AC210 Exam Three Conceptual Review

Purchased intangible assets should be recorded at their original cost plus all other costs necessary to get the asset ready for use

• True

• False

When recoding the cost of land, which of the following is NOT included?

• Purchase price

• Back property taxes

• Real estate commissions

• Depreciation

Improvements to an asset that benefit future periods are capitalized

• True

• False

Which of the following expenditures should be capitalized?

• Routine maintenance on equipment

• Replacing an air conditioning system in a building

• Utility costs for operating machinery

• Repairs to fix a broken window

Amortization applies only to intangible assets with indefinite useful lives

• True

• False

Which of the following assets is never depreciated?

• Land

• Buildings

• Equipment

• Vehicles

Long-term assets are intended for resale and are usually sold after one year

• True

• False

Which of the following best defines depreciation?

• A method for capitalizing an asset's cost

• The systematic allocation of the cost of a tangible asset over its useful life

• A calculation only used for land and buildings

• A process applied to intangible assets

How is the cost of a basket purchase of land, buildings, and equipment allocated?

• Equally between each asset

• Based on their original purchase prices

• Based on their relative fair market values

• According to the company's discretion

Goodwill is amortized over 10 years

• True

• False