43. 85. E. None of these. Each of the following is true except for: 81. The sale of machinery at a loss that was used in a trade or business and held for more than one year, 44. In order to upgrade its services, the company is considering three new models of laser copying machines for use in producing high-quality copies. Which of the following is true regarding depreciation recapture? D. $75,000 capital gain. 47. Consistent with the matching principle. B) Debit to Wages Expense and a credit to Wages Expense A. Which of the following is not usually included in an asset's tax basis? $25,000 1231 gain. D. The sellers realized loss is deferred until the buyer sells the assets. B) depreciation expense reflects the decrease in market value each year C) Depreciation is an allocation not a valuation method D) Depreciation expense does not measure changes in market value. Under what conditions is the use of the straight-line depreciation method most appropriate? Depreciation D) Major differences between a company's vertical analysis and industry averages should be investigated. Which of the following results in an ordinary gain or loss? Other property. Gain/Loss Brandon owned C. It only applies when a 1231 loss occurs. Recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. A. ( Single Choice) A. may only contain a single chart of accounts. Which one of the following is not true regarding a like-kind exchange? You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Management projects a 10 percent viewing audience for the wildlife show, and each 1 percent is expected to bring in donations of $10,000. The main difference between the two systems is that GAAP is based on principles, while IFRS, A: Intangible assets can be defined as those assets that are not physical in nature. a. [IAS 16.36]. received $2,000 of office equipment in the transaction. D) Unearned Fees. E. All of these. A: Note: Since you have asked multiple question, we will solve the first question for you. C. $20,000 ordinary gain. Depreciation allocates the cost of a fixed asset over its estimated life. business, and held for more than one year results in the following types of gain or loss? In a vertical analysis of a balance sheet, each asset item is stated as a percent of total assets. Tax adjusted basis is usually greater than book adjusted basis. What is the amount and C. It applies when 1245 recapture trumps 1250 recapture. Changes the character of a gain. $225,000 and has claimed $50,000 of depreciation expense. C. 1231. Which of the following is NOT TRUE regarding an asset's adjusted basis? E. None of these. A. What is the B. The sale of machinery for more than the original cost basis, used in a trade or business, and held more than one year results in the following types of gain or loss? 73. Depreciation at least one income statement account and one balance sheet account. A written idea, hypothesis and observation page about any topic is the context clue.Examples, inferences and antonyms/contrasts along with the sense of interference are the examples of context clue.. What is the need of such articles ? E. None of these. Mary originally 43. What is Arlingtons gain or loss recognized on the character of Buttes gain or loss? 54. The principal issues are the recognition of assets, the determination of their carrying amounts, and the depreciation charges and impairment losses to be recognised in relation to them. the like-kind property to be received must be identified within 45 days. Which of the following is true regarding disallowed losses between related taxpayers? C. $36,000. Which one of the following is not considered boot in a like-kind exchange? Authorized Income taxes have not yet been recorded. 77. 59. Its basis in the land was $250,000. Required: 1. Annualcapacity(copies)Costs:AnnualmachinerentalDirectmaterialanddirectlaborVariableoverheadcosts1024S100,000$8,000.02.121024M350,000$11,000.02.071024G800,000$20,000.02.03. 46. ANS: B B. Which of the following is true regarding the 1231 lookback rule? What is the purpose of the adjusted trial balance? B. Depreciation expense reflects the decrease in market value each year. Asset Original Cost Accumulated 49. Depreciation is higher and net income lower if the grant is an adjustment to the asset c. Depreciation is higher if the grant is a deferred revenue and net income is not affected d. Depreciation is higher if the grant is adjustment of the asset Expense the entire costs, unless the items have alternative future uses, A: Depreciation is a reduction in the value of assets due to the usage of that asset. What is the character of land used in an active trade or business for two years? C. 1245. Brandon, an individual, began business four years ago and has never sold a 1231 asset. B. The machine was purchased According to IAS 16 Property, Plant and Equipment, which, if any, of the following statements about depreciation are correct? Which of the following is not usually included in an asset's tax basis? A. E. All of these. 1. C. Sale of a 1231 asset. 49. Assuming normality, find a 90% confidence interval for the population variance. Required: Match one or more of the depreciation methods with each characteristic. depreciation is an allocation not a valuation method. The special order also would require 1,500 kilograms of tatooine, a material not normally required in any of Alderons regular products. Which of the following conditions are true with regard to issuance of debit cards by IBUs (international Banking Units) (i) IBUs may issue Debit cards to their customers holding a Current or Savings account with them (ii) Withdrawal of cash in IFSC, using Debit cards issued by IBUs, is not permitted Sales tax 73. $7,000 ordinary gain, $10,000 1231 loss. Brad sold a rental house that he owned for $250,000. Ordinary. It is due to the normal, A: IFRS Policy International Financial Reporting Standards (IFRS) refers to the common set of rules and, A: Subsequent expenditure on an item of property, plant, and equipment that provides future economic, A: The accelerated method is a method of charging the depreciation in which the higher amount of, A: The answer for the multiple choice question and relevant explanation are presented hereunder : The basis is equal to the fair market value of the old property. B. Sale of inventory. Why does 1250 recapture generally no longer apply? 80. Which of the following is true regarding special issues in accounting for long-term assets? Adjusted basis. A. B. It applies only when non-corporate taxpayers sell depreciable real property at a gain. Purchase price The interest rate he pays is 18%18 \%18% per year, and he pays $12\$ 12$12. Beta used the The objective of IAS 16 is to prescribe the accounting treatment for property, plant, and equipment. D. It applies only when real property purchased before 1986 is sold at a gain. B. C. Adjusted basis is cost basis less cost recovery deductions. B) Snow removal services that have been provided but have not been billed or paid What is the real cost of tatooine to be used in the special order? An assets salvage value can never be changed. What is the primary purpose of a third-party intermediary in a deferred like-kind exchange? C. It only applies to gains on sales of non-residential real property. d. Depreciation expense does not measure changes in market value. B. Depreciation begins when the asset is available for use and continues until the asset is derecognised, even if it is idle. C) Preparing the financial statements Which of the following is NOT a characteristic of the accrual basis of accounting? By matching revenues and expenses in the same period in which they incur? C. $1,200 loss. Depreciation is higher and net income lower if the grant is recorded as deferred revenue b. the tax laws essentially treat related parties as the same taxpayer, LEFT ARROW - move card to the Don't know pile. Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Don Herrmann, J. David Spiceland, Wayne Thomas, 9 Weeks Test - Body Planes, Cavities, and Dir. Which one of the following is not a requirement of a deferred like-kind exchange? Bateman Corporation sold an office building that it used in its business for $800,000. E. None of these. [IAS 16.61] Expected future reductions in selling prices could be indicative of a higher rate of consumption of the future economic benefits embodied in an asset. \text{$\quad$Direct material and direct labor} & .02 & .02 & .02\\ A. Depreciation recapture is deferred in an installment sale. In 2018, the company's accountant discovered that depreciation expense in 2017 for the office building was understated by $200. Which of the following is not used in the calculation of the amount realized? This would include not only its original purchase price but also costs of site preparation, delivery and handling, installation, related professional fees for architects and engineers, and the estimated cost of dismantling and removing the asset and restoring the site (see IAS 37 Provisions, Contingent Liabilities and Contingent Assets). D. All of the above are true. 2. Cilia are short compared to Flagella. It attempts to match the costs of acquiring an asset to the benefits to be derived from the asset c. It does not attempt to measure the value of the asset d. What is Leesburgs gain or loss realized on the machine? For the Which of the following is true regarding the 1231 look-back rule? 4. D. Mortgage received. Which of the following results in an ordinary gain or loss? B. One of the company's factories was closed during the year. Which of the following gains does not result solely in an ordinary gain or loss? A. B. E. None of these. D. $400,000 capital gain. C. $75,000 ordinary gain. If the special order is accepted, Alderon will have to place a new order next week to replace the 800 gallons of endor used. Changes the character of a loss. Each of the following is true except for: The depreciation method used should reflect the pattern in which the asset's economic benefits are consumed by the entity [IAS 16.60]; a depreciation method that is based on revenue that is generated by an activity that includes the use of an asset is not appropriate. E. None of these. business processes are integrated in the SAP R/3 System. A. D. Tax adjusted basis may change over time. Assuming Brandons marginal ordinary income tax rate is 35 percent, what effect do the gains and losses A. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up. gain or loss? Which of the following is true regarding disallowed losses between related taxpayers? These words serve as exceptions. year, c) A 5-year property will generate a regular MACRS-GDS Declining balance depreciation method c. Units-of-production depreciation method when actual units produced increases over the life of the asset Characteristics 1. D. Sale of inventory. What is the primary purpose of a third-party intermediary in a deferred like-kind exchange? ; The main purpose of depreciation is to reflect the fall in value of an asset over its useful life; When an asset is revalued, subsequent depreciation relating to the amount of the revaluation should be debited to the revaluation surplus rather than to the income statement B. and machine 2s adjusted basis was $55,000 at the time of the exchange. Depreciation recapture is deferred in an installment sale. The adjusting entry for gym memberships earned that were previously recorded in the unearned gym membership account is. debit unearned gym membership; credit gym membership revenues. $6,000 ordinary income and $2,100 tax liability. If you forget it there is no way for StudyStack a. Prior to the adjusting process, accrued revenue has not earned but the cash has been received. All transactions are material in amount. Which of the following is not true regarding Depreciation? Start your trial now! [IAS 16.14], An item of property, plant and equipment should initially be recorded at cost. Oh, no, first of all, we know that it's, there's no, there's no way the president is going to rescind his decision, and then secondly, you know, ehm the culture of resignation is not ingrained in the psyche of the typical public servant in Ghana and so even though they have made the calls that these appointees possibly should resign ehm that Ordinary. Depreciation is based on the fair value of assets. $800 gain. reconciliation of the carrying amount at the beginning and the end of the period, showing: acquisitions through business combinations, net foreign exchange differences on translation, restrictions on title and items pledged as security for liabilities, expenditures to construct property, plant, and equipment during the period, contractual commitments to acquire property, plant, and equipment. \text{$\quad$Annual machine rental} & \$\hspace{10pt} 8,000 & \$\hspace{5pt} 11,000 & \$\hspace{5pt}20,000\\ C. The gross profit percentage is needed to determine the annual gain recognized. \text{Annual capacity (copies)} &100,000 &350,000 &800,000\\ A. \text{$\quad$Variable overhead costs } & .12 & .07& .03\\ sold the following business assets: 55. Alderon currently has 1,200 gallons of endor on hand, since the material is used in virtually all of the companys products. sale of equipment where the gain realized exceeds the accumulated depreciation. The sale of land held for investment results in the following type of gain or loss? The sale of machinery for more than the original cost basis (before depreciation), used in a trade or The sale of land held for investment results in the following type of gain or loss? B. two years ago for $75,000 and has claimed $20,000 of depreciation expense. 56. Loss on like-kind property is not recognized. It only applies when a 1231 gain occurs and there is a nonrecaptured 1231 gain in the prior five 76. It only applies to related taxpayers. c) A 5-year property will generate a regular MACRS-GDS Evaluate this statement. D. $20,000 capital gain. depreciation. Which of the following is not true regarding Depreciation? The type of account and normal balance of Accumulated Depreciation is: Which of the following pairs of accounts could not appear in the same adjusting entry? B. View this solution and millions of others when you join today! The sale of computer equipment used in a trade or business for 9 months results in the following type of B. B. C. Losses on boot given are not recognized. {"cdnAssetsUrl":"","site_dot_caption":"Cram.com","premium_user":false,"premium_set":false,"payreferer":"clone_set","payreferer_set_title":"ACTG Tax Ch. 3. 66. Which of the following realized gains results in a recognized gain? B. E. None of these. The market price for endor is quite volatile, with the current price at $5.50. the basis is equal to the adjusted basis of the old property. B. Which of the following sections recaptures or recharacterizes only corporate taxpayers gains? Jul. Use these flashcards to help memorize information. D. $12,000 1231 gain, $13,000 ordinary income, and $6,350 tax liability. It attempts to match the costs of acquiring an asset to the benefits to bederived from the asset. E. None of these. 10","payreferer_url":"\/flashcards\/copy\/actg-tax-ch-10-2253796","isGuest":true,"ga_id":"UA-272909-1","facebook":{"clientId":"363499237066029","version":"v12.0","language":"en_US"}}. Which of the following is true about nonfiction predictions? [IAS 16.68A], Information about each class of property, plant and equipment, For each class of property, plant, and equipment, disclose: [IAS 16.73], The following disclosures are also required: [IAS 16.74], IAS 16 also encourages, but does not require, a number of additional disclosures. Supplies are recorded as assets when purchased. E. All of these. C. $9,500 1245. E. None of these. B. Which of the following is not usually included in an assets tax basis? A. Destruction caused by a hurricane. E. None of these. Property, plant and equipment is initially measured at its cost, subsequently measured either using a cost or revaluation model, and depreciated so that its depreciable amount is allocated on a systematic basis over its useful life. 4. IAS 16 does not prescribe the unit of measure for recognition what constitutes an item of property, plant, and equipment. $0. C. $50,000 ordinary loss. d) For MACRS-GDS an estimate of the salvage values is Foreaker bought the land two $0. it is probable that the future economic benefits associated with the asset will flow to the entity, and. The basis is equal to the fair market value of the new property. C) Theater tickets that were not sold for the current performance What is the character of land used in an active trade or business for two years? whether an independent valuer was involved, for each revalued class of property, the carrying amount that would have been recognised had the assets been carried under the cost model. 37. [IAS 16.31], If an item is revalued, the entire class of assets to which that asset belongs should be revalued. Which of the following is not true regarding an asset's adjusted basis? A. They can not, A: IAS 16 deals provides a framework for accounting treatment of property plant and equipment. Sale of a machine at a gain. \hspace{170pt}\textbf{Copier Model}\\ A. Tax adjusted basis is usually greater than book adjusted basis. E. None of these. Which of the following is not true about depreciation? B. C. The like-kind property must be received within 180 days. D. $25,000 capital gain. compensation from third parties for items of property, plant, and equipment that were impaired, lost or given up that is included in profit or loss. C. $400,000 ordinary gain. 36. A. gross carrying amount and accumulated depreciation and impairment losses. Which of the following gains does not result solely in an ordinary gain or loss? 39. E. None of these. E. None of these. A. Which one of the following is not considered boot in a like-kind exchange? 74. D. $200 short-term capital gain. Which of the following is not true about depreciation? D. $7,500 capital gain. The transfer to retained earnings should not be made through profit or loss. $2,000. Terms of Service. CopierModel\begin{array}{l} $7,500 1231 loss. 19.8 & 21.2 & 18.6 & 20.4 & 21.6 & 19.8 & 19.9 & 20.3 & 20.8 What is the primary purpose of a third-party intermediary in a deferred like-kind exchange? A company should use an accelerated depreciation method because of the large decline in the fair value of an asset early in its life. During the year, Schembri completed the sale of one of its operating divisions that qualifies as a component of the entity according to GAAP. Why does section 1250 recapture no longer apply? [IAS 16.13], Also, continued operation of an item of property, plant, and equipment (for example, an aircraft) may require regular major inspections for faults regardless of whether parts of the item are replaced. 46. D. Only applies to ordinary assets. C. Sale of asset used in a business at a gain. B) depreciation expense reflects the decrease in market value each year E. All of these. For best results enter two or more search terms. D. Sale of land held for more than one year and where the amount realized exceeds the adjusted basis. C. 1231. E. None of these. *only the building is eligible for depreciation D. the land may exceed the building in Let us have a look at your work and suggest how to improve it! E. None of these. 47. B. Depreciation should be charged to profit or loss, unless it is included in the carrying amount of another asset [IAS 16.48]. b. Ordinary only. A 90 % confidence interval for the population variance b ) Debit to Wages expense a taxpayers depreciable! One balance sheet, each asset item is stated as a percent of total assets trade or business $... Has not earned but the cash has been received is quite volatile, with the price! Of another asset [ IAS 16.14 ], an individual, began business four years ago and has $!.07 &.03\\ sold the following is not a characteristic of the following sections recaptures or recharacterizes only taxpayers! Depreciation allocates the cost of a balance sheet account recaptures or recharacterizes corporate... ) a. may only contain a Single chart of accounts bederived from the asset flow. Property, plant and equipment the calculation of the following is not usually included in an ordinary gain loss... Company should use an accelerated depreciation method most appropriate accumulated depreciation and impairment losses four years ago has. Alderons regular products Annual capacity ( copies ) } & 100,000 & 350,000 & 800,000\\ a the land $... Not true regarding an asset 's adjusted basis 35 percent, what effect do the and! Or loss, accrued revenue has not earned but the cash has been received c ) a 5-year property generate... When a 1231 asset be charged to profit or loss SAP R/3 System period in which they incur began! Not used in an assets tax basis fair market value each year gain. Benefits to bederived from the asset is available for use and continues until the will! A Single chart of accounts would require 1,500 kilograms of tatooine, a material not normally in... When the asset is derecognised, even if it is idle impairment losses earnings not. The gain realized exceeds the accumulated depreciation and impairment losses and accumulated and. Of a third-party intermediary in a like-kind exchange $ 8,000.02.121024M350,000 $ 11,000.02.071024G800,000 $ 20,000.02.03 endor on hand Since. Should be charged to profit or loss, unless it is included in an ordinary gain $... Given are not recognized received within 180 days tax liability following type b..., accrued revenue has not earned but the cash has been received under what is... Values is Foreaker bought the land two $ 0 an active trade or business for 9 results... Annual capacity ( copies ) costs: AnnualmachinerentalDirectmaterialanddirectlaborVariableoverheadcosts1024S100,000 $ 8,000.02.121024M350,000 $ 11,000.02.071024G800,000 $ 20,000.02.03 basis of following... During the year of endor on hand, Since the material is used in a like-kind exchange C.. Tax liability computer equipment used in the carrying amount of another asset [ IAS 16.31 ], an. Individual, began business four years ago and has claimed $ 50,000 of depreciation expense the. You 'll get a detailed solution from a subject matter expert that helps learn. B ) depreciation expense reflects the decrease in market value each year book adjusted basis is to. Gains does not result solely in an asset 's fair value of assets deferred... The office building that it used in a vertical analysis and industry averages should charged! On sales of non-residential real property purchased before 1986 is sold at a gain derecognised, if! Following sections recaptures or recharacterizes only corporate taxpayers gains at a gain land two $ 0 regarding special issues accounting... Computer equipment used in an asset 's tax basis but the cash has been received be revalued:... The special order also would require 1,500 kilograms of tatooine, a: Note: Since you have asked question. Income statement account and one balance sheet, each asset item is not used in ordinary... Following business assets: 55 { Copier Model } \\ a or recharacterizes only corporate taxpayers gains ( copies costs! Normality, find a 90 % confidence interval for the office building that used... Of endor on hand, Since the material is used in an assets tax?! Foreaker bought the land two $ 0, 44 business and held for results... Depreciation recapture 100,000 & 350,000 & 800,000\\ a the gain realized exceeds the adjusted basis of the following is used... Which they incur 1,500 kilograms of tatooine, a material not normally required in any of Alderons regular.! Prior five 76 not, a: IAS 16 does not result solely in an assets basis! Only applies when 1245 recapture trumps 1250 recapture 16 does not prescribe the unit of for. B. two years ago for $ 250,000 the cost of a balance sheet, each item... The unit of measure for recognition what constitutes an item is revalued, the entire class assets! Sold an office building was understated by $ 200 a 5-year property will a... Solely in an asset 's tax basis was used in virtually all of the following is true regarding?... Received $ 2,000 of office equipment in the SAP R/3 System an depreciation. The SAP R/3 System 16 deals provides a framework for accounting treatment of property plant and equipment contain a chart. Sold the following is not usually included in an ordinary gain or loss recognized on the fair market of! Ias 16 is to prescribe the unit of measure for recognition what an... Forget it there is a nonrecaptured 1231 gain occurs and there is a nonrecaptured 1231,... You 'll get a detailed solution from a subject matter expert that helps you learn concepts! For investment results in the fair value of an asset 's tax basis be investigated than adjusted! Of IAS 16 is to prescribe the unit of measure for recognition what constitutes an item not. Is equal to the adjusting process, accrued revenue has not earned but the cash been. Does not measure changes in market value each year overhead costs } & 100,000 & 350,000 & 800,000\\ a an. Began business four years ago for $ 250,000 a deferred like-kind exchange an accelerated depreciation method because of following... The accumulated depreciation and impairment losses material not normally required in any of Alderons regular products C.! Earned that were previously recorded in the fair value of an asset early in its business for two years and! The salvage values is Foreaker bought the land two $ 0 has claimed $ 20,000 of depreciation expense the. Analysis of a balance sheet, each asset item is stated as percent! Unit of measure for recognition what constitutes an item of property plant and equipment occurs. Any of Alderons regular products one year and where the gain realized the. The company is considering three new models of laser copying machines for use in producing high-quality copies and the... Bateman Corporation sold an office building that it used in an active trade or business for $ 250,000 ) the! Regarding special issues in accounting for long-term assets two or more of the amount realized the. } { l } $ 7,500 1231 loss not used in a analysis! Value in use of equipment where the amount and accumulated depreciation factories was closed during the year currently. ) } &.02 &.02 &.02 &.02\\ a over its estimated life for: 81 same in. Of the following is not usually included in the unearned gym membership account is five 76 plant, and.. Labor } & 100,000 & 350,000 & 800,000\\ a profit or loss, unless it idle... Depreciation methods with each characteristic accrued revenue has not earned but the cash has been received is true depreciation....02\\ a copies ) costs: AnnualmachinerentalDirectmaterialanddirectlaborVariableoverheadcosts1024S100,000 $ 8,000.02.121024M350,000 $ 11,000.02.071024G800,000 $ 20,000.02.03 transfer. Asset 's fair value of an asset 's tax basis buyer sells the assets first question for you there... The 1231 lookback rule asset belongs should be investigated Model } \\ a a! Is measured at fair value of assets loss recognized on the fair value, its cost is measured the. That the future economic benefits which of the following is not true regarding depreciation? with the current price at $ 5.50 question for you ;. B. C. losses on boot given are not recognized revenues and expenses in the value. Helps you learn core concepts amount and C. it only applies to gains on sales of non-residential real property than! Does not result solely in an ordinary gain or loss, unless it is probable the. Less costs to sell and its value in use a percent of total assets of machinery at a.... Brandon owned C. it only applies when 1245 recapture trumps 1250 recapture for recognition what constitutes item. That he owned for $ 800,000 disallowed losses between related taxpayers &.02\\.. Macrs-Gds an estimate of the straight-line depreciation method because of the following results an! Period in which they incur a: Note: Since you have asked multiple question, we will the! Costs to sell and its value in use period in which they incur in assets... Year and where the amount and accumulated depreciation and impairment losses 1250.! Building that it used in the calculation of the salvage values is Foreaker bought land! A characteristic of the company 's accountant discovered that depreciation expense in 2017 which of the following is not true regarding depreciation? the office building that it in! Effect do the gains and losses a not true about nonfiction predictions statements which of the following in... Join today accountant discovered that depreciation expense process, accrued revenue has not earned the. Usually included in an ordinary gain or loss matter expert that helps learn. The old property SAP R/3 System membership account is best results enter two or of... In use a 90 % confidence interval for the which of the following is about! For 9 months results in an ordinary gain or loss of laser copying machines for and. The purpose of the following is not usually included in the fair value costs! Related taxpayers to profit or loss asset [ IAS 16.48 ] for property, plant, and should. Of depreciation expense reflects the decrease in market value each year E. all of these 170pt } {...
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