Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Accounting 100 > Chapter 9 > Flashcards

Chapter 9 Flashcards

1
Q

revenue expenditure

A

costs incurred to acquire a plant asset that are expensed immediately

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

capital expenditures

A

costs included in a plant asset account

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

cash equivalent price

A

fair value of the asset given up or fair value of the asset received, whichever is more clearly determinable

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Costs of land

A

cash purchase price ,closing costs, real estate brokers’ commissions, accrued property taxes and other liens on the land assumed by the purchaser

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Land improvements

A

includes all expenditures necessary to make the improvements ready for their intended use (driveways, parking lots, fences, landscaping, and underground sprinklers) - keep in mind these improvements can depreciate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

all costs of buildings

A

all costs related directly to purchase or construction-purchase costs (price, closing costs, brokers’ commissions, remodling/replacing/repairing floor, roof, electric, and plumbing)-construction costs (contract price and payments for architects’ fess, building permits, and excavation costs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

costs of equipment

A

all costs incurred in acquiring the equipment and preparing it for use (purchase price, sales tax, freight charges, insurance during transit paid by the purchaser, expenses required in assembling, installing and testing the unit)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

journal entry for equipment costs

A

dr equipment
dr license expense
dr prepaid insurance
cr cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

ordinary repairs to ______ the operating efficiency/productive life of the unit is debited to the ________

A

maintain; maintenance and repairs expense account

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

additions and improvements costs

A

incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset (dr plant asset effected)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

advantages of leasing

A

reduced risk of obsolescence
little or no down payment
shared tax advantages
assets/liabilities not reported

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

depreciation

A

process of allocating to expense the cost of a plant asset over its useful life in a rational systematic manner (applies to land improvements, buildings, and equipment)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

factors of depreciation

A

cost, useful life, and salvage value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

straight line method of depreciation

A

depreciable cost = cost-salvage value
depreciable cost/useful life (in yrs) =depreciation expense
depreciable cost x rate =annual expense

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

annual expense (straight line method)

A

depreciable cost x rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

depreciation expense (straight line method)

A

depreciable cost/useful life in years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

depreciable cost (straight line method)

A

cost-salvage value

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Journal entry for straight line method of depreciation

A

dr depreciation exp

cr accumulated depreciation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

declining balance method of depreciation

A

accelerated method
decreasing annual depreciation expense over the asset’s useful life
declining balance rate is DOUBLE the straight line rate

20
Q

calculate the rate (declining balance)

A

100/ useful life in years

21
Q

annual expense (declining balance)

A

beginning book value x rate

22
Q

units of activity method

A

companies estimate total units of activity to calculate depreciation cost per unit

expense varies based on units of activity

23
Q

depreciable cost (units of activity)

A

cost- salvage value

24
Q

depreciable cost per unit (units of activity)

A

depreciable cost/total units of activity

25
Q

depreciation expense

A

depreciable cost per unit x units of activity

26
Q

IRS ______ require tax payer to use the same depreciation method on the tax return that is used in preparing financial statements

A

does not

27
Q

revising periodic depreciation

A

accounted for in the period of change and future periods
not handled retrospectively
not considered error

28
Q

calculate the net book value when revising periodic depreciation

A

cost - original salvage value/ original useful life

29
Q

calculate the remaining useful life when revising periodic depreciation

A

net book value - new salvage value

30
Q

the ______ writes the asset down to its new _____ _______ during the year in which the _____ ___ ______ occurs

A

company; fair value; decline in value

31
Q

disposal of plant assets

A 
record depreciation up to date of disposal
eliminate asset ( dr accumulated depreciation cr asset account)
32
Q

gain

A

if proceeds exceed book value

33
Q

loss

A

proceeds are less than book value

34
Q

journal entry for a gain on disposal (sale)

A

dr cash (proceeds from sale)
dr accumulated depreciation (acc dep so far)
cr equipment (original cost)
cr gain on sale

35
Q

journal entry for loss on disposal

A

dr cash (proceeds from sale)
dr accumulated depreciation
dr loss on disposal
cr equipment (original cost)

36
Q

retirement

A

NO CASH RECEIVED
dr accumulated depreciation (full amount of dep taken over life of asset)
cr asset acct (original cost of asset)

37
Q

limited life intangible assets

A 
limited life (amortize to expense)
cr asset acct
38
Q

indefinite life intangible assets

A

no forseeable limit on time the asset is expected to provide cash flows
NO amortization

39
Q

patents

A

20 year life
capitalize costs of purchasing
expense any r/d costs
legal fees incurred successfull defending a patent are capitalized to patent acct

40
Q

copyrights

A

life of creator + 70 years
capitalize costs of acquiring and defending it
amortized to expense over useful life

41
Q

trademarks

A

indefinite number of 20 year renewal periods
capitalize acquisition costs
no amortization

42
Q

franchises

A

may have limited life (amortize) or indefinite life (no amortize)

43
Q

goodwill

A

only recorded when an entire business is purchased
recorded as excess of purchase price over the FMV of the identifiable net assets acquired
internally created goodwill should not be capitalized

44
Q

return on assets

A

net income/average total assets OR

profit margin x asset turnover

45
Q

average total assets

A

beginning assets +ending assets/2

Accounting 100 (15 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions