Q1. Which of the following statements is false?

1. All research phase and development phase costs are expensed as incurred.
2. Companies are required to assess the estimated useful life and salvage value of intangible assets at least annually.
3. Limited-life intangibles are amortized by systematic charges to expense over their useful life.
4. The cost of acquiring a customer list from another company is recorded as an intangible asset
5. All intangibles are subject to periodic consideration of impairment with corresponding potential write-downs.

Q2. Which of the following statements is true?

1. The expected profit from a service type warranty that covers several years should all be recognized in the period the warranty is sold.
2. Under an assurance-type warranty, companies charge warranty costs only to the period in which they comply with the warranty.
3. For purposes of recognizing a provision, probable is defined as more likely than not.
4. A provision differs from other liabilities in that there is less uncertainty about the timing and amount of settlement.
5. Provisions are only recorded if it is possible that the company will have to settle an obligation at some point in the future.

Q3. Alpha Oil Co. buys an oil rig for $1,000,000 on Jan 1, 2019. The life of the rig is 10 years and the expected cost to dismantle the rig at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. On Jan 1, 2029, the rig is dismantled for $207,000.

Provide journal entries required for the following dates.

Date		Dr.	Cr.
Jan 1, 2019
Dec 31, 2019
Jan 1, 2029

Q4. Explain the difference between depreciation and impairment.

Q5. Explain why a company would pay more than the fair market value of another companys net assets.

Q6. On Jan 1, 2019 Miley Co. sold 700 computers. The $1,500 cash price included a 2-year assurance warranty. Miley estimated that over the 2-year period, warranty costs would amount to $90 for each computer sold. Assume warranty costs of $18,000 were incurred during 2019. The remaining warranty costs were incurred during 2020

Provide journal entries to record these transactions, commencing with the sale in Jan 2019.

Date		Dr.	Cr.
Jan 1, 2019