |
|
|
how are asset impairments recorded? |
- at the lower-of-cost-or-net realizable value. - It is not depreciated. - it can be continuously revalued, as long as the write-up is never to an amount greater than the carrying amount before impairment. |
|
|
The process of allocating the cost of natural resources? |
depletion of natural resources |
|
|
4 factors to calculate the depletion of natural resources? |
(1) acquisition cost of the deposit, (2) exploration costs, (3) development costs, and (4) restoration costs. |
|
|
A method of depreciating multiple-asset accounts using one rate; often used when the assets are dissimilar and have different lives. |
the composite method of calculating depreciation. |
|
|
6 types of intangible assets? |
(1) marketing-related (2) customer-related (3) artistic-related (4) contract-related (5)technology-related (6) goodwill |
|
|
2 characteristics of intangible assets |
(1) They lack physical existence, and (2) they are not financial instruments. In most cases, intangible assets provide services over a period of years and so are normally classified as long-term assets. |
|
|
Identify an intangible asset |
-trademark -customer list -copyright -franchise -patent |
|
|
Intangible assets judged to have a limited useful life, which reflects the periods over which these assets will contribute to cash flows. |
limited-life intangibles |
|
|
Companies amortize by systematic charges to expense over their useful lives. |
limited-life intangibles |
|
|
Intangible assets for which there is no foreseeable limit on the period of time over which they are expected to provide cash flows. |
indefinite-life intangibles |
|
|
A company does not amortize but instead assesses it for impairment at least annually. |
indefinite-life intangibles |
|
|
how research and development costs are recorded. |
costs are expensed as incurred. |
