Exam 11: Long-Term Operating Assets: Acquisition, Cost Allocation

During its first year of operation, Dovery Company incurred $375,000 of research costs undertaken with the prospect of gaining new technical understanding about a new nanotechnology procedure. An additional $505,000 was incurred to develop a production process to use that new technology to produce a new lubricant product. Assume development costs meet six conditions such as technical feasibility to demonstrate future economic benefit. Under IFRS, which of the following is the appropriate accounting for these costs?

Which of the following methods of amortization is normally used for intangible assets?

The cost of individually acquired intangible assets is charged as an expense of the period in which the costs are incurred.

When a long-term operating asset is exchanged for another long-term operating asset, and no cash is paid to the seller, there is no gain or loss for the buyer as a result of the exchange.

Bakiponi Corp. provides the following data from its recent financial statements: Dollars in millions) Beginning Gross Fixed Assets \ 2,140,000 \ 2,260,000 Ending Gross Fixed Assets 2,260,000 2,380,000 Beginning Accumulated Depreciation 1,210,000 1,420,000 Current-year Depreciation Expense 210,000 260,000 Current-year Sales Revenue 3,150,000 4,020,000 What is the fixed asset turnover ratio for 2019? (Round your answer to two decimal places, X.XX.)

U.S. GAAP requires companies to reconcile the historical cost and accumulated depreciation at the beginning of the period with amounts at the end of the period.

The amount of capitalized interest for a constructed asset is the lesser of actual interest incurred and avoidable interest.

The debit for a sales tax paid on the purchase of machinery would be a charge to ________.

The period of amortization of finite-life intangible assets should be either the useful life or legal life, whichever is longer.

A copyright is an exclusive right to reproduce and sell an original work for the creator's life plus 20 years.

Ordinary repairs are expenditures to maintain the operating efficiency of an asset that do not extend its original useful life.

Generally, which of the following costs are capitalized for self-constructed assets?

The average remaining life of a company's assets is computed as the balance of ending net fixed assets divided by depreciation expense.

Firms compute the amount of avoidable interest as the weighted-average accumulated expenditures times the appropriate interest rate.

For intangible assets, U.S. GAAP requires significant disclosures for ________.

A customer list may be classified as either a finite-life asset or an indefinite-life asset.

On June 30, 2018, F&R Company decided to scrap a piece of machinery with an original cost of $55,000 and accumulated depreciation (brought up to the date of the disposal) of $42,400. The company paid $750 to have the asset picked up and brought to a recycling facility for proper disposal. Record the journal entry for the disposal

IFRS requires that firms expense costs during a research phase but allows firms to capitalize development-phase costs under certain conditions. Under IFRS, which of the following is not a condition that must be met for a firm to capitalize development-phase expenditures?

Under IFRS, there is no need to use the weighted-average accumulated expenditures to determine capitalized interest.

A cost that is recorded as an asset is ________.