62844171-Chap-011

62844171-Chap-011 - Chapter 011 Operational Assets:...

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Chapter 011 Operational Assets: Utilization and Impairment Multiple Choice Questions 55. The factors that need to be determined to compute depreciation are an asset's: A. Cost, residual value, and physical life. B. Cost, replacement value, and service life. C. Fair value, residual value, and economic life. D. Cost, residual value, and service life. Learning Objective: 1 Level of Learning: 1 56. The depreciable base for an asset is: A. Its service life. B. The excess of its cost over residual value. C. The difference between its replacement value and cost. D. The amount allowable under MACRS AACSB: Reflective thinking Blooms: Knowledge Learning Objective: 1 Level of Learning: 1 11-1
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Chapter 011 Operational Assets: Utilization and Impairment 57. Depreciation, depletion, and amortization: A. All refer to the process of allocating the cost of operational assets over future periods. B. All generally utilize the same methods of cost allocation. C. Are all handled the same in arriving at taxable income. D. All of these are correct. AACSB: Reflective thinking Blooms: Knowledge Learning Objective: 1 Level of Learning: 1 58. Gains on the cash sales of fixed assets: A. Are the excess of the book value over the cash proceeds. B. Are part of cash flows from operations. C. Are reported on a net-of-tax basis if material. D. Are the excess of the cash proceeds over the book value of the assets. AACSB: Reflective thinking Blooms: Knowledge Learning Objective: 1 Level of Learning: 1 59. The overriding principle for all depreciation methods is that the method must be: A. Conservative and economic. B. Systematic and rational. C. Consistent and conservative. D. Significant and material. AACSB: Reflective thinking Blooms: Knowledge Learning Objective: 1 Level of Learning: 1 11-2
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60. Depreciation: A. Is always considered a period cost. B. Could be a product cost or a period cost depending on the use of the asset. C. Is usually based on the declining-balance method. D. Per books is usually higher than MACRS in the early years of an asset's life. AACSB: Reflective thinking Blooms: Knowledge Learning Objective: 1 Level of Learning: 2 61. Assuming an asset is used evenly over a four-year service life, which method of depreciation will always result in the largest amount of depreciation in the first year? A. Straight-line. B. Units-of-production. C. Double-declining balance. D. Sum-of-the-year's digits. AACSB: Reflective thinking Blooms: Comprehension Learning Objective: 2 Level of Learning: 2 62. In the first year of an asset's life, which of the following methods has the smallest depreciation? A. Straight-line. B. Declining balance. C.
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This note was uploaded on 03/07/2012 for the course ECON 3014 taught by Professor Michaelshaw during the Spring '11 term at HKU.

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62844171-Chap-011 - Chapter 011 Operational Assets:...

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