Deck 6 Flashcards Preview

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Flashcards in Deck 6 Deck (20):
1

Average composite life =

Total depreciable cost/annual depreciation

2

Sum of the years digits depreciation

Higher depreciation expense in earlier years (5/15 in year if asset has 5 year life)

3

Purchase cost for depletion includes

Any expenditures necessary to purchase and then prepare the land for the removal of resources (ex: cost to purchase property, development costs, restoration costs

4

Depletion expense

(depletion base/recoverable units) x units extracted

5

When is units of production method most appropriate?

Asset's service potential declines with use

6

Long-lived assets that are impaired can only have their carrying value restored if they are:

Held for disposal

7

Impairment losses are reported as:

Income from continuing operations before income tax

8

Fixed asset received in an exchange that lacks commercial substance should be recorded at:

Carrying value of asset given up + boot paid or - boot received

9

Will the moving average method or weighted average method provide the higher inventory carrying amount?

Moving average method (perpetual)

10

Dividends paid in excess of retained earnings is a

Return of capital

11

Net capitalized cost for software =

Cost - accumulated amortization

12

Difference between legal fees and registration fees?

Legal fees: expense; registration fees: APIC

13

Present value =

Future value x present value factor

14

Ordinary annuity (in arrears) vs. Annuity due

Ordinary: End of year; Annuity: beg of year

15

When a lease payment is made at the end of the year or the same time when debt is incurred, what accounts will this include?

No interest expense; only lease liability

16

Total interest revenue for a lease =

Total cash flows - present value of cash flows

17

Lease obligation is a

Liability

18

When a lease is capitalized, depreciation is based on:

Life of the asset (not lease term)

19

Leasehold improvements are amortized over the lessor of:

1) remaining life of the lease or 2) Life of the improvements

20

When is a deferred gain recorded under a sale-leaseback?

Recorded for "Major" sale-leasebacks (capital leases only)