1. As a recent graduate of State University you're aware that IFRS requires component depreciation for plant assets. A friend has asked you to succinctly explain what component depreciation means. Which of the following correctly describes component depreciation?

a) The method that requires that significant parts of a plant asset with different useful lives be depreciated separately.

b) The method of depreciation recommended for an asset that is expected to be significantly more productive in the first half of its useful life.

c) The method used to ensure that the depreciation rate remains constant from year to year.

d) The method used to prorate annual depreciation on a time basis.

2. Given the following account balances at year end, compute the total intangible assets on the balance sheet of Janssen Enterprises.

Cash…………………….…$1,500,000

Accounts Receivable……..4,000,000

Trademarks……………….1,000,000

Goodwill………………… . 2,500,000

Research & Development Costs…..2,000,000

a) $5,500,000

b) $3,500,000

c) $9,500,000

d) $7,500,000

3. Bonds with a face value of $300,000 and a quoted price of 97¼ have a selling price of

a) $291,750

b) $291,075

c) $292,500

d) $291,006

4. Sparks Company received proceeds of $423,000 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $400,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. What is the carrying value of the bonds on January 1, 2015?

a) $381,600

b) $420,700

c) $400,000

d) $418,400