1. Describe the process of allocating assets retirement obligation over the life of the asset. (5pts) 2. Assuming an asset retirement obligation was record at $80,000 at the time of asset purchase and...

1. Describe the process of allocating assets retirement obligation over the life of the asset. (5pts) 2. Assuming an asset retirement obligation was record at $80,000 at the time of asset purchase and the actual cost incurred at the time of asset retirement was $105,000, what does the difference of $25,000 represent (tips: 2 items)? (I Opts) 3. A state law requires the removal of asbestos when a building is demolished. Company A acquires a building, but plans to resell the building within the next 5 years. Even though the new buyer will be responsible for paying the removal cost, Company A sfill needs to record an asset retirement obligation. Explain why (lOpts). 4. Perform the recoverability test to determine whether an impairment is necessary for the building below, and if so how much is the impairment amount under (a) GAAP (8pts) and (b) 1FRS(7pts)? $198,500 $199,000 $196,000 $197,000 $198,000 5. A machine has a carrying value of $100,000. The company estimated that them is 30% probability that the machine will be leased to a third party and generates $80,000 future cash flow. There is 70% probability that the machine will be used by itself and generates $140,000 future cash flow. Do we need to record impairment in this case and why? (lOpts) 6. A building has a fair value of $300,000 and is no longer in use. The company plans to foreclose the building in exchange for a debt forgiveness in the amount of $350,000. If the carrying value of the building is $320,000, do we have an impairment? And if so, how much? (lOpts) 7. How do you determine whether to record impairment for an equity investment? (lOpts) 8. Define credit losses (5p.) and non-credit losses (5pts). 9. Discuss the difference between intrinsic value method and fair value method in accounting for stock option compensation (5pts). Which method do start-up companies prefer and why? (5pts) 10. A company issued to certain employees 1000 shares of stock option awards. The grand-date market price 11 09 per share, exercise price is $9 per share, and the fair value of the options based on the Black-Scholes option-pricing model is $3 per share. A performance condition is included such that the employee will vest 70% in the awards if cumulative net income is greater than $5 million in the succeeding four-year period, and 60% if otherwise. The company believes it is not likely that it will exceed the $5 million income target. The company also indicates that the fair value of the option factoring performance condition is $2. How much compensation should the company record for the first year (lOpts)?