Long-lived Assets von Edu Pristine

Dozent des Vortrages Long-lived Assets

Edu Pristine

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... and costs that are expensed in the period in which they ...

... Capitalize the amount incurred as assets in the balance sheet if it's expected to provide economic benefits over multiple periods. Costs include cash price plus all necessary expenditures made before an asset is ready for use. However if such benefits are highly uncertain such ...

... Interest incurred (accured/paid) during that period must be capitalized by adding such interest to the cost of assets. Cash Flow Statement: Normal interest as operating cash flow. Capitalized interest as investing activities ...

... For Income statement: Capitalization: Amount incurred is charged to income statement in subsequent years over the economic life of an asset. Delays recognition of expenses ,increases net income in period when expenses are incurred but decreases net income in subsequent periods. ...

... shareholders equity represented by increased assets on assets side and in subsequent period, shareholders equity is reduced with the amount of depreciation/amortization/expenses. On Expensing, shareholders equity is reduced by whole amount ...

... For Cash flow: No impact on overall cash flows except. Some impact of cash flow due to changes in tax paid depending upon tax provision. Just classification differs either. Operating activity (expenses). Investing activity (capitalized). With ...

... An analyst should look at debt covenants to decide whether capitalized interest should be added to normal interest while calculating coverage. In practice, in almost all cases, debt covenants require coverage ratio to include capitalized interest as well, as it decreases the same and take into account ...

... Expenses incurred to ship the new equipment to the factory. ...

... Freight costs (FOB shipping point): 2,000. Installation of equipment: 15,000. Annual salary of new employee hired to operate the equipment: 40,000. Increase in the annual cost of the fire and theft insurance policy to cover the new equipment ...

... Capitalizing expensing A. Cash flow from operations lower/higher B. Leverage ratios lower/ higher C. Profitability early years higher ...

... Cash flow from operations is lower/ higher. In capitalizing the entire amount is depreciated throughout the useful life of the asset. ...

... Capitalized interest is shown as ...

... transaction, identifiable intangible assets (e.g., patents, trademarks, franchises) are recorded at acquisition cost. The expense of their use ...

... When an intangible asset is purchased, such as a patent, they ...

... acquired from the business combination. If the sum of parts falls short of the purchase price, the shortfall is called. When an intangible asset is acquired in a business combination the of accounting is used. ...

... US GAAP requires that R&D expenditures, be expensed when incurred. IFRS requires expensing research costs but capitalizing development costs. Software development costs: For software ...

...  1. Which of the following is a tangible ...

... A. All expenses incurred during research stage. B. All expenses incurred during development stage. C. All expenses must be incurred except ...

... during the research stage but can capitalize ...

... Following is the extract of Balance Sheet of Unreliable just before the acquisition: ...

... $10 million, C. $90 million. The actual market value of Plant & Machinery is $900 million. Calculate the amount of goodwill Reliable Inc. should ...

... $550 Less: Fair Value of Net Assets ($520). Acquired goodwill $30. Goodwill of $20 million reported on Balance Sheet of Unreliable Inc. is an unidentifiable asset & hence ignored in the calculation of goodwill of Reliable ...

... Units produced in a particular period/ Total units to be produced during assets economic life). Depreciation is charged based on usages ...

... Greater depreciation expense in the early part of an asset's life and less expense in the later portion of its life. ...

... once the estimated residual value has been reached. Double-declining balance (DDB) uses 200% of the straight-line rate as % rate applied to declining balance. DDB depreciation = (2/useful life) ...

... new assets with longer depreciable lives. II. The firm's capital expenditures are outpacing depreciation. III. The firm is not using its assets as intensively as it should. IV. The firm is operating in its maturity phase. ...

... correct answer is I and II. Note that the firm is likely not in a maturity or declining ...

... A. Total depreciation expense will be higher over the life of the equipment. B. Depreciation expense will be higher in the first year. C. Scrapping the equipment after five years will result in a larger loss ...

... Depreciation expense will be higher in the first year. Accelerated depreciation will result in higher depreciation in the early years and lower depreciation in the later years compared to the straight-line method. Total depreciation expense will be the same under both methods.  ...

... with high debt/asset ratio would prefer to use A. ...

... he correct answer is LIFO and straight-line depreciation. In deflation, SLD and LIFO would minimize expense and thus increase ...

... following items in the earlier years of asset purchase? Applicable Tax rate is 30%. A. Tax expense. B. Net Income after Tax. ...

... The correct answer is: Net Income after Tax. More depreciation reduce net income by Depreciation (1-t), hence in the earlier year of asset purchase shifting depreciation ...

... uses the double-declining-balance depreciation method. Assuming that all revenue and other expense items are identical for both companies, which of the following statements is correct? A. Straight-line depreciation provides the highest depreciation expense and the best return on sales. B. Straight-line depreciation provides the lowest depreciation expense and the best return on sales. C. Double-declining-balance depreciation provides the lowest depreciation expense and the ...

... the lowest depreciation expense and the ...

... assets on net income of the company on the following year, considering other things constant. A. Net Income decrease. B. Net income increase. C. ...

... resulting decrease in per year depreciation expense and ...

... Calculate the estimated average depreciable. Life of the asset and estimated average age of the asset. A. Avg. depreciable life: 2.39, average age: 5.11 B. avg. depreciable life: 12.22, average age: 5.11 C. avg. depreciable life: 5.11, ...

... The correct answer is avg. depreciable life: 12.22, average age: 5.11. avg. depreciable life ...

... On January 1, 2009, Austin Company purchased a delivery truck for $64,000. The van was estimated to have a 5-year useful life or 100,000 miles. Salvage value was estimated at $4,000. The van was driven 25,000 miles in 2009 and 22,000 miles in 2010. Assume that Austin Company uses the ...

... used which of the following is least likely correct about the depreciation expense? A. The depreciation expense in year 3 is $7200. B. The DDM will never fully depreciate the machine. C. The straight line method should be used for year 4 an d 5 for depreciating ...

... following techniques might he use to do so: A. Increase the machinery's salvage value. B. Decrease the machinery's useful life. C. Both the above methods do not yield the desired ...