Question 1

For a company that uses ASPE, the required year-end journal entry to record an impairment loss includes

Accepted Answer

A)  a debit to Loss on Impairment and a credit to Accumulated Impairment Losses. 
B)  a debit to Other Comprehensive Income and a credit to Accumulated Impairment Losses. 
C)  a debit to Loss on Impairment and a credit to the related asset. 
D)  a debit to Other Comprehensive Income and a credit to the related asset. 
A)  a debit to Loss on Impairment and a credit to Accumulated Impairment Losses. 
B)  a debit to Other Comprehensive Income and a credit to Accumulated Impairment Losses. 
C)  a debit to Loss on Impairment and a credit to the related asset. 
D)  a debit to Other Comprehensive Income and a credit to the related asset.

Question 2

If a company uses the units of production method for calculating depreciation on its factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will

Accepted Answer

A)  be constant. 
B)  vary with unit sales. 
C)  vary with sales revenue. 
D)  vary with production. 
A)  be constant. 
B)  vary with unit sales. 
C)  vary with sales revenue. 
D)  vary with production.

Question 3

Use the following data to answer the questions:
Wren Corp. reported the following data on its most recent financial statements:
Net revenues:.............................$312,500
Net income................................. $\quad 58,200$
Total assets, Jan 1....................... $\quad 174,280$
Total assets, Dec $31 $..................... 168,420
-To two decimals, what is Wren Corp.'s rate of return on assets (ROA)?

Accepted Answer

A)  18.24% 
B)  18.62% 
C)  33.97% 
D)  34.56% 
A)  18.24% 
B)  18.62% 
C)  33.97% 
D)  34.56%

Question 4

On June 1, 2018, Morgan Manufacturing acquired a machine for $100,000 with an estimated useful life of five years and an estimated residual value of $10,000. The company uses the double-declining-method of depreciation and takes a full year's depreciation in the year of acquisition and none in the year of disposition. If the machine were disposed of for $16,000 on May 1, 2020, the loss on disposal would be

Accepted Answer

A)  $20,000. 
B)  $26,400. 
C)  $24,000. 
D)  $36,000. 
A)  $20,000. 
B)  $26,400. 
C)  $24,000. 
D)  $36,000.

Question 5

Explain the core difference between the rational entity model (IFRS) and the cost recovery impairment method (ASPE).

Accepted Answer

The rational entity (IFRS) approach bett

Question 6

A machine has a cost of $24,000, a residual value of $6,000, and an estimated three-year life. If depreciation in the second year was $2,000, which depreciation method was used?

Accepted Answer

A)  straight-line 
B)  double declining-balance 
C)  units of production 
D)  cannot tell from information given 
A)  straight-line 
B)  double declining-balance 
C)  units of production 
D)  cannot tell from information given

Question 7

An asset's useful life

Accepted Answer

A)  remains unchanged once it has been determined. 
B)  is the same as its physical life. 
C)  is affected by physical and economic factors. 
D)  is not affected by physical and economic factors. 
A)  remains unchanged once it has been determined. 
B)  is the same as its physical life. 
C)  is affected by physical and economic factors. 
D)  is not affected by physical and economic factors.

Question 8

The cost recovery impairment model

Accepted Answer

A)  uses undiscounted cash flows in its determination of impairment. 
B)  uses discounted cash flows in its determination of impairment. 
C)  is the method used under IFRS. 
D)  requires the calculation of value in use. 
A)  uses undiscounted cash flows in its determination of impairment. 
B)  uses discounted cash flows in its determination of impairment. 
C)  is the method used under IFRS. 
D)  requires the calculation of value in use.

Question 9

Use the following data to answer the questions:
Wren Corp. reported the following data on its most recent financial statements:
Net revenues:.............................$312,500
Net income................................. $\quad 58,200$
Total assets, Jan 1....................... $\quad 174,280$
Total assets, Dec $31 $..................... 168,420
-To two decimals, what is Wren Corp.'s profit margin ratio?

Accepted Answer

A)  33.97% 
B)  18.62% 
C)  18.24% 
D)  5.37% 
A)  33.97% 
B)  18.62% 
C)  18.24% 
D)  5.37%

Question 10

The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were

Accepted Answer

A)  less than book value. 
B)  greater than cost. 
C)  greater than book value. 
D)  less than current market value. 
A)  less than book value. 
B)  greater than cost. 
C)  greater than book value. 
D)  less than current market value.

Question 11

For 2020, Walrus Company reported net revenues, average total assets, and net income of $180,000, $24,000, and $100,000 respectively. Walrus Company's asset turnover ratio for 2020 was

Accepted Answer

A)  1.8. 
B)  3.8. 
C)  7.5. 
D)  8.0. 
A)  1.8. 
B)  3.8. 
C)  7.5. 
D)  8.0.

Question 12

The following information is available for an asset that is classified as held for sale: Accumulated depreciation (at March 31, 2020)..........................$24,3000
Acrat cost......................................................................................50,000
 If the asset were sold on April 1, 2020 for $27,600, there would be

Accepted Answer

A)  a loss of $1,900. 
B)  a gain of $1,400. 
C)  a gain of $1,900. 
D)  a loss of $22,400. 
A)  a loss of $1,900. 
B)  a gain of $1,400. 
C)  a gain of $1,900. 
D)  a loss of $22,400.

Question 13

Match between columns
                        Premises: Only assets with cash flows that are independent from those of other assets are included in a cash-generating unit (CGU).
The choice of depreciation method is specified in GAAP and does not require the use of professional judgement.
An asset that has been depreciated to its residual value can continue to be depreciated until it reaches a net book value of zero.
Gains and losses from the disposal of property, plant, and equipment are always reported as part of other comprehensive income.
A)capitation
B)coinsurance

Changes in the depreciation rate due to changes in the estimate of the asset's useful life are accounted for in the current and future periods.
The term "recoverable amount" with respect to a capital asset's impairment has the same definition under ASPE and IFRS.
Depreciation is the process of allocating the cost of assets in a manner that is consistent with the desired effect on income.
Once a loss has been recognized, IFRS prohibits the subsequent reversal of that loss.
When using the straight-line method, an asset's residual value is deducted in the calculation of depreciation expense.

Accepted Answer

The Answer of False and True is...

Question 14

Halcour Corporation acquired the right to mine a piece of land at a cost to lease of $600,000. The related excavation costs were $1,000,000, while developmental costs were an additional $8,000,000, all of which will contribute to Halcour extracting 25,000 tonnes. In the first year of operations Halcour mined and sold 5,000 tonnes, while in its second year the company extracted 6,500 tonnes but only sold 6,000 tonnes.
Instructions
Prepare the journal entry to record depletion expense for the first two years.

Accepted Answer

The answer of Halcour Corporation acquired the right to mine...

Question 15

ASPE requires that assets must be assessed for indications of impairment

Accepted Answer

A)  at the end of each reporting period. 
B)  at the end of every quarter. 
C)  when events and circumstances indicate that asset's carrying amount may not be recoverable. 
D)  whenever the method of depreciation has changed. 
A)  at the end of each reporting period. 
B)  at the end of every quarter. 
C)  when events and circumstances indicate that asset's carrying amount may not be recoverable. 
D)  whenever the method of depreciation has changed.

Question 16

Consider an asset for which the following information is available: Carrying value at Dec 31, 2020 before depreciation 59,000
Calculated depreciation for2020................................$2,400
Original cost...............................................................$24,000
Reridual value............................................................$8,500
Remaining useful life..................................................3 years The depreciation expense for 2020 is

Accepted Answer

A)  $3,100. 
B)  $3,000. 
C)  $2,400. 
D)  $500. 
A)  $3,100. 
B)  $3,000. 
C)  $2,400. 
D)  $500.

Question 17

On January 1, 2020, Seal Corp. purchased a machine costing $250,000. The machine is in an asset class for tax purposes with a 30% CCA rate. It has an estimated $40,000 residual value at the end of its five-year useful life. The CCA deduction for tax purposes for the year 2020 is

Accepted Answer

A)  $25,000. 
B)  $31,500 
C)  $37,500. 
D)  $75,000. 
A)  $25,000. 
B)  $31,500 
C)  $37,500. 
D)  $75,000.

Question 18

On January 1, 2012, Owl Corporation purchased equipment for $76,000, having a useful life of ten years and an estimated residual value of $4,000. Owl has recorded monthly depreciation using the straight-line method. On December 31, 2020, the equipment was sold for $14,000. The gain to be recognized from the sale is

Accepted Answer

A)  $14,000. 
B)  $6,800. 
C)  $2,800. 
D)  $0. 
A)  $14,000. 
B)  $6,800. 
C)  $2,800. 
D)  $0.

Question 19

A principal objection to the straight-line method of depreciation is that it

Accepted Answer

A)  provides for the declining productivity of an aging asset. 
B)  ignores variations in the rate of asset use. 
C)  tends to result in a constant rate of return on a diminishing investment base. 
D)  gives smaller periodic write-offs than decreasing charge methods. 
A)  provides for the declining productivity of an aging asset. 
B)  ignores variations in the rate of asset use. 
C)  tends to result in a constant rate of return on a diminishing investment base. 
D)  gives smaller periodic write-offs than decreasing charge methods.

Question 20

Roan Corp. acquired a tract of land containing an extractable natural resource. The company is required by the government to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 6.2 million tonnes, and that the land will have a value of $1.2 million after restoration. Relevant cost information follows: Land..............................................$\$ 8,000,000$
Estimated retoration costs..............$2,100,000$ If Roan maintains no inventories, what is the depletion charge per tonne of extracted resource?

Accepted Answer

A)  $1.00 
B)  $1.32 
C)  $1.44 
D)  $1.63 
A)  $1.00 
B)  $1.32 
C)  $1.44 
D)  $1.63

For a company that uses ASPE, the required year-end journal entry to record an impairment loss includes

If a company uses the units of production method for calculating depreciation on its factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will

Explain the core difference between the rational entity model (IFRS) and the cost recovery impairment method (ASPE).

A machine has a cost of $24,000, a residual value of $6,000, and an estimated three-year life. If depreciation in the second year was $2,000, which depreciation method was used?

An asset's useful life

The cost recovery impairment model

The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were

For 2020, Walrus Company reported net revenues, average total assets, and net income of $180,000, $24,000, and $100,000 respectively. Walrus Company's asset turnover ratio for 2020 was

ASPE requires that assets must be assessed for indications of impairment

On January 1, 2020, Seal Corp. purchased a machine costing $250,000. The machine is in an asset class for tax purposes with a 30% CCA rate. It has an estimated $40,000 residual value at the end of its five-year useful life. The CCA deduction for tax purposes for the year 2020 is

A principal objection to the straight-line method of depreciation is that it

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters

Exam 11: Depreciation, Impairment, and Disposition

For a company that uses ASPE, the required year-end journal entry to record an impairment loss includes

If a company uses the units of production method for calculating depreciation on its factory machinery, the credit to accumulated depreciation from period to period during the life of the firm will

Explain the core difference between the rational entity model (IFRS) and the cost recovery impairment method (ASPE).

A machine has a cost of $24,000, a residual value of $6,000, and an estimated three-year life. If depreciation in the second year was $2,000, which depreciation method was used?

An asset's useful life

The cost recovery impairment model

The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were

For 2020, Walrus Company reported net revenues, average total assets, and net income of $180,000, $24,000, and $100,000 respectively. Walrus Company's asset turnover ratio for 2020 was

ASPE requires that assets must be assessed for indications of impairment

On January 1, 2020, Seal Corp. purchased a machine costing $250,000. The machine is in an asset class for tax purposes with a 30% CCA rate. It has an estimated $40,000 residual value at the end of its five-year useful life. The CCA deduction for tax purposes for the year 2020 is

A principal objection to the straight-line method of depreciation is that it

The Canadian Financial Reporting Environment

Conceptual Framework Underlying Financial Reporting

Measurement

Reporting Financial Performance

Financial Position and Cash Flows

Revenue Recognition

Cash and Receivables

Inventory

Investments

Property, Plant, and Equipment: Accounting Model Basics

Intangible Assets and Goodwill

Accounting Information Systems and Adjusting Entries: A Comprehensive Guide

Filters