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Unformatted text preview: CHAPTER 8 COVERAGE OF LEARNING OBJECTIVES LEARNING OBJECTIVES QUESTIONS EXERCISES PROBLEMS OTHER LO1: Distinguish a company’s expenses from expenditures that it should capitalize. 4,5,13,17 28,29,45,46 LO2: Measure the acquisition cost of tangible assets such as land, buildings, and equipment. 3,24,26,27 28,29,30 58,59 LO3: Compute depreciation for buildings and equipment using various depreciation methods. 6,7,8,20 31,32,33,34, 35,36,37,38, 39,40 58,60,64 75 LO4: Recalculate depreciation in response to a change in estimated useful life or residual value. 11 41,47,52 56,57,58,67,74 77 LO5: Differentiate financial statement depreciation from income tax depreciation. 9,10 43 67 LO6: Explain the effect of depreciation on cash flow. 42 61,62,63 78 LO7: Account for expenditures after acquisition. 12 44, 47 66 LO8: Compute gains and losses on the disposal of fixed assets and consider the impact of these gains and losses on the statement of cash flows. 14,18,19 31,32,33,48, 49,50 64,68,69,70,71 LO9: Determine the balance sheet valuation of tangible assets for companies who use the revaluation method allowed under IFRS. 22,27 53 LO10: Account for the impairment of tangible assets. 21,23 54 LO11: Account for intangible assets, including impairment 2,15,16,25 51,52 65,72,73 78 LO12: Explain the reporting for goodwill. 51 LO13: Interpret the depletion of natural resources 2 55 Chapter 8 Long-Lived Assets 277 CHAPTER 8 8-1 T a n g i b l e a s s e t s a r e t h o s e t h a t c a n b e s e e n and touched. Intangible assets are rights or economic benefits that are not physical in nature. 8-2 A l l t h r e e t e r m s r e f e r t o a n a l l o c a t i o n o f c o s t s o v e r t i m e . R e d u c t i o n o f i n t a n g i b l e a s s e t s i s generally called amortization. Depreciation is a reduction in buildings and equipment and other tangible assets. Depletion is a reduction in natural resources. 8-3 Cash discounts are reductions in original cost, not income. 8-4 The cost benefit test of record keeping and the concept of materiality. 8-5 When an expenditure is capitalized, it is not credited to stockholders’ equity. Rather, it becomes an asset with a useful life in excess of 1 year. An asset is debited and generally either cash or a liability is credited. 8-6 A c c u m u l a t e d D e p r e c i a t i o n i s n o t c a s h . I f specific cash is being accumulated for the replacement of assets, such cash will be an asset specifically labeled as a “Cash Fund for Replacement and Expansion” or a “Fund of Marketable Securities for Replacement and Expansion.” Accumulated Depreciation is the cumulative amount of an asset’s depreciable value that has been expensed....
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This note was uploaded on 04/05/2012 for the course STERN C10.0001.0 taught by Professor Hipscher during the Spring '11 term at NYU.

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