Question
1.If the cash amount paid to satisfy the Asset Retirement Obligation (ARO) account balance is greater than the ARO balance, which of the following is
1.If the cash amount paid to satisfy the Asset Retirement Obligation (ARO) account balance is greater than the ARO balance, which of the following is true?
A) A gain should be recorded
B) A loss should be recorded
C) Neither a gain nor a loss should be recorded
2.All else being equal, if a company FAILS to record an impairment loss on a depreciable asset at the end of the accounting period, what is the overall net effect on net income and the balance sheet equation for that period?
Item | Net Income | Assets | Liabilities | Owners Equity |
A. | Overstated | Understated | No effect | Understated |
B. | Overstated | Overstated | No effect | Overstated |
C. | No effect | No effect | No effect | No effect |
D. | Understated | Understated | No effect | Understated |
E. | Understated | Overstated | No effect | Overstated |
3. Which of the following is a liability account?
A) Accretion expense
B) Accumulated depreciation
C) Loss on impairment
D) Asset retirement obligation
E) LIFO reserve
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