FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

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

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Short Answer

Review LaterAdd Note

Review Later

Calloway Shoes purchased a delivery truck on September 30,2016,for $32,000.The estimated useful life of the truck is 10 years with no residual value.After five years,the refrigeration unit will need to be replaced.The $8,000 cost of the unit is included in the cost of the truck.Calloway uses the straight-line depreciation method.Depreciation for 2016 under U.S.GAAP and International Financial Reporting Standards (IFRS),respectively,is:

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

Short Corporation acquired Hathaway,Inc. ,for $52,000,000.The fair value of all Hathaway's identifiable tangible and intangible assets was $48,000,000.Short will amortize any goodwill over the maximum number of years allowed.What is the annual amortization of goodwill for this acquisition?

A) $100,000.
B) $400,000.
C) $200,000.
D) $0.

E) B) and C)
F) All of the above

Correct Answer

verified

Show Answer

Question 3

True/False

Review LaterAdd Note

According to International Financial Reporting Standards (IFRS),an impairment loss for property,plant,and equipment is required only when an asset's book value exceeds the undiscounted sum of the asset's estimated future cash flows.

A change in the estimated recoverable units used to compute depletion requires retroactive adjustments to the financial statements.

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

Gains on the cash sales of fixed assets:

Use the following to answer questions In 2015,Dooling Corporation acquired Oxford Inc.for $250 million,of which $50 million was attributed to goodwill.At the end of 2016,Dooling's accountants derive the following information for a required goodwill impairment test: -Assume the same facts as above,except that the fair value of Oxford (the reporting unit)is $225 million. Required: Determine the amount,if any,of the goodwill impairment loss that Dooling must recognize on these assets.

Any method of depreciation should be both systematic and rational.

Gulf Consulting Co.reported the following on its December 31,2016,balance sheet: Equipment (at cost) …..$700,000 In a disclosure note,Gulf indicates that it uses straight-line depreciation over five years and estimates salvage value as 10% of cost.Gulf's equipment averages 3.5 years at December 31,2016.What is the book value of Gulf's equipment at December 31,2016?

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

Notsofast Inc.acquired land for $500,000 on July 1,2015.It erroneously recorded the full amount as an expense.Explain what Notsofast must do when it discovers the error in 2016.

Kingston Corporation has $95 million of goodwill on its books from the 2014 acquisition of Reliant Motors.At the end of its 2016 fiscal year,management has provided the following information for its required goodwill impairment test ($ 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:

Required: Compute depreciation for 2016 and 2017 and the book value of the drill press at December 31,2016 and 2017,assuming the straight-line method is used.

The replacement of a major component increased the productive capacity of production equipment from 10 units per hour to 18 units per hour.The expenditure should be debited to:

Granite Enterprises acquired a patent from Southern Research Corporation on January 1,2016,for $4 million.The patent will be used for 5 years,even though its legal life is 20 years.Rocky Corporation has made a commitment to purchase the patent from Granite for $200,000 at the end of five years.Compute Granite's patent amortization for 2016,assuming the straight-line method is used.

Fellingham Corporation purchased equipment on January 1,2014,for $200,000.The company estimated the equipment would have a useful life of 10 years with a $20,000 residual value.Fellingham uses the straight-line depreciation method.Early in 2016,Fellingham reassessed the equipment's condition and determined that its total useful life would be only six years in total and that it would have no salvage value.How much would Fellingham report as depreciation on this equipment for 2016?

At the end of its 2016 fiscal year,a triggering event caused Janero Corporation to perform an impairment test for one of its manufacturing facilities.The following information is available: The manufacturing facility is:

Depreciation for 2017,using double-declining balance,would be:

Using the straight-line method,depreciation for 2016 and book value at December 31,2016,would be:

The legal life of a patent is: