61. Which of the following is not considered in determining the useful life of an item of PPE?

a. Expected usage of the asset

b. Legal limits

c. Technical obsolescence

d. Residual value

62. A depreciation method that provides higher depreciation expense during the early years of the asset life.

a. Sum of the years digits method

b. Straight-line method

c. Service hours method

d. Units of production method

63. Which of the following statements is the assumption on which the straight line depreciation is based?

a. The operating efficiency of the asset decreases in later years

b. Service value declines as a function of time rather than use

c. Service value declines as a function of obsolescence rather than time

d. Physical wear and tear are more important than economic obsolescence

64. A method that excludes residual value from the base for the depreciation calculation is:

a. Straight line

b. Service hours

c. Productive output

d. Declining balance

65. A depreciation method used where the usage of the asset varies considerably from period to period and the service life is more a function of use rather than passage of time

a. Straight line method

b. Units of production method

c. Sum of the years digits method

d. Declining balance

66. The most common method in recording depletion for wasting assets is the:

a. Effective interest method

b. Sum of the years method

c. Straight line

d. Output method

67. Which of the following terms best describes the costs or an amount substituted for costs of an asset less its residual value?

a. Revalued amount

b. Carrying amount

c. Recoverable amount

d. Depreciable amount

68. Under PAS 16, the useful life of an item of PPE should be reviewed periodically and if expectations are materially different from previous estimates, the depreciation charge should be adjusted for the:

a. Prior periods only

b. Current periods only

c. Future periods only

d. Current and, if affected, future periods

69. If there is a change from the sum of the years digits to straight line method

a. The accumulated depreciation is adjusted to its appropriate balance through retained earnings based on the straight line method

b. The accumulated depreciation is adjusted to its appropriate balance through net income based on the straight line method

c. The accumulated depreciation balance is not adjusted but the remaining book value is allocated over the remaining life using the straight line method.

d. The accumulated depreciation balance is not adjusted but the remaining book value is allocated over the original life using the straight line method.

70. Gains and losses on the retirement or disposal of PPE should be based on the difference between:

a. Gross disposal proceed of the asset and the cost of the asset

b. Gross disposal proceeds and the carrying amount of the asset

c. Net disposal proceeds and the cost of the asset

d. Net disposal proceeds and the carrying amount of the asset

71. Which of the following is correct?

a. Some intangible assets convey exclusive rights which are represented only by tangible physical substance.

b. Intangible assets used in the operation of a business are always long term.

c. The process of recording the expiration of the economic benefits of an intangible asset is called depletion

d. Intangible assets are obtained in two ways: acquisition from external source or internally generated.

72. Which of the following statements is true?

a. The only cost of an internally developed patent that should be capitalized as patent cost are legal fees and other registration costs.

b. An identifiable tangible asset developed internally is never recognized in the accounts as an asset.

c. Intangible assets usually have a residual value that must be considered in the amortization of cost.

d. An intangible asset is usually amortized by a credit to an income account.

73. Which of the following statement is false?

a. A loss caused by impairment in the value of an intangible asset should be classified as an ordinary item (or other expense).

b. If a franchise becomes worthless prior to the end of its estimated useful life, the unamortized balance in the franchise account should be immediately written off as an impairment loss.

c. A lease bonus payment made in advance should be debited to leasehold improvement account, which is an asset account.

d. Leasehold improvements should be amortized over the shorter of the term of the lease or the useful life if the improvement.

74. Amortization of intangible assets result primarily from the application of the:

a. Full disclosure principle

b. Revenue principle

c. Cost principle

d. Matching principle

75. Intangible assets have all of the following characteristics, except:

a. Their ownership confers rights, but no physical substance.

b. They have no physical substance

c. They are relatively long-lived.

d. They provide benefits to the current operations only.

76. A consideration in determining the useful life of an intangible asset is not the:

a. Initial cost

b. Legal, regulatory, or contractual provisions

c. Provisions for renewal or extension

d. Expected actions of competitors

77. A franchise should be classified on the balance sheet as a (an);

a. Operational asset

b. Deferred charge

c. Intangible asset

d. Current asset

78. In accordance with the PFRSs, which of the following methods of amortization is normally not recommended for intangible assets?

a. Units of production

b. Declining balance

c. Effective interest method

d. Straight line method

79. Amortization of an intangible asset is usually recorded as a:

a. Debit to retained earnings and a credit to a contra account.

b. Debit to retained earnings and a credit to the intangible asset account.

c. Debit to retained earnings and a credit to a contra liability account.

d. Debit to amortization expense and a credit to the intangible asset account or contra account.

80. A change in the amortization rate for an intangible asset should be accounted for:

a. By means of retroactive basis.

b. By means of prior period adjustment.

c. On a prospective basis.

d. On a current basis.

81. We purchased a patent from another company which had held it for 3 years. We should therefore amortize the patent over what number of years?

a. Remaining useful life, not to exceed 37.

b. Any number not to exceed 40. c. Remaining useful life, not to exceed 17.

d. 20

82. Costs incurred by a company that may develop its own goodwill internally should be:

a. Capitalized and amortized as the company profits increased.

b. Capitalized and amortized over the useful life of the goodwill. c. Expensed when incurred as a current operating expense.

d. Capitalized and amortized over a period not to exceed 40 years.

83. Good will should properly appear on the financial statements of a company which:

a. Has purchased an entity.

b. Consistently operates profitably.

c. Consistently reports above-normal profits.

\d. Meets all of the conditions regarding legal goodwill.

84. For some purposes, assets are classified as identifiable and unidentifiable. Which of the following is an unidentifiable asset?

a. Goodwill

b. Patent

c. Cash in foreign bank

d. Prepaid insurance

85. Goodwill, when properly recognized, should be written off:

a. By systematic charges to expense over the period benefitted, but nit more than 20 years.

b. As soon as possible against retained earnings.

c. As soon as possible as an ordinary item.

d. When impairment loss occurs.

86. If a franchise becomes worthless prior to the end of its estimated useful life, the unamortized balance in the franchise account should be written off as a(an):

a. Prior period adjustment

b. Impairment loss

c. Expense of the current period

d. Change in estimate e. Extraordinary item

87. Which of the following cost related to computer software is capitalized as an intangible asset account?

a. Cost to duplicate discs and manuals for sale

b. Developing costs preceding technological feasibility

c. Coding and testing costs incurred after technological feasibility but before completing the product master

d. Cost of customers service

88. Which of the following confers exclusive right to conduct business in a particular territory?

a. Franchise

b. Trademark

c. Leasehold

d. Patent

e. Copyright

89. Which of the following is included in research and development expense in 2013?

a. The total cost of a building (useful life 25 years, completed January 2013) to be used exclusively in research and development.

b. Depreciation in 2013 on the building used for research and development.

c. The costs incurred in 2013 to ensure quality control for existing production process.

d. The costs incurred in 2013 of research activities performed for another firm the project is expected to be completed in 2014.

90. Total research and development expense for Canada, Inc. would include which of the following items:

1. Depreciation on Canada, Inc. property, plant and equipment used in Canada, Incs development projects.

2. Amortization of Canada, Incs patent used in Canada, Incs research.

3. Resources paid by Canada, Inc. for Red Corporations research efforts performed for Canada, Inc.s research and development projects.

4. Canada, Inc.s cost of research performed for West Corporations research and development projects.

5. Canada, Inc.s cost of internal development efforts which culminated in a patent granted to Canada, Inc.

6. Overhead costs allocated to Canada, Inc.s research and development efforts which took the place of another Canada, Inc.s activities.

7. Costs to train Canada, Inc.s employees to run machines used in ongoing production. These machines had earlier been developed by Canada, Inc.

a. 1234567

b. 123456

c. 1236

d. 12356

e. 123