1. Directly attributable costs include all of the following, except

A. Cost of site preparation, initial delivery, handling and installation

B. Professional fees such as for architects and engineers

C. Estimated cost of dismantling and removing the asset and restoring the site, to the extent that it is recognized as a provision

D. Initial operating losses incurred prior to an asset achieving planned performance

2. The straight-line method of depreciation is not appropriate for

A. A company that is neither expanding nor contracting its investment in equipment because it is replacing equipment as the equipment depreciates

B. Equipment on which maintenance and repairs increase substantially with age

C. Equipment with useful life that is not affected by the amount of use

D. Equipment used consistently every period

3. Depreciation is best described as a method of

A. Asset valuation

B. Current value allocation

C. Cost allocation

D. Useful life determination

4. Which of the following statements is the assumption on which straight-line depreciation is based?

A. The operating efficiency of the asset decreases in later years

B. Service value declines as a function of time rather than use

C. Service value declines as a function of obsolescence rather than time

D. Physical wear and tear are more important than economic obsolescence

5. The effect of a change in the expected pattern of consumption of economic benefits of a depreciable asset should be included in the*

A. determination of income or loss in the period of change only.

B. determination of income or loss in the period of change and future periods.

C. statement of retained earnings as an adjustment of the beginning balance.

D. statement of retained earnings with the net income for the period.

6. It is the cost of an asset or other amount substituted for cost in the financial statements, less its residual value

A. Depreciable amount

B. Carrying amount

C. Fair value

D. Depreciated replacement cost

Answer rating: 100% (QA)

Answer 1 C Estimated cost of dismantling and removing the asset and restoring the site to the extent that it is recognized as a provision Answer 2 A A ... View the full answer