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Intermediate Accounting Volume 1, 7th Edition By Spiceland – Test Bank

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Intermediate Accounting Volume 1, 7th Edition By Spiceland – Test Bank

1.

Amortization accounting is not a matter of valuation.

True False

2.

Amortization retains funds by reducing income and thereby impacting the dividend payment decision.

True False

3.

Impairment losses on intangible assets are to be amortized over the asset’s remaining useful life.

True False

4.

Accumulated amortization represents the cash set aside for the replacement of assets.

True False

5.

Held-for-sale capital assets are not depreciated.

True False

6.

Component accounting requires the same amortization method be applied for all of an asset’s major components.

True False

7.

The declining balance method records higher amortization expense in the earlier years of an asset’s useful life.

True False

8.

If an industrial firm uses the units-of-output method for computing amortization on its only plant asset, factory machinery, the credit to accumulated amortization from period to period during the life of the firm will vary with sales revenue.

True False

9.

The half-year convention is applied to CCA calculations.

True False

10.

Goodwill impairment losses are reversible under IFRS but not under ASPE.

True False

11.

Asset groups under ASPE include both assets and liabilities, while cash generating units (CGUs) under IFRS include only assets.

True False

12.

Amortization expense each period is proportionate to usage of the asset each period with the service hours method.

True False

13.

Goodwill impairment losses are reversible under IFRS but not under ASPE.

True False

14.

Conceptually, the cost of a capital asset (i.e., property, plant and equipment, but not land) represents a long-term prepayment of expense.

True False

15.

GAAP requires that, when recording amortization expense, the credit must always be made to a contra asset account, rather than directly to the asset account.

True False

16.

ASPE specifies a minimum amount of depreciation to be taken each year while IFRS does not.

True False

17.

With the exception of Goodwill, all impairment losses are reversible under ASPE.

True False

18.

The residual value of an asset is the expected value of the asset at the end of its entire useful life, while scrap (salvage) value refers to the expected value of the asset at the end of its useful life to the company.

True False

19.

Amortization expense is a source of cash because it is a non-cash expense.

True False

20.

Under IFRS, depreciation is never taken on Investment Property.

True False

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