Deck16

Question 1

Only costs that increase the useful life of plant assets can be capitalized.

Answer 1

False - Costs that increase PRODUCTIVITY can also be capitalized

Question 2

Is Recovery of impairment losses prohibited under GAAP?

Answer 2

No - UNLESS the asset is held for disposal, the losses can be recovered

Question 3

When should an asset be tested for recoverability?

Answer 3

When things indicated that the carrying amount might not be recoverable.

Question 4

If Carrying Value is less than Expected Future Cash Flows, should an impairment loss be reported?

Answer 4

No. Impairment loss is only reported if Expected Future Cash Flows is less than Carrying Value

Question 5

What does it mean when carrying amount of the PPE Asset is not recoverable?

Answer 5

The Future Cash it will produce is less than the asset is on the Books for.

Question 6

Is redeemable preferred stock considered an equity investment for accounting purposes?

Answer 6

No. It may be reacquired by the issuing corporation under prescribed conditions.