Final Exam ACG 5026 Fennema FSU Questions and Correct Answers
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Course
ACG 5026
Institution
ACG 5026
Tangible Assets -Have physical substance -Usually include land, buildings, machinery, fixtures and equipment
Intangible Assets -Have no physical substance -Provide the owner with specific rights and privileges -Include trademarks, patents, copyrights
Three common depreciation methods -Straight-li...
Final Exam ACG 5026 Fennema FSU
Questions and Correct Answers
Tangible Assets ✅-Have physical substance
-Usually include land, buildings, machinery, fixtures and equipment
Intangible Assets ✅-Have no physical substance
-Provide the owner with specific rights and privileges
-Include trademarks, patents, copyrights
Three common depreciation methods ✅-Straight-line method - Equal expense each
year
-Double-declining-balance method - An accelerated method (more expense in early
years)
-Units-of-production method - Based on activity instead of time
How to account for R&D Expenditures ✅-Expense these because it is more
conservative and because "future benefits" are uncertain
How to Account for Intangible Assets ✅-Cost is amortized (same process as
depreciation for tangible assets) over the useful life (or the legal life, if less) but not to
exceed 40 years. An exception is Goodwill, which is no longer amortized.
-Under IFRS, revaluation of intangibles is an option, but not a requirement. Under U.S.
GAAP, revaluation is not an option.
Problems Accounting for Intangible Assets ✅- benefits are uncertain and difficult to
quantify
-Useful life often is impossible to estimate with confidence
Goodwill ✅-The excess of the purchase price paid over the fair value of its identifiable
net assets to buy an entire company
-Assets-Liabilities assumed = Net Assets
How to account for Goodwill ✅-Only record goodwill when another company is bought
-Never amortized
-Has an indefinite life
How to Identify Current Liabilities ✅Current Liabilities:
-A/P
-Accrued Liabilities
-Deferred Performance Liabilities
-Short-term Interest-Bearing Debt
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