Question 1

Explain how a company should decide which depreciation method to use for income tax purposes.

Accepted Answer

The answer of Explain how a company should decide which...

Question 2

On January 1,2015,Kamloops Corporation purchased equipment for $15,500.Kamloops Corporation expected the equipment to remain in service for 4 years and have a residual value of $1,500.Kamloops Corporation amortized the equipment using double-declining-balance depreciation.On June 30,2017,Kamloops Corporation sold the equipment for $3,750 cash.
Prepare journal entries on June 30,2014,to record depreciation expense for the six months ended June 30,2017,and to sell the equipment.

Accepted Answer

The answer of On January 1,2015,Kamloops Corporation purchased equipment for...

Question 3

Copyrights are granted for the life of the author plus:

Accepted Answer

The correct answer is (C) 50 years. According to the Berne Convention for the Protection of Literary and Artistic Works, copyrights are granted for the life of the author plus a minimum of 50 years after their death. This means that after the author's death, their work is protected under copyright law for 50 years. After 50 years, the work enters the public domain, which means that anyone can use, copy, or distribute the work without the need for permission from the copyright holder.

Question 4

Goodwill is an intangible asset that has special features.Which statement below is true regarding the special nature of goodwill?

Accepted Answer

Goodwill is recorded only when it is purchased in the acquisition of another company. Goodwill cannot be created by a company on its own, but can only be acquired through the purchase of another company. Once recorded, goodwill is not amortized. Instead, it is subject to an annual impairment test to see if its value has declined. If the value has declined, the goodwill must be written down to its new, lower value.

Question 5

All of the following are intangible assets except:

Accepted Answer

Intangible assets are non-physical assets that have no physical substance, such as trademarks, goodwill, copyrights, patents, and other intellectual property. Natural gas is a physical asset and is tangible.

Question 6

Goodwill is equal to the excess of the cost of an acquired company over the sum of the:

Accepted Answer

The answer of Goodwill is equal to the excess of...

Question 7

The cost of a trademark should be amortized over its useful life.The maximum time period for trademark amortization is:

Accepted Answer

The maximum amortization period for a trademark is the useful life of the trademark itself. A trademark may have a useful life of more than 20, 30, or even 40 years, so the amortization period should reflect the actual useful life of the asset.

Question 8

Key West Corporation,a public company purchased its plant at a cost of $10.7 million,with no residual value.The plant is to be depreciated over 20 years.At this time the company selected the revaluation method.
December 31,2016 a real estate expert determined this building is now worth $18.6 million.
Prepare the required journal entry if any.

Accepted Answer

The answer of Key West Corporation,a public company purchased its...

Question 9

Most companies use straight-line depreciation for their books but an accelerated method (CCA depreciation)for the tax return.Explain why companies use these two different methods that result in the need for two sets of records.

Accepted Answer

The answer of Most companies use straight-line depreciation for their...

Question 10

Except for goodwill,the accounting for intangibles is similar to accounting for tangible long-lived assets.

Accepted Answer

Both intangible and tangible long-lived assets, except for goodwill, are initially recorded at cost and subsequently accounted for either using the cost model (cost less accumulated depreciation/amortization and impairment losses) or the revaluation model (fair value at the date of revaluation less subsequent accumulated depreciation/amortization and impairment losses), subject to impairment reviews. Goodwill, however, is not amortized but tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired.

Question 11

Under federal law a patent is granted to the holder for 25 years.

Accepted Answer

Under federal law, a patent is granted to the holder for 20 years from the filing date of the patent application.

Question 12

Key West Corporation,a public company determined its plant has experience an impairment due to a loss in market value.The impairment amount calculated by the controller totals $22,650.Prepare the required journal entry.

Accepted Answer

The answer of Key West Corporation,a public company determined its...

Question 13

Amortization of an intangible asset is similar to which amortization method?

Accepted Answer

The straight-line method is the most commonly used method for amortizing intangible assets. This method evenly distributes the cost of the asset over its useful life, allowing for a predictable and consistent expense that matches the asset's consumption. CCA amortization is used for certain types of capital assets, units-of-production is used for assets with a clear usage rate, and double-declining-balance is used for assets that have a higher depreciation expense early on in their useful life.

Question 14

Which of the following is not an intangible asset?

Accepted Answer

Leasehold improvement is a tangible asset because it refers to the physical improvements made to a leased space, such as new carpet or paint. Copyright, patent, and trademark are all intangible assets, as they are intellectual property rights.

Question 15

Amortization is not recorded on intangible assets.

Accepted Answer

Amortization is recorded on intangible assets such as patents, copyrights, and trademarks, to allocate the cost of the asset over its useful life.

Question 16

The cost of a patent should be amortized over:

Accepted Answer

The cost of a patent should be amortized over the lesser of 20 years or its economic useful life, as this is the period during which the patent is expected to generate economic benefits. Amortization is the process of spreading the cost of an asset over its useful life, and in the case of a patent, it is typically expensed over the term of the patent or its expected useful life, whichever is shorter.

Question 17

Yeast Corporation purchased Bitter Ltd.on August 31,2017.Yeast Corporation recorded goodwill in the purchase of Bitter.Yeast has determined that the Bitter goodwill will have an indefinite life.How will Yeast account for the Bitter goodwill in future accounting periods?

Accepted Answer

Goodwill with an indefinite life is not amortized but is tested annually for impairment. If the value decreases, an impairment loss is recognized, reducing the goodwill's carrying amount.

Question 18

Research costs incurred by a company should be:

Accepted Answer

Research costs are considered to be expenses rather than assets, and therefore they should be expensed on the current year's income statement. This is in line with the matching principle in accounting, which requires that expenses be recognized in the same period as the revenues they helped to generate. Capitalizing and amortizing research costs over a period of years is not appropriate, as these costs are not expected to generate future economic benefits beyond the current year.

Question 19

Which of the following is not an intangible asset?

Accepted Answer

Accounts receivable is a tangible asset as it represents money owed to a company by its customers. Patents, copyrights, and goodwill are examples of intangible assets.

Question 20

At year end the Carleton Corporation reviewed all of its property,plant and equipment assets for impairment.It discovered that its boiler's recoverable amount exceeded its carrying value by $5,500.Another one of its assets,a warehouse building previously written down for an impairment of $12,750 experienced a financial recovery.Prepare the required adjustments.Note Carleton Corporation is a publicly traded corporation.

Accepted Answer

The answer of At year end the Carleton Corporation reviewed...

Quiz 6: Property, plant, and Equipment, and Intangible Assets

Explain how a company should decide which depreciation method to use for income tax purposes.

Copyrights are granted for the life of the author plus:

Goodwill is an intangible asset that has special features.Which statement below is true regarding the special nature of goodwill?

All of the following are intangible assets except:

Goodwill is equal to the excess of the cost of an acquired company over the sum of the:

The cost of a trademark should be amortized over its useful life.The maximum time period for trademark amortization is:

Most companies use straight-line depreciation for their books but an accelerated method (CCA depreciation)for the tax return.Explain why companies use these two different methods that result in the need for two sets of records.

Except for goodwill,the accounting for intangibles is similar to accounting for tangible long-lived assets.

Under federal law a patent is granted to the holder for 25 years.

Key West Corporation,a public company determined its plant has experience an impairment due to a loss in market value.The impairment amount calculated by the controller totals $22,650.Prepare the required journal entry.

Amortization of an intangible asset is similar to which amortization method?

Which of the following is not an intangible asset?

Amortization is not recorded on intangible assets.

The cost of a patent should be amortized over:

Yeast Corporation purchased Bitter Ltd.on August 31,2017.Yeast Corporation recorded goodwill in the purchase of Bitter.Yeast has determined that the Bitter goodwill will have an indefinite life.How will Yeast account for the Bitter goodwill in future accounting periods?

Research costs incurred by a company should be:

Which of the following is not an intangible asset?