Question :
131. IFRS uses the idea of a disposal group, a group : 1245651
131. IFRS uses the idea of a disposal group, a group of assets and directly associated liabilities that a firm will dispose of as a group in a single transaction. The disposal group notion of IFRS envisions a larger unit than the component notion of U.S. GAAP. In the year that a firm decides to sell or otherwise dispose of a unit that qualifies as a discontinued operation, it aggregates the assets and liabilities of that unit on the balance sheet into four groups. Which of the following is not one of the groups?
A. current assets
B. noncurrent assets
C. current liabilities
D. noncurrent liabilities
E. contingent liabilities
132. IFRS uses the idea of a disposal group, a group of assets and directly associated liabilities that a firm will dispose of as a group in a single transaction. The disposal group notion of IFRS envisions a larger unit than the component notion of U.S. GAAP. In the year that a firm decides to sell or otherwise dispose of a unit that qualifies as a(n) _____ it aggregates the assets and liabilities of that unit on the balance sheet into four groups: current assets, noncurrent assets, current liabilities, and noncurrent liabilities.
A. continuing operation
B. discontinued operation
C. extraordinary gain or loss
D. impaired operation
E. paid-in-capital
133. Under U.S. GAAP, sometimes a firm sells or otherwise disposes of a major division or segment of its business during the year or contemplates its sale or disposal within a foreseeable time after the end of the accounting period. If so, it must disclose separately any income, gains, and losses related to that division or segment. The separate disclosure appears in the
A. income from continuing operations.
B. income, gains, and losses from discontinued operations.
C. extraordinary gains and losses.
D. retained earnings.
E. paid-in-capital.
134. Firms almost always report asset impairment charges or restructuring charges in _____.
A. income from continuing operations
B. income, gains, and losses from discontinued operations
C. extraordinary gains and losses
D. retained earnings
E. paid-in-capital
135. Which of the following is true regarding asset abandonment?
A. Firms will sometimes abandon assets if there is no market for the asset.
B. The firm eliminates the carrying value of the asset and recognizes a loss in an amount equal to the carrying value.
C. Firms will sometimes abandon assets if an automobile is severely damaged in an accident.
D. Firms will sometimes abandon assets if a machine requires an overhaul that is not cost effective.
E. all of the above
136. A firm may retire an asset from service by trading it in on a new asset. U.S. GAAP and IFRS require that firms record trade-in transactions at _____ unless they lack commercial substance.
A. present value of future cash flows
B. replacement value
C. liquidation value
D. fair value
E. undiscounted cash flows
137. A firm may retire an asset from service by trading it in on a new asset. U.S. GAAP and IFRS require that firms record a trade-in that lacks commercial substance at
A. present value of future cash flows.
B. replacement value.
C. liquidation value.
D. the carrying value of the exchanged asset.
E. undiscounted cash flows.
138. Warrior Dash Express Inc. owns a moving van that originally cost $500,000 and currently has $450,000 of accumulated depreciation. The fair value of the moving van is $120,000. Warrior Dash Express Inc. exchanges the van plus $480,000 in cash for a new moving van costing $600,000. The entry to record the transaction is as follows:
A. Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Accumulated Depreciation (old van) . . . . . . . . . .. . . . . . . . . .450,000
Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000
Gain on Trade-in of Old Van . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
B. Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Accumulated Depreciation (old van) . . . . . . . . . .. . . . . . . . . .450,000
Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000
C. Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Accumulated Depreciation (old van) . . . . . . . . . .. . . . . . . . . .380,000
Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000
D. Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000
Gain on Trade-in of Old Van . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000
Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Accumulated Depreciation (old van) . . . . . . . . . . . . . . . . . . . . . . . . . 450,000
E. Equipment (old van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 570,000
Cash . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 480,000
Equipment (new van) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000
Accumulated Depreciation (old van) . . . . . . . . . .. . . . . . . . . . . . . . . . 450,000
139. (CMA adapted, Jun 90 #27) When a fixed plant asset with a five-year estimated useful life is sold during the second year, how would the use of a double declining balance method of depreciation instead of the straight-line method affect the gain or loss on the sale of the fixed plant asset?
Gain
Loss
A. Increase Increase
B. Increase Decrease
C. Decrease Increase
D. Decrease Decrease
E. cannot be determined by the information provided.
140. A firm acquires a car for company business. The car costs $12,000, has a useful life of 5 years, and a salvage value of $2,000. The straight-line method of depreciation is used. What is the gain or loss on retirement if the car is sold for $5,000 after three years of use?
A. a gain of $200
B. a loss of $1,000
C. a gain of $1,000
D. a loss of $200
E. a loss of $800
0
Sun9681
