the use to six years, a company will amortize the cost over A) Eight years B) Si
ID: 2429202 • Letter: T
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the use to six years, a company will amortize the cost over A) Eight years B) Six years. C) Seven years D) Either six or eight years is allowed. 16) Accounting for a change in the estimated service life of equipment ve restatement of prior year's financial statements. B) Requires C) Requires a prior period adjustment D) Is handled currently as a change in accounting principle Apparel has purchased equipment on January 1, 2015, for $560,000. In 2015-2017, the asset on a straight-line basis with an estimated useful life of eight years 17) Herman Herman depreciated and a $80,000 residual value. In 2018, Herman has started to change its business strategy and now believes that the equipment will be used for only another two years (five years total) but does not believe the residual value has changed. What depreciation would Herman record for the year 2018 on this equipment? A) $150,000. B) $175,000. C) $124,000. D) $96,000. 18) Recognition of impairment for property, plant, and equipment is required if book value exceeds: A) Fair value. B) Present value of expected cash flows. C) Undiscounted expected cash flows. D) Accumulated depreciation. 19) Accounting for impairment losses: A) Involves a two-step process for recoverability and measurement. B) Applies only to depreciable assets. C) Applies only to assets with finite lives. D) All of these answer choices are correct 20) According to International Financial Reporting Standards (IFRS), the impairment loss for property, plant, and equipment is the difference between book value and: A) The B) The present value of future cash flows. C) Fair value less costs to sell. D) The higher of the present value of estimated future cash flows and the fair value less costs to sell undiscounted sum of estimated future cash flows.Explanation / Answer
15) The answer is "B) Six years"
Useful life will be 6 years.
16) The answer is "A) Is handled prospectively"
Change in accounting estimates are handled prospectively.
17) The answer is "A) $150,000”
Depreciation for 2015, 2016 and 2017 = (560,000 - 80,000) / 8 = $60,000 every year
Book value after 3 years = 560,000 - (60,000 x 3) = 380,000
Depreciation for the year 2018 = (380,000 - 80,000) / 2 = $150,000
18) the answer is "C) Undiscounted expected cash flows"
19) the answer is "A) Involves a two-step process for recoverability and measurement"
20) the answer is "D) The higher of the present value of estimated future cash flows and the fair value less costs to sell"
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