LO 11.1Which of the following would not be considered an intangible asset?
LO 11.2Which of the following statements about capitalizing costs is correct?
- Capitalizing costs refers to the process of converting assets to expenses.
- Only the purchase price of the asset is capitalized.
- Capitalizing a cost means to record it as an asset.
- Capitalizing costs results in an immediate decrease in net income.
LO 11.2If a company capitalizes costs that should be expensed, how is its income statement for the current period impacted?
- Assets understated
- Net Income understated
- Expenses understated
- Revenues understated
LO 11.3An accelerated depreciation method that takes more expense in the first few years of the asset’s life is ________.
- units-of-production depreciation
- double-declining-balance depreciation
- accumulated depreciation
- straight-line depreciation
LO 11.4The amortization process is like what other process?
- recognizing revenue
LO 11.4If the market value of goodwill is found to be lower than the book value, goodwill is __________ and must be adjusted by __________.
- worthless; reducing it with a credit
- impaired; reducing it with a credit
- impaired; increasing it with a credit
- worthless; increasing it with a credit
LO 11.4Which of the following is true regarding special issues in accounting for long-term assets?
- An asset’s useful life can never be changed.
- An asset’s salvage value can never be changed.
- Depreciation expense calculations may need to be updated using new and more accurate estimates.
- Asset values are never reduced in value due to physical deterioration.