Changing the method of accounting for depreciation will result in a. prospective
ID: 2493299 • Letter: C
Question
Changing the method of accounting for depreciation will result in
a. prospective approach
b. a note disclosure
c. a cumulative change in accounting principle
d. a prior period adjustment to retained earnings
Under IFRS, impairment losses may be reversed in subsequent year for:
a. Intangible assets with finite lives
b. Physical assets
c. Goodwill
d. a and b only
e. all of the above
During ABC Co.s inventory increased by $4500 and accounts payable decreased by $8700. If cost of goods sold was $325,000 then cash paid to suppliers of merchandise is
$338,500
325,000
329,000
338,200
325,000
Which type of expenditure may be capitalized as an intangible asset for IFRS, but expensed under US GAAP
Internally developed goodwill
Goodwill arising from a purchase of another entity
Internally developed customer list
Internal development cost for a patented process
Software development costs
Callable bonds
Can be redeemed by the issuer at some time at a pre-specified price
Can be converted to stock
Mature in a series of payments
Can be redeemed at the holders choice
Are issued by the government
If a bond is issued at a premium, overtime, the amortization of the premium will:
Increase
Decrease
Not change
Cannot be determined without knowing the interest rate
If an entity neglected to amortize the premium on outstanding ten-year bonds payable, what is the effect of this omission on interest expense and the bond-carrying amount (book value) respectively?
Understate; understate
Understate; overstate
Overstate; understate
Overstate; Overstate
A debit balance in the account Market Adjustment- Trading Securities at the end of the year should be interpreted as
The net realized holding gain to date
The net unrealized holding gain to date
The net realized holding gain for that year
The net unrealized holding gain for that year
Dividends in arrears are:
Disclosed in the notes only
Recognized as current liabilities
Recognized as long-term liabilities
Recognized as contra equity
Par Value Treasury Stock is resold for an amount in excess of its purchase prize. This will result in
An increase in contributed capital
An increase in retained earnings
A decrease in total shareholders’ equity
A decrease in retained earnings
An increase in common stock
These are question I got wrong on a quiz. If you could give an explanation for each answer that would help me a lot in my studies. Thanks again!
Explanation / Answer
1. Changing the method of accounting for depreciation will result in a cumulative change in accounting principle as it would amounting to change in accounting policy which requires adjustement of effect of change in change in accounting policy retrospectively.
2. Under IFRS, impairment losses may be reversed in subsequent year for: all of the above
Impairment charges are reversed if there are subsequent changes in the recoverable amount, use of the asset, or economic conditions.
If a change has occurred, the asset impairment may be reversed; however, the asset should not be revalued to an amount greater than the carrying amount would have been if no impairment loss had been recognized (i.e., the otherwise net carrying amount after regular depreciation expense is deducted).
3.cash paid to suppliers of merchandise is $ 338,200
cash paid to suppliers of merchandise =cost of goods sold+ increase inventory +A/P decreased
325000+4500+8700
=$ 338,200
Callable bonds Can be redeemed by the issuer at some time at a pre-specified price
If a bond is issued at a premium, overtime, the amortization of the premium will Decrease as bonds outstanding value decrease over the time to make it its value equla to face value.
Dividends in arrears are Disclosed in the notes only
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