Deck 12 Flashcards Preview

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Flashcards in Deck 12 Deck (20):
1

Salvage value rule for Double declining balance

Ignore; the asset should not be depreciated below the estimated salvage value

2

Under US GAAP, long-lived assets that are impaired can only have their carrying value restored if they are:

Held for disposal (not held for use)

3

Gains and losses on fixed assets are always recorded at what value?

Net book value

4

Calculation for liability/asset in construction contracts =

Construction in progress - progress billings

5

Negative book balance is considered:

A current liability (not cash)

6

Example of a monetary exchange:

Exchanging equipment for a $200,000 noninterest bearing note (recorded using the fair value of the asset)

7

Short-term debt that is expected to be refinanced is classified as:

Long-term liability (anything paid prior to refinancing is considered current)

8

Sales tax that is refundable in 5 years is considered:

A noncurrent asset

9

Deposits received by customers is considered:

A current liability

10

Capitalized interest equals the smaller of:

The avoidable interest and total interest incurred

11

Only the interest related to _____ expenditures is capitalized

Construction expenditures (not total expenditures)

12

First step to calculate the amount of interest which should be capitalized is:

Calculate the weighted average accumulated expenditures

13

Do temporary market declines in inventory need to be recognized at interim?

No if a turn-around can reasonably be expected to occur before the end of the fiscal year

14

Cost recovery method

No profit is recognized until cash collections exceed the cost of sales

15

Will a reversal be allowed under GAAP for an impairment?

No; unless it is held for disposal

16

Change from the installment method to the cost recovery method:

A change in accounting principle inseparable from a change in accounting estimate

17

The carrying amount of stock is equal to the:

Fair value of the stock

18

The carrying amount of a bond is equal to the:

Cost + amortization

19

Normal present value formula is:

Present value = future amount x present value factor

20

Ordinary annuity vs. annuity due

Ordinary annuity: payments are made at the end of the year; annuity due: payments made at beginning of year