Reference no: EM132772773

Questions -

Q1. How should capitalized software development costs be amortized?

A. None of the answers are correct

B. The greater of the amortization amount calculated using percentage-of-revenue method or the straight-line method should be expensed

C. They shouldn't be amortized; software development costs have an indefinite useful life

D. The lesser of the amortization amount calculated using percentage-of-revenue method or the straight-line method should be expensed

E. The greater of the amortization amount calculated using percentage-of-costs method or the straight-line method should be expensed

Q2. When choosing cost allocation methods, if a firm chooses:

A. A cost allocation method, the firm cannot change the cost allocation method to a different one.

B. None of the answers are correct.

C. Straight line depreciation method, it must use accelerate depreciation method for tax purposes.

D. Accelerated depreciation method, it must use the same depreciation method for tax purposes.

E. Straight line depreciation method, it must use the same depreciation method for all classes of assets.

Q3. Company X sold machinery for $5,000 that was originally purchased for $15,000. Company X had already recorded depreciation of $5,000 on the machinery. What is the value of Company X's gain/loss on the disposal, and would it be a debit or a credit in the sale entry?

A. $5,000 loss; credit

B. 10,000 loss; debit

C. None of the answers are correct

D. $5,000 loss; debit

E. $10,000 loss; credit

Q4. Accounting for impairment losses that involve recoverability:

A. None of the answers are correct.

B. Involves a two-step process for recoverability and measurement.

C. Applies to assets with finite lives.

D. Applies to depreciable assets.

E. All of these answer choices are correct.