Baruch College, CUNYACCT 3000 Quiz complete solutions answers graded A+

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1. Property, plant, and equipment and intangible assets are long-term, revenue producing assets. True False 2. Sales tax paid on equipment acquired for use in the business is not capitalized. True ... False 3. Demolition costs to remove an old building from land purchased as a site for a new building are considered part of the cost of the new building. True False 4. The initial cost of property, plant, and equipment includes all the identifiable expenditures necessary to bring the asset to its desired condition and location for use. True False 5. A distinguishing characteristic of intangible assets is the degree of uncertainty about when or if they will provide future benefits. True False 6. Costs incurred after discovery of a natural resource but before production begins are reported as expenses of the period in which the expenditures are made. True False 7. The relative fair values are used to determine the valuation of individual assets acquired in a lump-sum purchase. True False 8. The fair value of the asset, debt, or equity securities given in a noncash acquisition should determine the value of the consideration received. True False 9. Under current GAAP, fair value is used to measure the components of all nonmonetary exchanges. True False 10. The interest capitalization period for a self-constructed asset ends either when the asset is substantially complete and ready for use or when interest costs no longer are being incurred. True False 11. The FASB's required accounting treatment for research and development costs often understates both net income and assets. True False 12. According to International Financial Reporting Standards, all research and development expenditures are expensed in the period incurred. True False 13. A company that prepares its financial statements according to International Financial Reporting Standards must calculate amortization of capitalized software development costs in the same way as under U.S. GAAP. True False 14. A company that prepares its financial statements according to International Financial Reporting Standards accounts for a government grant by recognizing revenue for the amount of the grant. True False 15. The successful efforts method of accounting for oil and gas exploration costs allows costs incurred in searching for oil and gas within a large geographical area to be capitalized. True False 16. Property, plant, and equipment and intangible assets are: A. Created by the normal operation of the business and include accounts receivable. B. All assets except cash and cash equivalents. C. Current and long-term assets used in the production of either goods or services. D. Long-term revenue-producing assets. 17. The acquisition costs of property, plant, and equipment do not include: A. The ordinary and necessary costs to bring the asset to its desired condition and location for use. B. The net invoice price. C. Legal fees, delivery charges, installation, and any applicable sales tax. D. Maintenance costs during the first 30 days of use. 18. Goodwill is: A. Amortized over the greater of its estimated life or 40 years. B. Only recorded by the seller of a business. C. The excess of the fair value of a business over the fair value of all net identifiable assets. D. None of these answer choices are correct. 19. Productive assets that are physically consumed in operations are: A. Equipment. B. Land. C. Land improvements. D. Natural resources. 20. An exclusive 20-year right to manufacture a product or use a process is a: A. Patent. B. Copyright. C. Trademark. D. Franchise. 21. The exclusive right to benefit from a creative work, such as a film, is a: A. Patent. B. Copyright. C. Trademark. D. Franchise. 22. The exclusive right to display a symbol of product identification is a: A. Patent. B. Copyright. C. Trademark. D. Franchise. 23. The capitalized cost of equipment excludes: A. Maintenance. B. Sales tax. C. Shipping. D. Installation. 24. Asset retirement obligations: A. Increase the balance in the related asset account. B. Are measured at fair value in the balance sheet. C. Are liabilities associated with the restoration of a long-term asset. D. All of these answer choices are correct. 25. If a company incurs disposition obligations as a result of acquiring an asset: A. The company recognizes the obligation at fair value when the asset is acquired. B. The company recognizes the obligation at fair value when the asset is disposed. C.The company records the difference between the fair value of the asset and the obligation when the asset is acquired. D. None of these answer choices are correct. 26. When selling property, plant, and equipment for cash: A.The seller recognizes a gain or loss for the difference between the cash received and the fair value of the asset sold. B.The seller recognizes a gain or loss for the difference between the cash received and the book value of the asset sold. C. The seller recognizes losses, but not gains. D. None of these answer choices are correct. 27. Which of the following does not pertain to accounting for asset retirement obligations? A. They accrete (increase over time) at the company's credit-adjusted risk-free rate. B. They must be recognized according to GAAP. C.Statement of Financial Accounting Concepts No. 7 is applied when adjusting cash flow obligations for uncertainty. D. All of these answer choices pertain to accounting for asset retirement obligations. 28. The asset retirement obligation (rounded) that should be recognized by MMC at the beginning of the extraction activities is: Montana Mining Co. (MMC) paid $200 million for the right to explore and extract rare metals from land owned by the state of Montana. To obtain the rights, MMC agreed to restore the land to a suitable condition for other uses after its exploration and extraction activities. MMC incurred exploration and development costs of $60 million on the project. MMC has a credit-adjusted risk free interest rate is 7%. It estimates the possible cash flows for restoring the land, three years after its extraction activities begin, as follows: Cash Outflow Probability $10 million 60% $30 million 40% A. $8.2 million. B. $14.7 million. C. $18 million. D. $30 million. [Show More]

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