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     41.     A change in estimate should
a.     result in restatement of prior period statements.
b.     be handled in current and future periods.
c.     be handled in future periods only.
d.     be handled retroactively.

     42.     White Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should
a.     recognize an extraordinary loss for the period.
b.     include a credit to the equipment accumulated depreciation account.
c.     include a credit to the equipment account.
d.     not be made if the equipment is still being used.

     43.     Dividends representing a return of capital to stockholders are not uncommon among companies which
a.     use accelerated depreciation methods.
b.     use straight-line depreciation methods.
c.     recognize both functional and physical factors in depreciation.
d.     none of these.

     44.     Depletion expense
a.     is usually part of cost of goods sold.
b.     includes tangible equipment costs in the depletion base.
c.     excludes intangible development costs from the depletion base.
d.     excludes restoration costs from the depletion base.

     45.     The most common method of recording depletion for accounting purposes is the
a.     percentage depletion method.
b.     decreasing charge method.
c.     straight-line method.
d.     units-of-production method.


     46.     Reserve recognition accounting
a.     is presently the generally accepted accounting method for financial reporting of oil and gas reserves.
b.     is a historical cost method similar to the full cost approach and the successful efforts approach.
c.     is used for reporting of oil and gas reserves for federal income tax purposes.
d.     requires estimates of future production costs, the appropriate discount rate, and the expected selling price of oil and gas reserves.

     S47.     Of the following costs related to the develop¬ment of natural resources, which one is not a part of depletion cost?
a.     Acquisition cost of the natural resource deposit
b.     Exploration costs
c.     Tangible equipment costs associated with machinery used to extract the natural resource
d.     Intangible development costs such as drilling costs, tunnels, and shafts

     S48.     Which of the following disclosures is not required in the financial statements regarding depreciation?
a.     Accumulated depreciation, either by major classes of depreciable assets or in total.
b.     Details demonstrating how depreciation was calculated.
c.     Depreciation expense for the period.
d.     Balances of major classes of depreciable assets, by nature and function.

     P49.     The book value of a plant asset is
a.     the fair market value of the asset at a balance sheet date.
b.     the asset's acquisition cost less the total related depreciation recorded to date.
c.     equal to the balance of the related accumulated depreciation account.
d.     the assessed value of the asset for property tax purposes.

     50.     A general description of the depreciation methods applicable to major classes of depreciable assets
a.     is not a current practice in financial reporting.
b.     is not essential to a fair presentation of financial position.
c.     is needed in financial reporting when company policy differs from income tax policy.
d.     should be included in corporate financial statements or notes thereto.

     51.     The asset turnover ratio is computed by dividing
a.     net income by ending total assets.
b.     net income by average total assets.
c.     net sales by ending total assets.
d.     net sales by average total assets.

     *52.     A major objective of MACRS for tax depreciation is to
a.     reduce the amount of depreciation deduction on business firms' tax returns.
b.     assure that the amount of depreciation for tax and book purposes will be the same.
c.     help companies achieve a faster write-off of their capital assets.
d.     require companies to use the actual economic lives of assets in calculating tax depreciation.


     *53.     Under MACRS, which one of the following is not considered in determining depreciation for tax purposes?
a.     Cost of asset
b.     Property recovery class
c.     Half-year convention
d.     Salvage value

     *54.     If income tax effects are ignored, accelerated depreciation methods
a.     provide funds for the earlier replacement of fixed assets.
b.     increase funds provided by operations.
c.     tend to offset the effect of steadily increasing repair and maintenance costs on the income statement.
d.     tend to decrease the fixed asset turnover ratio.

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