6. 36T, F. An operating asset is impaired when the carrying value exceeds its ma

Question

6. 36T, F. An operating asset is impaired when the carrying value exceeds its market value or replacement value. 37. T,F. A capital expenditure is debited to the asset account when such expenditure enlarges the capacity of the asset, enables it to produce more products less efficiently for many years in the future. 38. T, F. Betterments are treated the same way as capital expenditures 39. The total cost of a piece of equipment consist of all of the following except a. Invoice price and cash discount b. Freight and insurancec. Excise Taxes d Installation costs e. None of the above. 40. The three major depreciation method are: a. Straight line method b. Double declining method c. Production method d. Sum-of years method e. A, b and C above. 41. Long-lived assets may be disposed off for the following reasons: a. Sale b. Discarded c. Traded for another asset. d. All of the above e. None of the above 42. T, F. Gain or loss on sale of equipment is strictly based on its most recent book value. 43. T, F. Long term Babilities are debts that a company must satisfy over a year or heyond its normal operating cycle whichever is shorter 44. T. F. Long-term liabilities always carry interest rates that are attached to them. 45. Examples of long -term liabilities are the following except: a. Bonds payable b. Car Notes Payable c. Mortgages Payable d. Property Taxes Payable e. None of the above. 46. T, F. Bonds carry two interest rates that are associated with them which are coupon rate and market rate. 47. T, F. Coupon rate is the contractual rate of interest that the issuer must pay annually cr semi-annually erest rate is very important because it is the rate that determines 48. Market rate or effective int the bonds annuity payments. T. F. A bond is sold at a premium when the coupon rate is higher than the market rate 49· 50. T.F. A bond is discount by applying the discounting factor that is found between the years the bond is to run or the periods and the market rate established on the date of its sale.

Explanation / Answer

36. An Asset is said to be impaired when its carrying amount is higher than receoverable Amount. Receoverable amount is the higher of Net selling price or Value in Use.

Answer True

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