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Principles of Accounting, Volume 1: Financial Accounting

Questions

Principles of Accounting, Volume 1: Financial AccountingQuestions

Questions

1.

LO 11.1What is the difference between tangible and intangible assets?

2.

LO 11.1Define intangible assets.

3.

LO 11.1What is the difference between a patent and a copyright?

4.

LO 11.1What is goodwill, and how is it generated?

5.

LO 11.2For each of the following transactions, state whether the cost would be capitalized (C) or recorded as an expense (E).

  1. Purchased a machine, $100,000; gave long-term note
  2. Paid $600 for ordinary repairs
  3. Purchased a patent for $45,300 cash
  4. Paid $200,000 cash for addition to old building
  5. Paid $20,000 for monthly salaries
  6. Paid $250 for routine maintenance
  7. Paid $16,000 for major repairs
6.

LO 11.2What amounts should be recorded as a cost of a long-term asset?

7.

LO 11.2Describe the relationship between expense recognition and long-term assets.

8.

LO 11.3Define natural resources.

9.

LO 11.3Explain the difference between depreciation, depletion, and amortization.

10.

LO 11.4Explain the differences between the process of amortizing intangible assets and the process of depreciating tangible assets.

11.

LO 11.4What is goodwill, and what are the unique aspects of accounting for it?

12.

LO 11.5What are some examples of special issues in accounting for long-term assets? How are they handled?

13.

LO 11.5What is the difference between functional obsolescence and physical obsolescence?

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