11) On January 1, 2011, Petrel Shipping Company bought equipment that cost $65,000 with an estimated useful life of 10 years and an estimated salvage value of $5,000. The company uses the double-declining balance method of depreciation. What will be the
BOOK VALUE
of the asset on December 31,
2012?
A) $35,600
B) $38,900
C) $40,460
D) $41,600
12) According to GAAP, which of the following items about long term-assets must be disclosed, either in the financial statements or in the related footnotes?
A) the historical cost of the long-term assets owned
B) the accumulated depreciation taken over the life of the long-term assets
C) the method(s) used to depreciate long-term assets
D) all of these
13) On January 1, 2011, Handy Manufacturing Company paid $50,000 for equipment with an estimated useful life of 5 years and $3,000 expected salvage value. The company uses straight-line depreciation. If the adjustment for depreciation is
NOT
made, net income for the year ended December 31, 2011 will be ________.
A) understated by $19,400
B) overstated by $9,400
C) overstated by $19,400
D) understated by $9,400
14) Which financial statement reports long-term assets?
A) the balance sheet
B) the income statement
C) the statement of changes in shareholders’ equity
D) the statement of long-term assets
15) U.S. GAAP value plant and equipment at historical cost minus accumulated depreciation.
16) International Financial Reporting Standards (IFRS) allow revaluation of assets to their fair value if fair value can be measured reliably.
17) International Financial Reporting Standards (IFRS) require revaluation of assets to their fair value if fair value can be measured reliably.
18) Under U.S. GAAP, when assets are written down because of impairment, the impairment losses cannot be reversed even if conditions change.
19) Under International Financial Reporting Standards (IFRS), when assets are written down because of impairment, the impairment losses can be reversed if circumstances change.