6/8/22, 11:03 PM Property, Plant & Equipment and Tangible Assets

NAME : 
CLASS : 
Property, Plant & Equipment and T angible Assets
15 Questions DAT E  : 

1. T he method that does not necessarily produce a declining pattern of depreciation over an
asset's service life is:

A T he units-of-production method. B T he double-declining-balance method.

T he sum-of-the-years'-digits method. All of these answer choices produce a

C D
declining pattern.

2. Which of the following approaches cannot be used to determine the fair value of an
impaired asset?

T he sum of the discounted expected cash T he sum of the undiscounted expected

A B
flows cash flows

C T he market price of the asset D Prices of similar assets

3. Which of the following types of subsequent expenditures is not normally capitalized?

A Improvements B Repairs and maintenance

C Rearrangements D Additions

4. A delivery van that cost $40,000 has an expected service life of eight years and a residual
value of $4,000. Depreciation for the second year of the asset's life using the sum-of-the-
years'-digits method is:

A All of these answer choices are incorrect B $8,000

C $7,000 D $4,500

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6/8/22, 11:03 PM Property, Plant & Equipment and Tangible Assets

5. Assuming that Cordant is considered a cash-generating unit, the amount of goodwill

impairment loss that Cordova should recognize according to International Financial
Reporting Standards is:

A $40 million B $60 million

C None D $50 million

6. A change in the estimated recoverable units used to compute depletion requires

retroactive adjustments to the financial statements.

A False B T rue

7. According to International Financial Reporting Standards (IFRS), the impairment loss for
property, plant, and equipment is the difference between book value and:

T he undiscounted sum of estimated Fair value less costs to sell

A B
future cash flows

T he present value of future cash flows T he higher of the present value of

C D estimated future cash flows and the fair
value less costs to sell

8. A change from the straight-line method to the sum-of-years'-digits method of depreciation

is handled as:

A prospective change from the current A cumulative adjustment to income in the

year through the remainder of its useful current year for the difference in
A B
life. depreciation under the new versus old
useful life estimate.

A retrospective change back to the date of None of these answer choices are correct.
C acquisition as though the current D
estimated life had been used all along.

9. Accounting for a change in the estimated service life of equipment:

Requires retroactive restatement of prior Requires a prior period adjustment

A B
year's financial statements

Is handled prospectively Is handled currently as a change in

C D
accounting principle

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6/8/22, 11:03 PM Property, Plant & Equipment and Tangible Assets

10. A major expenditure increased a truck's life beyond the original estimate of life. GAAP
permits the expenditure to be debited to:

A Repairs B Major repairs

C Accumulated depreciation D None of these answer choices are correct

11. Any method of depreciation should be both systematic and rational.

A False B T rue

12. An asset should be written down if there has been an impairment of value that is:

A Material and market driven B Significant

C Relevant and objectively determined D Unplanned and sudden

13. Accounting for impairment losses:

A Applies only to assets with finite lives B All of these answer choices are correct

Involves a two-step process for Applies only to depreciable assets

C D
recoverability and measurement

14. Which of the following activities would most likely be accounted for in aproprietary fund?

T ax assessor and collection activities Street, curb, and sidewalk maintenance

A B
and repairs

C Wastewater and sewerage services D Police protection

15. T he accounting for special revenue funds is most similar to which type of fund?

A Enterprise B Capital Projects

C Internal Service D General

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6/8/22, 11:03 PM Property, Plant & Equipment and Tangible Assets

Answer Key

1. a 2. b 3. b 4. c

5. d 6. a 7. b 8. a

9. c 10. c 11. b 12. b

13. c 14. c 15. d

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