Reading 22: Long-Lived Assets

Which of the following costs incurred for a machine should most likely be expensed in the period incurred?

When a firm capitalizes an expenditure instead of expensing it immediately, the effect in the current period is to:

A company constructs a warehouse for its own use. The interest cost incurred during construction should be:

Under IFRS, which of the following costs related to intangible assets must be expensed as incurred?

An intangible asset with an indefinite useful life:

A company acquires another firm for $50 million. The fair value of the identifiable net assets acquired is $40 million. The $10 million difference is recorded as:

Using the straight-line method, a machine purchased for $100,000 with a residual value of $10,000 and a 5-year useful life would result in an annual depreciation expense of:

A firm uses the double-declining balance (DDB) depreciation method for an asset with a 5-year life. The rate applied to the carrying value each year is:

Compared to straight-line depreciation, using an accelerated depreciation method in the early years of an asset's life will result in:

Component depreciation is required under:

A company increases the estimated useful life of its equipment. This change is accounted for:

Under IFRS, an asset is considered impaired when its carrying value exceeds its:

The recoverable amount of an asset under IFRS is defined as:

Under U.S. GAAP, the first step in testing a long-lived asset for impairment is to compare the asset's carrying value to its:

Under U.S. GAAP, if an asset is impaired, the loss recognized is equal to the excess of the carrying value over the:

Regarding the reversal of impairment losses on long-lived assets held for use, which statement is correct?

When a firm revalues an asset upward under the IFRS revaluation model for the first time, the gain is reported:

A firm using the IFRS revaluation model revalued an asset downward last year, recognizing a loss in net income. This year, the asset's value increased. The gain up to the amount of the previous loss should be:

An asset with a carrying value of $20,000 is sold for $25,000. The original cost was $50,000. The gain or loss on derecognition is:

Under IFRS, investment property is defined as property owned for the purpose of:

If a firm uses the fair value model for investment property under IFRS, changes in the fair value of the property are recognized in:

Average age of fixed assets can be estimated by dividing:

Which of the following would lead to a lower fixed asset turnover ratio?

A firm capitalizes a $10,000 expenditure that should have been expensed. In the year of the expenditure, cash flow from operations (CFO) will be:

An asset has a cost of $200,000, estimated useful life of 10 years, and salvage value of $20,000. Under the double-declining balance method, depreciation expense in Year 1 is:

In the later years of an asset's life, compared to straight-line depreciation, an accelerated depreciation method results in:

A firm reclassifies a piece of machinery from 'held-for-use' to 'held-for-sale'. At reclassification, the asset is measured at:

Once an asset is classified as held-for-sale, the firm:

An impairment charge reduces the carrying value of an asset. In future periods, this will generally result in:

Under U.S. GAAP, which of the following is expensed as incurred?

When calculating the fixed asset turnover ratio, a firm that uses the revaluation model (upward revaluation) compared to the cost model will likely show:

A firm has gross PP&E of $2,000, accumulated depreciation of $500, and annual depreciation expense of $150. The estimated total useful life of its assets is closest to:

Software development costs incurred by a company intending to sell the software are capitalized under U.S. GAAP:

If a company uses the fair value model for investment property, a transfer from owner-occupied property to investment property is treated as:

Regarding derecognition, if an asset is exchanged for another asset and the fair value can be reliably measured, the gain or loss is calculated based on:

Under the units-of-production method, depreciation expense:

Which of the following creates a deferred tax liability?

When estimating the remaining useful life of assets, the calculation Net PP&E / Depreciation Expense is most accurate when the firm uses:

A manufacturing firm treats the cost of lubricating oil for factory machines as:

If a firm uses the cost model for investment property under IFRS, it must disclose:

Compared to a firm that expenses an expenditure, a firm that capitalizes it will report:

Under U.S. GAAP, revaluation of PP&E to fair value is:

An asset with a carrying amount of $80,000 is abandoned. The firm incurs no costs to abandon it. The firm should recognize:

Regarding internally generated goodwill:

If a firm uses a shorter useful life estimate for its assets compared to peers, its:

Which of the following items is treated as a component of other comprehensive income under the IFRS revaluation model?

A key difference between the IFRS fair value model for investment property and the revaluation model for PP&E is:

When analyzing a firm's solvency, an analyst would most likely adjust the financial statements by:

Generally, capitalizing a cost rather than expensing it results in:

Under U.S. GAAP, which of the following is capitalized as an asset?