Finance
Finance Mastery Quiz
Test your knowledge and skills in finance with our comprehensive quiz that challenges you on various topics including accounting, asset management, and financial reporting.
Participate to:
- Enhance your understanding of financial concepts.
- Prepare for certifications or advanced studies.
- Challenge yourself with 12 thought-provoking questions.
Red Company immediately expenses its development costs while Black Company capitalizes its development costs. All else equal, Red Company will:
Show smoother reported earnings than Black Company
report higher operating cash flow than Black Company.
Report higher asset turnover than Black Company.
Which of the following statements about indefinite-lived intangible assets is most accurate?
They are amortized on a straight-line basis over a period not to exceed 40 years.
They are reported on the balance sheet indefinitely.
They never appear on the balance sheet unless they are internally developed.
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:
Depreciation expense.
Operating cash flow.
Retained earnings.
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?
DDB = $7,500; UOP = $2,970
DDB = $7,500; UOP = $3,300
DDB = $6,750; UOP = $2,970
Which of the following is least likely considered in determining the useful life an intangible asset?
Initial cost.
Legal, regulatory, or contractual provisions
Provisions for renewal or extension.
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.
$0
$97,500
$292,500
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?
$0
$80,000
$90,000
According to U.S. GAAP, an asset is impaired when:
The firm cannot fully recover the carrying amount of the asset through operations.
Accumulated depreciation plus salvage value exceeds acquisition cost.
The present value of future cash flows from an asset exceeds its carrying value.
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?
$25,000
$45,000
$85,000
Which of the following disclosures would least likely be found in the financial statement footnotes of a firm?
Accumulated depreciation
Carrying values by asset class.
Average age of assets.
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:
Lower
Higher
Unaffected
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:
10 years
15 years
20 years
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