Exam 10: Long-Lived Assets

Long-lived assets are operating assets that are expected to yield their economic benefits over a period longer than one year.

Intangible assets are long-lived assets that do not have physical substance.

To prevent abuses when accounting for nonmonetary asset exchanges,U.S.GAAP requires companies to record certain exchanges of nonmonetary assets at the existing book value of the relinquished assets.

When accounting for indefinite-lived intangible assets under IFRS,carrying values are compared to the recoverable amount instead of fair value to ascertain if a write-down is needed.

Some intangible assets have indefinite lives and are impairment tested rather than amortized.

Indefinite-lived intangible assets must be evaluated for impairment at least annually.

Which one of the following factors makes it difficult for financial analysts to use trend analysis?

Expenditures included in the cost of a long-lived asset are capitalized.

Which of the following is used to measure the amount of the write-down that must be recognized on an impaired asset?

The first stage of impairment testing of a long-lived asset is to take the present value of the future cash flows generated by the asset.

The apportionment of the cost of a copyright to future periods under the matching principle is

An impairment loss is the difference between the carrying value of the asset and the future value of the asset.

Units-of-production depreciation is similar to straight-line depreciation but defines useful life in terms of expected production rather than in years.

The accounting for an asset whose carrying value exceeds its expected future economic benefits is guided by the concept of verifiability.

The Key Company sold a machine.The machine had accumulated depreciation of $50,000 and a salvage value of $6,000.If the machine sold for $16,000 and a gain of $4,000 is recognized,the original cost of the asset is

An expenditure that increases a long-lived asset's useful life should be capitalized.

Under U.S.GAAP,an asset that was written down can later be written back up to its original carrying value if its value recovers to previous levels.

Market forces lead to commonalities that usually make comparisons across firms within the same industry meaningful.

An impairment loss is the difference between the carrying value of the asset and the

Under U.S.GAAP,software development costs are expensed as research and development costs up until the time the software is released to customers.