36. T, F. Research specific new product. and development costs should be capital
ID: 2589714 • Letter: 3
Question
36. T, F. Research specific new product. and development costs should be capitalized when they can be associated with a 37. T, F. The ful costing method capitalizes the cost of both successful efforts and dry wells in oil 38. T, F. A long-term asset's carrying value should be reduced when its value has be impaired and gas industry 39. T. F. If the defense of an intangible asset in the court of law is successful, the cost of the defense 40. T, F. If there is a change in the life or residual value of an operational asset, the change should should be capitalized. be reflected in the financial statements for the current period and future periods by recalculating periodic depreciation, depletion, or amortization. 41 T, F. A change in accounting principle by a company must be justified by recalculating the effects 42. T, F. A change in accounting estimate like a change in depreciation rate is not usually justifiable 43. A material error in accounting for operational assets that is discovered in a year subsequent to on income statement, retained earnings and earnings per share. by management but the effects of such changes must be disclosed. the error should be corrected by: a. Previous financial statements that were affected must be corrected b. Retained earnings must be corrected as prior year adjustment c. Earnings Per share of subsequent periods must be corrected d. Statement of Changes in Owners' equity must be corrected e. All of the above. 44. When a company undertakes to invest in property, plant and equipment, it is actually taking a financial risk for which it must earn a reasonable rate of return. The rate of return it should accept must not be below: a. A bank borrowing rate; b. Government risk-free rate of return c. Average rate on its operational assets d. Industry's rate of return e. None of the above.Explanation / Answer
Answers as follows.
37.True.
full costing method capitalises the cost of both successful efforts and dry wells in oil and gas industry
38.True.
A long term assets carriying value should be reduced when the value has be impaired.
39.True.
If the defense of an intangible asset in the court of law is successful,the cost of defense should be capitalised.
40.True.
If there is change in the life or residual value of an operational asset,then the change should be reflected in the financial statementsfor the current period and the future periodby recalcualting periodic depreciation, depletion,Amortization.
41.True.
change in the accounting principle must be justified by the change in the effects on the income statements,retained earnings,earnings per share.
42.True.
change in accounting estimate like change in depreciation rate is not usually justifiable by management but the effects of such change must be disclosed.
43. All of the Above (E)
44. Industry rate of return (D)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.