Quiz 9-13 D Flashcards Preview

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Flashcards in Quiz 9-13 D Deck (14):

When you are given a purchase price, estimated ore removable, salvage value, development costs and ore removed/sold during the year, how do you calculate depletion expense for the year?

Depletion expense =
(Purchase price + development costs - salvage value)
X (ore removed and sold)/removable ore estimated


A note due in 5 years where the interest is calculated at 3% per year and payable when the note is due. The present value of $1 due in 5 years is .6806

How do you calculate the amount that the note should be reported at on the balance sheet?

Maturity amount x present value factor =
(10k + (10k x 3% x 5 years)) x .6806


The initial test for determining whether an impairment of the carrying amount of a long lived fixed asset is...

Carrying amount exceeds undiscounted future cash flows


Which of the following is Reported on a proprietorship income statement and why?


Proprietor's draw

Depreciation: yes, is an expense incurred in generating income

Proprietor's draw: no, it's a distribution of owners equity to owner,
It does not effect income and is not an expense


Reliable is synonymous with...

Faithful representation


To be reliable, information about an item must be...

representationally faithful, verifiable and neutral


Values assigned to property based on management's estimate of fair value are...

Not representationally neutral and not reliable


Debtors gains are calculated based on...

Undiscounted amounts


Total future cash payments, including interest, are used to compute...

The gain on troubled debt restructuring


Sinking fund:

Current maturities on long term debt include...

Term notes due within 1 year and payments on serial notes
Due within 1 year


Non monetary exchanges should be recorded at...

Fair values unless 1 of the 3 criteria are met


Name the following 3 criteria, in a monetary exchange, for which if met she be based on carrying amounts?

1 fair value is not determinable

2 exchange transaction is to facilitate sales for customers

3 exchange transaction lacks commercial substance


In a nonmonetary exchange, if one of the 3 criteria are met, and inventory given up exceeds fair value...2

1 the inventory given up should be written down and

2 a loss recognized before exchange is recorded


Debt ratio equation

Debt ratio = total liabilities/total assets