Finance

Red Company immediately expenses its development costs while Black Company capitalizes its development costs. All else equal, Red Company will:

Which of the following statements about indefinite-lived intangible assets is most accurate?

In the early years of an asset’s life, a firm using the double-declining balance method, as compared to a firm using straight-line depreciation, will report lower:

East Company purchased a new truck at the beginning of this year for $30,000. The truck has a useful life of eight years or 150,000 miles, and an estimated salvage value of $3,000. If the truck is driven 16,500 miles this year, how much depreciation will East report under the double-declining balance (DDB) method and the units-of-production (UOP) method?

Which of the following is least likely considered in determining the useful life an intangible asset?

At the beginning of this year, Fairweather Corp. incurred $200,000 of research costs and $100,000 of development costs to create a new patent. The patent is expected to have a useful life of 40 years with no salvage value. Calculate the carrying value of the patent at the end of this year, assuming Fairweather follows U.S. GAAP.

Two years ago, Metcalf Corp. Purchased machinery for $800,000. At the end of last year, the machinery had a fair value of $720,000. Assuming Metcalf uses the revaluation model, what amount, if any, is recognized in Metcalf’s net income this year if the machinery’s fair value is $810,000?

According to U.S. GAAP, an asset is impaired when:

A firm recently recognized a $15,000 loss on the sale of machinery used in its manufacturing operation. The original cost of the machinery was $100,000 and the accumulated depreciation at the date of sale was $60,000. What amount did the firm receive from the sale?

Which of the following disclosures would least likely be found in the financial statement footnotes of a firm?

In the year after an impairment charge on a finite-lived identifiable intangible asset, compared to not taking the charge, net income is most likely to be:

Metallurgy, Inc., reported depreciation expense of $15 million for the most recent year. Beginning-of-year gross PP&E and accumulated depreciation were $287 million and $77 million, respectively. If end-of year gross PP&E and accumulated depreciation were $300 million and $80 million, the estimated remaining useful life of PP&E is closest to: