What is the effect on the profits for 2012 and 2013 if depreciation on a fixed asset is omitted in 2012 end-of-year adjustments? profit 2012 overstated, profit 2013 understated Oprofit 2012 understated, profit 2013 no effect O profit 2012 overstated, profit 2013 no effect O profit 2012 overstated, profit 2013 overstated
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- Which of the following transactions and events would result in a deterioration in Net Tangible Asset Backing in year 2020? A. the consumption of a prepaid expense from the previous period B. a payment for wages owing from the previous period C. the recognition of income tax expense owing at the end of the periodWhat is the Depreciation and Depletion Expense in 2013 and 2014With respect to Statement 2, what would be the most likely eff ect in 2010 if AMRC wereto switch to an accelerated depreciation method for both financial and tax reporting?A. Net profit margin would decrease.B. Total asset turnover would increase.C. Cash flow from operating activities would increase.
- Why does the depreciation included in computing the annual cost of annual worth method but not in computing the total cost of present and future worth method ?Which of the following statements is/are correct? (i) An increase in the estimated useful life of a non-current (fixed) asset reduces the annual depreciation charge. (ii) A reduction in the estimated residual value of a non-current (fixed) asset decreases the annual depreciation charge. (iii) If the sales proceeds of a non-current (fixed) asset are greater than its net book value, this indicates insufficient charge of depreciation in the income statements (profit and loss accounts) of previous years. Is it a) (i) only b) (ii) only c) (i), (ii) and (iii) d) (i) and (ii) only46. Evaluate the following statements: S1. In the sum-of-the-years'-digits method, residual value is not used in the computations of depreciation expense. S2. Straight-line depreciation assumes equal usefulness in each time period, and the periodic charge is not affected by asset productivity or efficiency variations. S3. The residual value of an asset is deducted from the depreciable base when calculating double-declining-balance depreciation. a. True, False, True b. False, True, False c. False, False, True d. False, False, False e. True, True, False f. True, True, True g. False, True, True
- In Able Company’s efforts to estimate a value for Baker Company's goodwill, Able is estimating Baker Company's expected future earnings. Able is using Baker's past earnings to project the future earnings. Which of the following items should be eliminated from Baker's past earnings in order to project future earnings? Extraordinary items Amortization expense for identifiable intangibles a. Yes Nob. Yes Yesc. No Yesd. No NoIndicate whether each of the following statements is true or false. Depreciation, depletion, and amortization all involve the allocation of the cost of property, plant and equipment (PPE) to expense. Answer An accelerated depreciation method is appropriate when the asset’s economic usefulness is the same each year Answer The declining-balance method does not deduct the residual value in computing the depreciation base. Answertrue or false 1. Some intangible assets are not required to be amortized every year. 2. Internally created intangibles are recorded at cost. 3. Internally generated intangible assets are initially recorded at fair value. 4. Amortization of limited-life intangible assets should not be impacted by expected residual values. 5. Internally generated goodwill should not be capitalized in the accounts 6. Dividends in arrears on cumulative preferred stock should be recorded as a current liability. 7. Magazine subscriptions and airline ticket sales both result in unearned revenues. 8. Discount on Notes Payable is a contra account to Notes Payable on the balance sheet. 9. All long-term debt maturing within the next year must be classified as a current liability on the balance sheetAll long-term debt maturing within the next year must be classified as a current liability on the balance sheet 10. A short-term obligation can be excluded from current liabilities if the company intends to refinance…
- IFRS requires annual reviews of long-lived assets (other than goodwill) for reversal indicators. A loss may be reversed up to the newly estimated recoverable amount, not to exceed the initial carrying amount adjusted for depreciation. This is a significant departure from GAAP, so what are the financial statement implications? Is it a good thing or bad?Which of the following formulas for the capital expenditure on intangibles is correct? Assume the current time (now) is t1 and last year is to, and that 'Intangible assets' is a carrying value net of accumulated amortisation. Select one: a. CapExOnIntangibles(t1) = IntangibleAssets (t1) + IntangibleAssets (t0) + Amortisation ExpenseOnIntanglibles (t1) b. CapExOnIntangibles(t1) = IntangibleAssets (t1) - IntangibleAssets(t0) + Amortisation ExpenseOnIntanglibles(t1) c. CapExOnIntangibles (t1) = IntangibleAssets(t1) - IntangibleAssets(t0) - Amortisation ExpenseOnIntanglibles (t1) d. CapExOnIntangibles(t1) = IntangibleAssets (t1) + AmortisationExpenseOnIntanglibles (t1) e. CapExOnIntangibles (t1) = IntangibleAssets (t1) - Amortisation ExpenseOnIntanglibles (t1)how much is the depreciation expense for 2025 using the double declining balance depreciation method?