A reconciliation of beginning and ending carrying values for long-lived tangible asse

nd paid $5,000 to have it installed in their plant.Based on an estimated salvage value of $25,000 and an economic life of six years, the difference between straight-line depreciation and double-declining balance depreciation in the second year of the asset’s life is closest to:

A.$7,220.

B.$10,556.

C.$16,666.

ues in the computation of depreciation expenses for financial reporting is least accurate?

A.Estimates of the useful life of the same depreciable asset can differ between companies.

B.Companies are required to disclose data about estimated salvage values in the footnotes to the financial statements.

C.Depreciable lives and salvage values are chosen by management and allow for the possibility of income manipulation.

llion.In its financial statements, Bao will most likely:

A.disclose how it determined the fair value of the intangible asset.

B.report lower net income in subsequent periods because of increased amortization expense on the asset.

C.report higher assets, net income, and shareholders’ equity in the most recent period than it would have reported under the cost model.

2.0 million.The present value of the machine’s future cash flows is $1.7 million.The asset is permanently impaired.Bao should (under IFRS):

A.immediately write down the machine to its salvage value.

B.immediately write down the machine to its recoverable amount.

C.write down the machine to its recoverable amount as soon as it is depreciated down to salvage value.

Under U.S.GAAP, an asset is considered impaired if its book value is:

A.less than its market value.

B.greater than the present value of its expected future cash flows.

C.greater than the sum of its undiscounted expected cash flows.

ty for rent.Based on the market for similar properties, the firm determines that the fair value of the plant is €500,000 more than its original cost.If this firm uses the cost model for plant and equipment and the fair value model for investment property, should it recognize a gain on its income statement under IFRS?

A.Yes, because the plant will be reclassified as investment property.

B.No, because the increase in value does not reverse a previously recognized loss.

C.No, because the firm must continue to use the cost model for valuation of this asset.

n method instead of using straight-line depreciation will tend to have:

A.lower net income and lower equity.

B.higher return on equity and higher return on assets.

C.lower depreciation expense and lower turnover ratios.

te?

A.advertising fees are generally expensed as incurred.

B.In most countries, research and development costs are capitalized.

C.Intangible assets are initially entered on the balance sheet at their purchase prices when they are acquired from an outside entity.

of recognizing it as an expense will result in higher:

A.debt-to-equity and debt-to-assets ratios.

B.net income and have no effect on total cash flows.

C.cash flow from investing and lower cash flow from operations.

it purchases and depreciates them over years to a value of zero.Based on the underlying economics of the DVD rental business, the most appropriate method of depreciation for the firm to use on its financial statements is:

A.straight-line.

B.declining balance.

C.units-of-production.