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- Depreciation of a plant asset is the process of ________. A. asset valuation for statement of financial position purposes B. allocation of the assets cost to the periods of use C. fund accumulation for the replacement of the asset D. asset valuation based on current replacement cost dataIntangible Assets Product development costs represent a considerable expenditure for companies. They are either written off as expense or capitalized as assets. Required: a. Discuss the conceptual issues and the definition of an asset that may be applied in determining whether development expenditure should be treated as an expense or an asset.Cost includes all costs necessary to bring the asset to a working condition for its intended use. Which of these costs are taken as a part of cost of assets? I. Invoice price II. Transportation cost III. Installation charges I and II II and III I, II and III I and III
- Accumulated Depreciation a.is the same as Depreciation Expense b.is used to show the amount of cost expiration of natural resources c.is used to show the amount of cost expiration of intangibles d.is a contra asset accountExercises E9.1 (LO 1), AP Writing The following expenditures relating to plant assets were made by Glenn Company during the first 2 months of 2022. Determine cost of plant acquisitions. 1. Paid $7,000 of accrued taxes at the time the plant site was acquired. 2. Paid $200 insurance to cover a possible accident loss on new factory machinery while the machinery was in transit. 3. Paid $850 sales taxes on a new delivery truck. 4. Paid $21,000 for parking lots and driveways on the new plant site. 5. Paid $250 to have the company name and slogan painted on the new delivery truck. 6. Paid $8,000 for installation of new factory machinery. 7. Paid $900 for a 2-year accident insurance policy on the new delivery truck. 8. Paid $75 motor vehicle license fee on the new truck.Reproduction value is theA. Estimate of cost of reproducing, creating , developing or manufacturing a similar assetinternallyB. Salvage value of the assetC. Net value reflected in the company’s financial statementsD. Cost of similar assets that have the nearest equivalent value as of the valuation date
- Under the cost model, subsequent to initial recognition as an asset, an item of property, plant, and equipment shall be carried at a. Revaluation Amount b. Cost less accumulated depreciation and accumulated impairment losses c. Revalued amount less accumulated depreciation and any accumulated impairment loss d. CostTangible assets are first recorded at: Multiple Choice cost minus residual (or salvage) value. the amount of cash paid for them. current market value or resale value. all costs to acquire them and prepare them for use.1. Depreciation is best described as a method of a. Asset valuation b. Current value allocation Cost allocation C. d. Useful life determination 2. All of the following factors are considered in determining the useful life of an asset, except a. Expected usage of the asset b. Expected physical wear and tear c. Technical obsolescence d. Residual value 3. Technical or commercial obsolescence arises from a. Expected usage of the asset b. c. Expected physical wear and tear Change or improvement in production or change in the market demand for the product output of the asset d. Expiry date of related lease of the asset 4. The production method of depreciation results in a. Constant charge over the useful life of the asset. b. Decreasing charge over the useful life of the asset. c. Increasing charge over the useful life of the asset. d. Variable charge based on the expected use or output of the asset. 5. What factor must be present under the production method of depreciation? a. Total units…
- When intangible assets are self-generated, costs incurred in 3. the development phase are capitalized. b. capitalized only to extent of the limits provided under the standards. a. expensed or capitalized, as a matter of accounting policy choice and professional judgment. d. expensed immediately, unless they meet all of the conditions for capitalization under PAS 38 Intangible assets. С. A Identify the type of the following costs: These include costs of searching new knowledge and identifying and selecting possible alternatives. These include costs of designing from selected alternative and using knowledge gained from research. a. Research costs, Development costs b. Development costs, Research costs c. R&D, Intangible asset costs I. II.The terms depreciation, depletion, and amortization all refer to the process of allocating the cost of an asset to the periods the asset is used. Required: Discuss the differences between depreciation, depletion, and amortization as the terms are used in accounting for property, plant, and equipment and intangible assets.4. In full cost and successful efforts accounting, costs are amortized over either proved reserves (PR) or proved developed reserves (PDR). Fill in the following table to indicate which reserves (PR or PDR) should be used to amortize the costs under each accounting method. If the costs should not be amortized, put an X to indicate no amortization. Cost a. Proved property acquisition b. Unproved property acquisition c. Successful exploratory drilling d. Successful development drilling e. Unsuccessful exploratory drilling f. Unsuccessful development drilling g. G&G costs h. Wells-in-progress-proved property SE FC