Exam 10: Depreciation,Amortization,and Impairment

Cummings corporation purchased new equipment on January 1,2014.The equipment cost $8,800,had an estimated useful life of four years,and a residual value of $400.Using declining balance amortization,the amortization expense recorded at the end of 2015 should be:

Gains or losses upon the retirement of individual asset units are not recognized when the assets concerned are:

Under capital cost allowance,residual value is not considered in determining amortization for tax purposes.

The declining balance method records higher amortization expense in the earlier years of an asset's useful life.

Which of the following statements is not correct?

GAAP requires that fractional year amortization be computed to the nearest month.

ABC's December 31^st,Year 2 revaluation entry would include:

Amortization is not recognized until the asset is in its intended condition and location and is contributing to revenue.

Given the information provided above,what would be the carrying value of Aerospace Inc's Goodwill on January 1^st,2014?

(a) On July 1,2001,XY purchased a machine that cost $22,000.It has a four-year life and $2,000 estimated residual value.It is to be depreciated using the sum-of-the-years'-digits method.Give the amortization entry at the end of 2001 and 2002 (end of the accounting period).XY has a December,31 year-end (b) Refer to the data in the above situation.Suppose instead the machine is to be depreciated using the service-hours method and its estimated life is 20,000 hours.Give the amortization entry at the end of 2001 and 2002,assuming it was used 3,000 hours during 2001 and 7,000 hours during 2002.

All of the following amortization methods take into account residual value except:

A major objective of capital cost allowance for tax amortization is to help companies achieve a faster write-off of their capital assets.

DBB purchased new equipment on January 1,2014.The equipment cost $4,400,had an estimated useful life of four years,and a residual value of $200.Using sum-of-the-years'-digits amortization,the amortization expense recorded at the end of 2016 should be:

On April 1,2013,the first day of the fiscal year,Traverse Co.purchased new machinery for $300,000.The machinery has an estimated useful life of five years,and amortization is computed by the double-declining balance method.Calculate the balance in the accumulated amortization account for this machinery at March 31,2015.

Given the information provided above,what would be the carrying value of Aerospace Inc's Patents on January 1^st,2014?

When the revaluation model is applied,impairment testing must be performed annually.

Under what conditions will the service hours and productive output methods of amortization result in the same amortization expense for a particular year?

On January 1,2011,Alabama Company purchased equipment at a cost of $40,000.The equipment was estimated to have a residual value of $4,000 and it is being amortized over eight years under the straight-line method.Calculate the amount that should be the charge for amortization of this equipment for the year ended December 31,2018.

Which method of amortization results in periodic amortization expense that may fluctuate from one period to the next,but not necessarily in a steadily upward or downward direction?

The 2011 revaluation journal entry would include