Quiz Ch 07 – T/F Depreciation of Machine Installation Costs
Financial Accounting
Thomas, Tietz, and Harrison
12th Edition
Machine installation expenses should be included in the machine cost and subject to depreciation.
Machine installation expenses should be included in the machine cost and subject to depreciation.
When disposing of a plant asset, its cost and accumulated depreciation are deducted from the books.
Depreciation or amortization does not apply to leasehold improvements.
When acquiring a company with extraordinary earning potential, the buyer may offer to pay for its goodwill.
IFRS adopts a “components” approach for accounting for the depreciation of assets, such as buildings, aircraft, and manufactured equipment.
Depreciation expense lowers assets and stockholders’ equity.
Net income is positively impacted by gains on the sale of equipment, while losses on the sale of equipment have a negative impact on net income.
The estimated future cash flows will exceed the net book value when a long-term asset is impaired.
IFRS adoption in the US may reduce the recognition of intangible assets on balance sheets.
Land cost encompasses any overdue property taxes paid by the buyer.