Q$1$:

Gleim CPA Review

To determine whether to recognize the impairment of a depreciable fixed asset, a company must compare the

Select one:

a$.$ Carrying amount of the asset and the present value of the future cash flows expected to be generated by the asset.

b$.$ Original cost of the asset and the fair value of the asset.

c$.$ Carrying amount of the asset and the undiscounted future cash flows expected to be generated by the asset.

d$.$ Original cost of the asset and the carrying amount of the asset.

Q$2$;

Larson Stores owns a small retail outlet in a California coastal town. In the last few years, a significant percentage of the residents have moved further inland after a number of landslides destroyed area homes. The building was purchased on January $1,1990,$ at a cost $$1,200,000.$ The building has been depreciated assuming a service life of $40$ years, $$300,000$ salvage value. Annual net cash inflows have averaged $$60,000$ over the last few years. An independent appraiser estimates the fair value of the property at $$450,000.$ After reviewing the situation, the owners of Larson Stores decided to close the store in January $2020$ and sell the property

If Larson Stores records an impairment loss, which of the following statements is$($are$)$ true about the accounting and reporting related to the loss in the $2020$ financials assuming the property is unsoid as

of December $31,2020?$

Select one:

a$.$ The company should continue to depreciate the building

b$.$ The company should continue to classify the building as property, plant, and equipment until the building is sold.

c$.$The company should report the impairment loss and operating costs related to the closed store as discontinued operations in the income statement, net of taxes.

d$.$ A and B

e$.$ B and C

f$.$A and C

&A$.$ B$,$ and C

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$30.$

How is the amount of oil and gas exploration costs that can be capitalized determined?

Select one:

a$.$ All oil &gas exploration costs are capitalized.

b$.$ All oil & gas exploration costs are expensed.

c$.$ It depends on the capitalization method selected.

d$.$ You can only capitalize successful exploration costs