which of the following statements in relation to the cost of the asset is true? A. all of the statements are true B. The cost includes cash equivalent paid C. The cost includes the fair value of any non monetary consideration given to acquire an a D. The cost includes ponrefundable purchase taxes
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- Assuming interest costs related to an asset qualify for interest capitalization, which of the following best describes the determination of how much interest should be capitalized? The amount capitalized should be the average between the actual and avoidable interest amounts. The amount capitalized should be the higher of the actual or avoidable interest amounts. The amount capitalized should always be the actual interest amount. The amount capitalized should be the lower of the actual or avoidable interest amounts. The amount capitalized should always be the avoidable interest amount.1. What is the definition of a fixed asset and which expenditures can be added to the capitalized cost of a fixed asset? 2. Please define the term "Net book value."1. Inventory should be stated at (a) Lower of cost and fair value. (b) Lower of cost and net realizable value. (c) Lower of cost and nominal value. (d) Lower of cost and net selling price. 2. Which of the following costs of conversion cannot be included in cost of inventory? (a) Cost of direct labor. (b) Factory rent and utilities. (c) Salaries of sales staff (sales department shares the building with factory supervisor). (d) Factory overheads based on normal capacity. 3. Inventories are assets (a) Used in the production or supply of goods and services for administrative purposes. (b) Held for sale in the ordinary course of business. (c) Held for long-term capital appreciation. (d) In the process of production for such sale. (e) In the form of materials or supplies to be consumed in the production process or the rendering of services. (f) Choices b and d. (g) Choices b, d, and e. 4. The cost of inventory should not include (a) Purchase price. (b) Import duties and other taxes. (c)…
- 1. IAS 36 applies to which of the following assets? (a) Inventories. (b) Financial assets. (c) Assets held for sale. (d) Property, plant, and equipment. 2. Value-in-use is (a) The market value. (b) The discounted present value of future cash flows arising from use of the asset and from its disposal. (c) The higher of an asset’s fair value less cost to sell and its market value. (d) The amount at which the asset is recognized in the balance sheet. 3. If the fair value less costs to sell cannot be determined (a) The asset is not impaired. (b) The recoverable amount is the value-in-use. (c) The net realizable value is used. (d) The carrying value of the asset remains the same. 4. If assets are to be disposed of (a) The recoverable amount is the fair value less costs to sell. (b) The recoverable amount is the value-in-use. (c) The asset is not impaired. (d) The recoverable amount is the carrying value. 5. Estimates of future cash flows normally would cover projections over a maximum…The book value of an asset is equal to the: a. asset's market value less its historical cost b. book value relied on by secondary markets c. replacement cost of the asset d. asset's cost less accumulated depreciation1. How do we decide whether to capitalize (record as an asset) or expense a particular cost? 2. Provide one example of each to capitalize (record as an asset) or expense a particular cost.
- The difference between book value of the asset with the proceeds received from its sale, will result in:Which of the following best describes the higher of an asset's net selling price and its value in use? Select one: a. Recoverable amount b. Depreciable amount c. Revalued amount d. Carrying valueIt is the initial cost of acquiring an asset, plus sales tax, transportation and normal costs of making asset serviceable. a. Adjusted standard cost O b. Cost basis O c. Standard cost O d. Adjusted cost basis
- The cost of property acquired by direct cash purchase includes the cash paid and: A. the implied interest on the debt to finance the purchase.B. the market value of any noncash asset surrendered to acquire the asset.C. the estimated residual value of the asset.D. directly attributable costs of bringing the asset to working condition for its intended use.Which of the following statements about capitalizing costs is correct?A. Capitalizing costs refers to the process of converting assets to expenses.B. Only the purchase price of the asset is capitalized.C. Capitalizing a cost means to record it as an asset.D. Capitalizing costs results in an immediate decrease in net income.The key characteristic for theclassification of an asset as ‘held for sale’ is that the carrying amount ofthe asset must _________________. a Be lower than initial cost of the asset. b Be higher than its net realizable value. c Principally be recovered through continuing use. d Principally be recovered through a sale transaction.