Net purchase price of an asset plus all reasonable and necessary expenditures to get it in place and ready for use is known as a . Acquisition cost b . Depreciable cost Oc None of the given options • d . Cost of an asset

Net purchase price of an asset plus all reasonable and necessary expenditures to get it in place and ready for use is known as a . Acquisition cost b . Depreciable cost Oc None of the given options • d . Cost of an asset

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 4MC: Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers...

See similar textbooks

Related questions

Q: The measurement of revaluation model is at: Fair value at the date of acquisition less any…

A: As per the INTERNATIONAL ACCOUNTING STANDARD Revaluation concept the measurement of Revaluation…

Q: Statement 1: In impairment loss, the discount rate being used is the current pretax rate that…

A: Ans. While computing impairment loss it is necessary that the cash flows are adjusted and multiplied…

Q: An asset is impaired if: O a. The amount to be recovered through use (or sale) of the asset exceeds…

Q: Statement 1: The cost of an asset, or other amount substituted for cost, less its residual value is…

A: An asset is depreciable till the level of residual value only. When the WDV of an assets comes to…

Q: The book value of an asset is equal to the asset's cost less accumulated depreciation.…

A: Book value means the value as per books of accounts. The assets are generally recorded at cost less…

Q: assets are amortized a. using straight-line method applied to the shorter of an intangible asset's…

A: Intangible Assets - It is an assets which are not in physical in nature. for example patent,…

Q: Depreciation is: Oa. the loss in market value of an asset. Ob. the allocation of a long-term asset's…

A: Depreciation is an accounting method for reducing the total amount of a tangible or physical asset…

Q: Allowable depreciation reduces the basis of an asset whether the depreciation is deducted or not.

A: Allowable depreciation is the depreciation of the asset which is must allowed to deduct from the tax…

Q: It is the expected selling price of a property when the asset can no longer be used by its owner.…

A: Purchase value of assets is cost of assets purchase plus expenses incurred at the time purchase.

Q: f the value implied by the purchase price of an acquired company exceeds the fair values of…

A: Goodwill refers to an intangible form of asset which arises when a verified buyer acquires or takes…

Q: Which of the following answers is the correct formula for determining the his Select one: O a.…

A: Historical cost of an asset: It is a sun of purchase price and any cost incurred to bring the asset…

Q: Statement 1: When an item of asset is transferred to and from the classification investment…

A: The correct answer for the above mentioned question is given in the following steps for your…

Q: Which statement is INCORRECT about subsequent measurement of intangible assets? Q7 Select…

A: Intangible assets are identifiable non-monetary asset without any physical substance. An asset…

Q: Which of the following statements is false? (a) Financial Instruments are intangible assets (b)…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: When does the cost of land affect an entity's profit or loss? * O When the related revaluation is…

A: The Fixed assets and Investments that are long term in nature i.e. full value of the asset cannot be…

Q: Profit on sale of fixed assets arises when: Sale price is more than the original purchase value of…

A: Profit on the sale of fixed assets arises when the book value of the asset is less than the selling…

Q: Q1 Which of the following statement (s) is (are) true? (i) When no future economic benefits are no…

A: Intangible assets are those assets that lack physical substance and are identifiable and…

Q: Under IFRS, the recoverable amount of an asset is The higher of an asset’s value in use or its…

A: Impairment of an asset: Impairment is the loss that occurs due to, unexpected decrease in the market…

Q: Impairment loss is a situation when Select one: a. Carrying amount of an asset is greater than…

A: The greater of the following two values are the recoverable amount of an asset: Fair value minus…

Q: Evaluate the consequences of depreciation charged on the historical cost of the assets. I)…

A: Please see the next step for the solution

Q: (Multiple Choice Question) Amortizable Cost refers to 1. An asset's Net Book Value minus its…

A: Amortizable cost refers to that cost of a fixed asset which has to be charged as an expense either…

Q: Depreciation records include all of the following information about fixed assets EXCEPT the a.…

Q: Which of the following best describes the higher of an asset's net selling price and its value in…

A: Asset's net selling price is the amount obtainable from the sale of assets less any disposal cost.…

Q: Vhen evaluatin Ing whethe netner an asset has been impaired, th the higher of O Initial Cost and…

A: 1) Impairment loss is the amount by which the carrying amount of an asset is exceeds its recoverable…

Q: When accounting for self-constructed PPE and computing the amount of interest cost to be…

A: Self constructed PPE are those Property, Plant and Equipment which is constructed by the business on…

Q: Salvage value is: O Also called residual value O Also called scrap value O An estimate of the…

A: Solution: salvage value is the value of an asset remaining after it has been fully depreciated. It…

Q: An asset's cost minus accumulated depreciation is its Multiple Choice OO O market salvage residual…

A: Fixed Assets - Fixed assets are the resources of the Company. Depreciated at the end of every year.…

Q: Match the term on the left to the appropriate description on the right. v Historical cost A. The…

A: 1. In this question we match the write explanation with proper headings.This is match the columns.…

Q: Statement 1: When an item of asset is transferred to and from the classification investment…

A: Only two of the Statements are true.

Q: Question 1 Which of the following statements regarding the acquisition of PP&E is false? Answers:…

A: ‘’Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: A gain or loss on the sale of a plant asset is determined by comparing the: A.…

A: Solution:- A gain or loss on the sale of a plant asset is determined as follows under:-

Q: What is the purpose of amortisation? To allocate the cost of an intangible non-current asset…

A: Amortization and Depreciation are both terminology used in finance

Q: A limited-life intangible is reported at its ____________. a. replacement cost b. carrying amount…

A: Intangible assets are those assets which can not be seen or touched, these assets can only be felt.…

Q: Historical cost is the basis advocated for recording the acquisition of property, plant, and…

A: Historical cost principle: This is an accounting principle which states that the actual cost paid in…

Q: Which of the following statements is correct? Question 1 options: a Some intangible assets have…

A: Intangible Assets: These are the assets that do not have any physical presence in real but have…

Q: I. IAS 16 Property, plant and equipment requires entities to disclose the purchase date of each…

A: IAS 16 Property, plant, and equipment details the accounting treatment of most types of property,…

Q: preciation expense for the period is zero. Subsequent expenditures incurred to maintain the asset's…

A: A way by which we can determine the current depreciation expense amount, by the straight-line…

Q: of the VLN, acquisition cost would NOT include: A. Purchase price. B. Transportation cost to get the…

A: operating assets are the assets which are used in the day to day activities of the business. the…

Q: which of the following statements in relation to the cost of the asset is true? A. all of the…

A: The balance sheet represents the financial position of the business with assets, liabilities on a…

Q: In a replacement analysis, the market value of the currently owned asset a. does not impact the cash…

A: With the passage of the time, old assets are outdated and more cost is incurred to maintain. So, it…

Q: Which of the following is not a capital expenditure decision Select one: a. Improvement in fixed…

A: SOLUTION- AN EXPENSE WHICH INVOLVES REPLACEMENT OF THE ENTIRE ASSET IS A CAPITAL EXPENDITURE . WHILE…

Q: According to historical cost principle, the assets and liabilities should be reported (tick…

A: Assets and liabilities are the part of the balance sheet of a company. They help in determining the…

Question

Definition Video Definition Accounting method wherein the cost of a tangible asset is spread over the asset's useful life. Depreciation usually denotes how much of the asset's value has been used up and is usually considered an operating expense. Depreciation occurs through normal wear and tear, obsolescence, accidents, etc. Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The allocation of the cost of a tangible asset to expense in the periods in which the asset is used is termed as: Select one: a. Depreciation b. None of the given options c. Appreciation d. Fluctuation
Which of the following is not a capital expenditure decision Select one: a. Improvement in fixed asset b. Purchase of goodwill c. None of the options d. Replacement in fixed asset e. R&D Expenditure
The book value of an asset is equal to the: a. asset's market value less its historical cost b. book value relied on by secondary markets c. replacement cost of the asset d. asset's cost less accumulated depreciation
Salvage value is: O Also called residual value Also called scrap value O An estimate of the asset's value at the end of its benefit period O A factor relevant to determining depreciation O All of the above
Which of the following answers is the correct formula for determining the historical cost of an asset? Select one: O a. historical cost = original value of the asset - accumulated depreciation. O b. historical cost = the basic purchase price of the asset minus any other costs necessary to prepare the asset ready for use. O c. historical cost = the basic purchase price of the asset plus any other costs necessary to prepare the asset ready for use. O d. historical cost = the basic purchase price of the asset only.
In a replacement analysis, the market value of the currently owned asset a. does not impact the cash flows of the replacement asset(s) in the opportunity cost approach b. does not impact the cash flows of the current asset in the cash flow approach if the current asset is kept c. is treated as a salvage value for the current asset in the cash flow approach if the current asset is kept d. is added to the first cost of the replacement asset(s) in the opportunity cost approach.
Which of the following statements about capitalizing costs is correct? A. Capitalizing costs refers to the process of converting assets to expenses. B. Only the purchase price of the asset is capitalized. C. Capitalizing a cost means to record it as an asset. D. Capitalizing costs results in an immediate decrease in net income.
What is a relevant cost? Explain why depreciation on an existing asset is always irrelevant.
Which of the following amounts would be used in calculating a lessee's right of use asset (ROU)? ) O Estimated Salvage Value O Market Value of the Asset O Unguaranteed Residual Value Bargain Purchase Option
Revenue Expenditures are Select one: O a. Expenses related to Business Operation O b. None of the these O c. Have no direct effect on profit O d. Expenses incurred when purchasing non- current assets
Which of the following best describes the higher of an asset's net selling price and its value in use? Select one: a. Recoverable amount b. Depreciable amount c. Revalued amount d. Carrying value
which of the following statements in relation to the cost of the asset is true? A. all of the statements are true B. The cost includes cash equivalent paid C. The cost includes the fair value of any non monetary consideration given to acquire an asset D. The cost includes nonrefundable purchase taxes