157. Listed below are five terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the best term placing the letter designating the term in the space provided.
Terms:
a. Accumulated depreciation
b. Book value
c. Depreciation
d. Residual value
e. Service life
Phrases:
_____ Also referred to as salvage value, is the amount the company expects to receive from selling the asset at the end of its service life.
_____ Allocating the cost of a tangible asset over its service life.
_____ Equal to the original cost of the asset minus the current balance in accumulated depreciation.
_____ A contra-asset account representing the total depreciation taken to date.
_____ How long the company expects to receive benefits from the asset before disposing of it.
158. Listed below are five terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the best term placing the letter designating the term in the space provided.
Terms:
a. Amortization
b. Depletion
c. Straight-line method
d. Declining-balance method
e. Activity-based method
Phrases:
_____ The process of recording expense for natural resources.
_____ Allocates an asset’s cost based on its use.
_____ An accelerated depreciation method that records more depreciation in earlier years and less depreciation in later years.
_____ Allocating the cost of an intangible asset over its service life.
_____ Allocates an equal amount of depreciation to each year of the asset’s service life.
159. Listed below are five terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the best term placing the letter designating the term in the space provided.
Terms:
a. Return on assets
b. Profit margin
c. Asset turnover
d. Impairment
e. Big bath
Phrases:
_____ Net sales divided by average total assets; which measures the sales per dollar of assets invested.
_____ Net income divided by net sales; indicates the earnings per dollar of sales.
_____ Net income divided by average total assets; measures the amount of net income generated for each dollar invested in assets.
_____ Recording all losses in one year to make a bad year even worse.
_____ Occurs when the future cash flows (future benefits) generated for a long-term asset fall below its book value (cost minus accumulated depreciation).