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- LO1 The purpose of depreciation is to (a) spread the cost of an asset over its useful life. (b) show the current market value of an asset. (c) set up a reserve fund to purchase a new asset. (d) expense the asset in the year it was purchased.1 Select the best answer for the question. 11. What is the process by which the cost of a fixed asset over its estimated useful life is periodically charged to an expense a O A. Hypothecation B. Accretion C. Liquidation D. Depreciation O Mark for review (Will be highlighted on the review page) > O Hi FuAccounting When you dispose of a property and end up with a gain or a loss, it may be treated in one of 2 ways. What are they? When you dispose of personal-use property, you usually do not have a capital gain. Why not? To calculate any capital gain or loss, you need to know the following 3 amounts: the proceeds of disposition the adjusted cost base (ACB) the outlays and expenses incurred to sell your property Using these three amounts, what is the formula to calculate your capital gain or loss? 4. Capital Gains are reported on Schedule 3. What line does the sale of Personal Use Property go on?
- Q10 Which of the following statement is NOT correct? Select one: a. When the carrying amount of an asset is less than the recoverable amount, then an asset should have its previous impairments reversed to the value of the recoverable amount provided there is accumulated amortization to cover the difference. b. The difference between the carrying amount of an asset and the recoverable is the impairment loss if the carrying amount is greater. c. When the carrying amount of an asset is greater than the recoverable amount, then an asset should be impaired to the value of the recoverable amount d. The difference between the carrying amount of an asset and the recoverable is the impairment loss if the carrying amount is less.What type of policy covers the cost of rebuilding or repairing property based on current construction costs? O actual cash value O depreciated asset value O replacement cost O net cash cost QUESTION 9 What process do insurance companies use to decide whether to sell a plicy and at what rate? O appraisal O undervriting O escrow assessment QUESTION 10 What service do insurance companies use to review the claim history for a property? O RECS O CHRS O FACA1. It is a depreciation method based on the assumption that the value of a property is directly proportional to its age. a. Straight Line Method b. Sinking Fund Method c. Declining Balance Method d. Service Output Method 2. Which of the following is NOT a requirement of a depreciation method? a. It should be simple b. It should recover the capital c. BIR approved d. The book value should be higher than the market value 3. The decrease in the purchasing power of money a. Devaluation b. Depreciation c. Inflation d. Depletion
- 8. If a FVTPL financial asset is bought, the investment account is Multiple-Choice O A. Debited for the cost of the financial asset NOT including any extra expenditures required in making t he purchase O B. Debited for the cost of the financial asset including any extra expenditures required in making the pu rchase O C. Credited for the cost of the financial asset including any extra expenditures required in making the p urchase D. Credited for the cost of the financial asset NOT including any extra expenditures required in making the purchaseYour asset is impaired: its 'fair value less costs to sell' is OMR 4k and its value in use' is OMR 6k. Carrying value of the asset is OMR 8k. Which is the value of asset in the statement of financial position after impairment? O a. OMR 8k. O b. Loss of OMR 2k. O c. Zero. O d. OMR 6k.Which method will produce the highest charge to income in year 4? Which method will produce the highest book value for the asset at the end of year 3? If the asset is sold at the end of year 3, which method would yield the highest gain (or lowest loss) on disposal of the asset?
- The Drysdale, Koufax, and Marichal partnership has the following balance sheet immediately prior to liquidation: $ 42,000 37,500 89,500 79,500 69,500 Cash 24 49,000 Liabilities Drysdale, loan Drysdale, capital (50%) Koufax, capital (30%) Marichal, capital (20%) Noncash assets 269,000 a-1. Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2. a-2. Liquidation expenses are estimated to be $28,000. Prepare a predistribution schedule to guide the distribution of cash. Further, modify the tags in explanation as well. b. Assume that assets costing $87,000 are sold for $66,500. How is the available cash to be divided? Complete this question by entering your answers in the tabs below. Req Req Req B Determine the maximum loss that can be absorbed in Step 1. Then, assuming that this loss has been incurred, determine the next maximum loss that can be absorbed in Step 2. Loss…Multiple choice: a benefit of using an accelerated depreciation method is that a. it is preferred by the tax code b. it yields a higher income in the early years of an asset's useful life c. it yields a larger depreciation expense in the early years of an asset's life d. the results are identical to straight line depreciationLO1 Depreciable cost is the difference between the original cost of the asset and its accumulated depreciation.
