Deck 11 Flashcards Preview

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Flashcards in Deck 11 Deck (21)
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1
Q

The write-down of inventory is reflected in:

A

COGS, unless the amount is material

2
Q

Periodic inventory system

A

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

3
Q

Perpetual Inventory system

A

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
Q

FIFO periodic vs. FIFO perpetual inventory

A

Amounts will be the same

5
Q

Weighted average method (periodic system)

A

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

6
Q

Moving average method (perpetual system)

A

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

7
Q

Price index for Dollar Value LIFO =

A

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

8
Q

Difference between dollar value LIFO and regular LIFO:

A

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

9
Q

Capitalized interest equals the lower of the two:

A

1) Total interest incurred or 2)avoidable interest

10
Q

Where are revaluation losses and gains reported?

A

Gains: OCI; Losses: income statement

11
Q

Historical cost definition

A

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

12
Q

Capitalize vs. Expense of Equipment:

A

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

13
Q

Additions to equipment (capitalize or expense)

A

Capitalize

14
Q

Improvements and replacements (capitalize or expense)

A

Increase life: reduce accumulated depreciation; Increase usefulness: Capitalize

15
Q

Computing capitalized interest costs is based on:

A

Accumulated expenditures (not amount borrowed)

16
Q

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

A

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

17
Q

Impairment loss under GAAP:

A

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

18
Q

Depreciable base of an asset =

A

Cost minus salvage value

19
Q

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

A

Accumulated depreciation

20
Q

Average composite life =

A

Total depreciable cost / annual depreciation

21
Q

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

A

Dr. Cash and accumulated depreciation; Cr. Asset