Deck 11 Flashcards Preview

FAR > Deck 11 > Flashcards

Flashcards in Deck 11 Deck (21):
1

The write-down of inventory is reflected in:

COGS, unless the amount is material

2

Periodic inventory system

Uses purchases; units of inventory and costs are counted and valued at the end of the period (No COGS until period end)

3

Perpetual Inventory system

No purchases; Each inventory item is updated for each purchase and each sale immediately as they occur (keeps a running total of inventory balances)

4

FIFO periodic vs. FIFO perpetual inventory

Amounts will be the same

5

Weighted average method (periodic system)

Divide total costs of inventory available by the total number of units of inventory purchased

6

Moving average method (perpetual system)

Same calculation at the weighted average method except that this calculation is done after each purchase

7

Price index for Dollar Value LIFO =

Ending inventory at current year cost / ending inventory at base year cost

8

Difference between dollar value LIFO and regular LIFO:

Regular LIFO is measured in units while Dollar value LIFO is measured in dollars

9

Capitalized interest equals the lower of the two:

1) Total interest incurred or 2)avoidable interest

10

Where are revaluation losses and gains reported?

Gains: OCI; Losses: income statement

11

Historical cost definition

Measured by the cash or cash equivalent price of obtaining the asset (used for fixed assets under GAAP)

12

Capitalize vs. Expense of Equipment:

Additions: capitalize; improvements and replacements: capitalize; Ordinary repairs: expense; extraordinary repairs: capitalize

13

Additions to equipment (capitalize or expense)

Capitalize

14

Improvements and replacements (capitalize or expense)

Increase life: reduce accumulated depreciation; Increase usefulness: Capitalize

15

Computing capitalized interest costs is based on:

Accumulated expenditures (not amount borrowed)

16

Capitalization of interest can only be for costs during what period?

During the period of construction (before and after - expense)

17

Impairment loss under GAAP:

Impairment loss occurs if the carrying value exceeds the undiscounted cash flows

18

Depreciable base of an asset =

Cost minus salvage value

19

When a permanent impairment occurs with equipment, the loss should be credited to what account:

Accumulated depreciation

20

Average composite life =

Total depreciable cost / annual depreciation

21

When selling or disposing of a group or composite asset, what is the journal entry?

Dr. Cash and accumulated depreciation; Cr. Asset