Exam 7: Investing Activities

Which of the following is the least effective way for an analyst to understand whether existing long-lived assets must be replaced?

Interpretation No.46R relates to the issue of whether an investing firm is the primary beneficiary in a variable-interest entity.When is an entity classified as a variable interest entity?

Which of the following is not a difficulty in determining current market values when determining the value of fixed assets?

Which of the following items would be charged to the cost of land rather than the cost of the building?

Firms that capitalize routine maintenance and repair charges will end up with the result of having the current period's income being ____________________.

Which one of the following is an example of the expected benefit approach for valuing long-lived assets?

Below you will find the balance sheet and income statement of a US Corp.'s foreign subsidiary at the end of its first year of operations.The following exchange rates were in effect during the period: Jan.1,2012 - $1 = 1FC Dec.31,2012 - $1.70 = 1FC The average exchange rate during the period was $1.40=1FC.The common stock was issued on January 1,2012. Assuming that the foreign currency is the functional currency translate the financial statements into U.S.dollars.

GAAP stipulates that firms should do what with expenditures that increase the service potential of an asset beyond that originally anticipated?

Assume that Hsu Company needs to acquire a large special-purpose materials handling facility.Given that no outside vendor exists for this type of facility and that the company has available engineering,management,and productive capacity,the Hsu borrows funds and builds the facility.Identify the costs that should be capitalized as part of this facility.

For U.S.GAAP,software development costs are capitalized as intangible assets

You are trying to determine the functional currency of a foreign unit.For the following three factors determine what conditions would result in the foreign currency being the functional currency: a.Sales Prices b.Financing c.Relationships between the Parent and the Foreign Unit

All of the following are typically costs that fail the future benefits test of long-lived operating assets except:

Under current accounting rules an asset is ____________________ when its carrying amount is deemed "not recoverable."

___________________________________ include trade and brand names,trademarks,patents,copyrights,franchise rights,customer lists and goodwill.

When dividends from an investment are recognized as income,the investment must have been of which type?

When a foreign entity operates as a relatively self-contained and integrated unit within a foreign country,normally,its functional currency is the ____________________________________________________________.

All of the following statements are true regarding accounting for software development costs except:

When a firm can exercise control or significantly influence the operations of a company it has only a minority interest in,it should account for the investment using the ______________________________.

Discuss how firms should account for intangible assets under U.S.GAAP.Your answer should include discussion of the following areas: a.internally generated intangible assets versus specifically identifiable intangible assets acquired from others. b.amortization and impairment testing

Orman Company is a large international canning company.Orman uses straight-line depreciation for financial reporting purposes and accelerated depreciation for tax reporting.The company's tax rate is 35%.Selected financial information about Orman appears below. Required: a.Compute the amount of depreciation expense that Orman recognized for income tax purposes for year 2010 and 2009.The amount reported as the deferred tax liability relating to temporary depreciation differences represents the cumulative income tax delayed as of each balance sheet date because Orman uses accelerated depreciation for tax purposes and straight-line depreciation for financial statement reporting. b.Compute the fixed asset turnover ratio for years 2010 and 2009 using the amounts reported for financial statement purposes. c.Compute the fixed asset turnover ratio for years 2010 and 2009 using the amounts reported for tax purposes.