F3 #3 Flashcards
How do we treat R&D research and development?
As an immediate expense
Good will will never!
Be amortized or impaired.
Anything with an indefinite life?
Will never be impaired or amortized.
Patents are?
Intangible and their cost to acquire and register it are capitalized.
What are derivative securities?
Financial instruments (Future contracts)
INtangible assets are amortized by?
The lessor of the useful life or legal life.
How do we treat organization and commencement costs?
We expense them immediately.
What do we do with freight costs when you cosign inventory?
We add it to the value of the cosigned inventory.
Dollar value life
Price index=
Ending inventory at current cost/ending inventory at base year cost
Once you find the value multiply that number by the amount change in inventory in the year.
Return on ratios are?
Net income/average of the tatal asked.
JE if assets are donated?
Dr asset (Fair market value)
Cr Gain
What do we do with deferred costs not paid by previous owner?
We add/capitalize them to the cost.
JE if assets are added to make it more efficient?
We capitalize
Dr Asset
Cr Cash/accounts payable
JE if the asset is replaced?
IF NBV/carrying value is known
New asset
Dr new asset at cost
Cr Cash
Old asset
Dr Loss (NBV of asset)
Cr NBV of asset
IF NBV/carrying value is not known
Dr Accumulated depreciation(By replacement cost)
Cr Cash/APs
