会计英语答案ch10.docVIP

CHAPTER 10FIXED assets and intangible assets cLASS discussion questions 1. a. Tangible b. Capable of repeated use in the operations of the business e. Long-lived 2. a. Property, plant, and equipment b. Current assets (merchandise inventory) 3. Real estate acquired as speculation should be listed in the balance sheet under the caption Investments, below the Current Assets section. 4. $375,000 5. Ordinarily not; if the book values closely approximate the market values of fixed assets, it is coincidental. 6. a. No, it does not provide a special cash fund for the replacement of assets. Unlike most expenses, however, depreciation expense does not require an equivalent outlay of cash in the period to which the expense is allocated. b. Depreciation is the cost of fixed assets periodically charged to revenue over their expected useful lives. 7. 12 years 8. a. No b. No 9. a. An accelerated depreciation method is most appropriate for situations in which the decline in productivity or earning power of the asset is proportionately greater in the early years of use than in later years, and the repairs tend to increase with the age of the asset. b. An accelerated depreciation method re-duces income tax payable to the IRS in the earlier periods of an asset’s life. Thus, cash is freed up in the earlier periods to be used for other business purposes. c. MACRS was enacted by the Tax Reform Act of 1986 and provides for depreciation for fixed assets acquired after 1986. 10. No. Accounting Principles Board Opinion No. 20, Accounting Changes, is quite specific about the treatment of changes in depreciableassets’ estimated service lives. Such changes should be reflected in the amounts for depreciation expense in the current and future periods. The amounts recorded for depreciation expense in the past are not affected. 11. Capital expenditures are recorded as assets and include the cost of acquiring fixed assets, adding a component, or replacing a component of fixed assets. Reven