As natural resources are used up the client has to recognize which of the following?
a.depreciation expense.
b.depletion expense.
c.amortization expense.
d.reclamation expense.

After a natural resource such as gas or coal is used up by the client, the client is responsible for restoring the land to its original condition. What is the cost of this restoration called?
a.depreciation expense.
b.depletion expense
c.amortization expense.
d.reclamation expense.

Which of the following are estimates used by natural resource companies in recognizing costs over the life of the resource, e.g., oil or coal?
a.reserves.
b.depletion rate.
c.reclamation expense.
d.both A and B.
e.all of the above.

Capitalized natural resources, e.g., oil or coal, are usually written off over what period of time?
a.over a period not to exceed 40 years.
b.over an allocated useful life.
c.as assets are taken from the ground.
d.any of the above.

In evaluating control risk and effectiveness for fixed assets, controls should be designed for numerous purposes. Which of the following is not a usual control for fixed assets?
a.identify existing assets, inventory them, and reconcile physical inventory with the property ledger.
b.periodically reassess the appropriateness of depletion categories.
c.identify obsolete or scrapped equipment and write it down to scrap value.
d.periodically review management strategy and systematically assess the impairment of assets.
e.all of the above are usual controls for fixed assets.

Answer rating: 100% (QA)

1 The correct answer is option b which is depletion expense A charge on profits for the usage of nat... View the full answer