F3 - M4 - PP&E: Cost Basis

Question 1

________ are assets acquired for use in operations, possess physical substance, are long-term in nature, and are subject to depreciation.

Answer 1

Property, plant, and equipment

Question 2

Under _________, fixed assets are valued at historical cost to acquire and put into use with few exceptions.

Answer 2

Under U.S. GAAP

Question 3

Donated fixed assets are recorded at

Answer 3

Fair Value

Question 4

Donated fixed assets are recorded at fair value and a gain or revenue is recognized equal to

Answer 4

That Value

Question 5

Under IFRS, fixed assets are recorded upon acquisition at historical cost to acquire and put into use. Subsequently, fixed assets can be reported using either the _____ model or the _________ model:

Answer 5

cost model or revaluation model

Question 6

_____ model were fixed assets are reported on the balance sheet at historical cost less accumulated depreciation and impairment.

Answer 6

Cost model

Question 7

Using this ______ model, fixed assets are revalued to fair value at a specific point in time, only used by _____

Answer 7

Revaluation model, IFRS

Question 8

For the revaluation model, The fixed assets are then reported on the balance sheet at _________ on the ________ date less

Answer 8

fair value on the revaluation date less subsequent accumulated depreciation and subsequent impairment.

Question 9

US GAAP evaluates fixed assets on the ________

Answer 9

Historical Cost

Question 10

______ measured by cash or cash equivalent price of obtaining the assets and brining it to the location delivery and condition necessary for its intended use

Answer 10

Historical Cost

Question 11

What is the JE for donated Fixed Asset?

Answer 11

DR Fixed Assets (FMV) and CR - Gain on nonreciprocal transfer

Question 12

Under IFRS, fixed assets ar initially recognized at __________ , subsequent to acquisition, they can be valued using _______ or _______ model

Answer 12

Cost, Cost or Revaluation Model

Question 13

Under cost model, fixed assets are recorded at _______ adjusted for ________ and __________

Answer 13

Cost, Accumulated depreciation and impairment

Question 14

________ model—fixed assets are revalued to fair value at a specific point in time.

Answer 14

Revaluation Model

Question 15

The fixed assets are then reported on the balance sheet at fair value on the _______date less _______ ___________ and subsequent _________.

Answer 15

revaluation date less accumulated deprecation and impairment

Question 16

When initially adjusting the fixed assets to fair value, revaluation losses are reported on the __________ and revaluation gains are reported in ________________ as revaluation surplus.

Answer 16

income statement, other comprehensive income

Question 17

_________ should be recorded to reflect all the costs necessary to make the land ready for its intended use.

Answer 17

Land

Question 18

__________ have finite lives and should be depreciated.

Answer 18

Land improvements

Question 19

For the “basket purchase” of land and buildings, allocate the purchase price based on the ratio of __________ of individual items.

Answer 19

appraised value

Question 20

___________ that maintain the equipment should be expensed.

Answer 20

Ordinary repairs

Question 21

____________, such as overhauls or major replacements, should be capitalized.

Answer 21

Extraordinary repairs

Question 22

Constructed fixed assets should include _______________ on weighted _________ during the construction period.

Answer 22

capitalized interest, weighted average expenditures incurred

Question 23

When fixed asset are revalued, the revaluation losses (When Carrying value > Fair Value are reported _____________-

Answer 23

Income Statement

Question 24

When fixed asset are revalued, the revaluation gains(When Carrying value < Fair Value are reported

Answer 24

Other comprehensive income

Question 25

Revaluation gains can be reversed up to _________

Answer 25

to the extent they reverse a previously recognized a revaluation loss

Question 26

If revaluate fixed assets subsequently become impaired, the impairment is recorded by the first reducing ______________

Answer 26

Any valuation surplus to zero

Question 27

For impairments first offset any _______ and then surplus to ___________-

Answer 27

OCI then to I/S

Question 28

Should you depreciate the cost of land

Answer 28

No

Question 29

The cost of land includes purchase price, broker's commission, title and recording fees, legal fees any cost of clearing of brush and trees, ______ development, Cost of _______ and Less

Answer 29

Site development, Cost of razing (tearing down) an old building and less proceeds from sale of existing building

Question 30

_______ includes ; 1) Fences, 2) Water Systems 3) Sidewalks, 4) Paving, 5) Landscaping 6) Lighting

Answer 30

Are all land improvements

Question 31

Plant/building includes the cost of ___________ forward

Answer 31

Cost of Excavation and digging forward

Question 32

Filling in a hole or leveling is included in _______ cost

Answer 32

Land cost

Question 33

Digging a hole for foundation is included in _______ cost

Answer 33

Building Cost

Question 34

What are all the cost capitalized with Equipment?

Answer 34

1) Invoice price, 2) less cash discounts, 3) Freight in, Installation charges (testing a prep) cost to rearrange, 5) Sales and federal taxes, 6) Addition of construction period interest.

Question 35

Wha tis the JE for recording additions increasing the quantity of fixed assets

Answer 35

Dr Asset Cr Cash/AP

Question 36

There are two ways improvements or replacements are recorded (2)

Answer 36

1) If carrying value is known, remove it and recognize a gain or loss and capitalize the cost of improvement 2) if carrying value is unknown, debit accumulated deposits for the cost

Question 37

For Improvements is known, remove it and ______________ and capitalize the cost of improvement

Answer 37

Gain or loss

Question 38

For Improvements is unknown, the asset life is extended, and what is the JE

Answer 38

Dr Accumulated Deprecation, CR/ Cash/AP

Question 39

In order to capitalize interest (3)

Answer 39

1) Expenditures for the assets have been made, 2) activities that are pessary to get asset ready for its intended use are in process (permit is filed) and 3) interest cost is being incurred

Question 40

Intentional delays in construction does what to the capitalized interest

Answer 40

Stops it

Question 41

Ordinary construction delays does what to the capitalized interest

Answer 41

Continues

Question 42

What items have to be disclosed in the financial statements

Answer 42

1) Total interest cost incurred during the period, 2) Capitalized interest cost of the period, if any

Question 43

When assets are purchased required fixed payments extending beyond a year, the asset should be valued at the ____________ of all future payments

Answer 43

Present value

Question 44

What are the two rules for capitalized cost

Answer 44

1) Only capitalize interest on money actually spent 2) The amount o interest is lower of actual interest cost incurred and avoidable interest

Question 45

The amount of interest capitalized is the lower of______

Answer 45

actual interest cost incurred or avoidable interest