Answer TRUE or FALSE for the below: a) Changing an estimated useful life for an item...

Answer TRUE or FALSE for the below:

a) Changing an estimated useful life for an item of depreciable property will likely entail restating financial statements of prior years.

b) Warranty expense is not recorded until the actual warranty work is performed.

c) Preferred stock has a "preference" ahead of common stock for both dividends and liquidation proceeds.

d) Salvage value is ignored during the early years of life for an asset that is to be depreciated under the straight-line method.

e) A manufacturer would include only raw materials and work in process in its balance sheet; finished goods would be transferred to the buyer.

f) Current liabilities are debts and obligations that will be paid within one year or the operating cycle, whichever is longer.

g) Treasury stock transactions typical produce losses in the income statement, but not gains.

h) Contingent liabilities should be recorded in the accounts when it is possible the future event will occur and the amount of the liability can be reasonably estimated.

i) A corporation is created by obtaining a charter from the federal government.

j) Payroll withholdings are current liabilities to an employer.

Solutions

Expert Solution

A) False.

Explanation: Changes in Accounting Estimates must be accounted for prospectively in the financial statements, i.e. the effects of the change must be incorporated in the accounting period in which the estimates are revised. Therefore, carrying amounts of assets and liabilities and any associated expense and gains are adjusted in the period of change in estimate. (IAS 8: Changes in Accounting Estimates)

B) False

Explanation: Warranty expense will be recorded on an estimated basis.

C) True

D) False

Explanation: Under straight line depreciation, (cost - salvage) at the time of asset purchase is depreciated over the estimated life of the asset.

E) False

Explanation: Manufacturer will also include unsold finished goods (inventory) in its balance sheet

F) True

G) False

Explanation: The Treasury stock (repurchase of shares from open market) does not affect the income statement. The gain / losses are recorded in the other comprehensive income.

H) True

I) False

Explanation: A Corporation can also be formed through registration

J) True

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

A company purchases a used item of equipment for $35,000. Its remaining useful life is estimated...

A company purchases a used item of equipment for $35,000. Its remaining useful life is estimated to be 6 years, and salvage is estimated to be $5000 at the end of its useful life. Prepare a table that shows its depreciation expense, accumulated depreciation, and net book value for each year of its estimated useful life, one using the straight-line method, and one using double-declining balance. Straight-line Cost of $35,000 – Salvage 0f $5,000 = $30,000 divided by 6 years...

True or False In replacement analysis, the economic useful life is the value of n that...

True or False In replacement analysis, the economic useful life is the value of n that maximizes the EUAC. The essence of the replacement question is not deciding exactly when to replace the equipment, but rather whether you should replace the equipment now or later. When we have more than one challenger, we normally compare all of them to the defender at once to pick the best option.

Answer True or False Recognition is the process of formally recording or incorporating an item into...

Answer True or False Recognition is the process of formally recording or incorporating an item into the financial statements. When initially recording the cost of land purchased, most companies use the current value. Under the accrual method expenses are recognized when revenue is earned. Most companies use the cash basis of accounting. Three months before year end Billings Company signed a $100,000 12%, 6- month note. Principal and interest will be paid at maturity. No interest should be accrued at...

True/False Questions. For each question below, please answer “true” or “false” and explain why. 6. A...

True/False Questions. For each question below, please answer “true” or “false” and explain why. 6. A consumer with convex preferences who is indifferent between the bundles (5,2) and (11,6) will like the bundle (8,4) at least as well as either of the first two bundles. Assume these two goods are imperfect substitutes. 7. The marginal rate of substitution is always the same constant number when the goods are imperfect substitutes and no matter how many of each good is being...

Indicate whether the below statements are True or False. If your answer is True, explain why....

Indicate whether the below statements are True or False. If your answer is True, explain why. If your answer is False, provide a specific counter-example. (No points will be given to simply writing True or False even if the answer is correct.) Every dominant strategy equilibrium is a Nash Equilibrium. Every Nash Equilibrium is a dominant strategy equilibrium. A 2-player game that has a strictly dominated strategy for each player is a dominance solvable game. All Nash Equilibria will survive...

Answer by stating either “True” or “False” in the space below and provide the correct statement/answer...

Answer by stating either “True” or “False” in the space below and provide the correct statement/answer if “False”. 11)F.L. in levelling means; Formation level. 12)C.P. written in remarks column on a survey field note means; Change Point. 13)In scaling, the scale 1:200 cm mean, that for each 1 cm on plan equals 2 metres in real time. 14)Hight of collimation method to calculate reduce levels is used often to cover larger areas. 15)When volume is calculated, bulking of 30% is...

For the questions below, answer if the statement is true or false and explain how you...

For the questions below, answer if the statement is true or false and explain how you reach to your conclusion. a. The Clausius statement of the second law denies the possibility of transferring energy by heat from a cooler to a hotter body? b. The COP if a reversible refrigeration cycles is always equal to the COP of an irreversible refrigeration cycle when each operates between the same two thermal reservoirs. c. The Kelvin–Planck and Clausius statements of the second...

A new machine costs $120,000, has an estimated useful life of five years and an estimated...

A new machine costs $120,000, has an estimated useful life of five years and an estimated salvage value of $15,000 at the end of that time. It is expected that the machine can produce 210,000 widgets during its useful life. The New Times Company purchases this machine on January 1, 2017, and uses it for exactly three years. During these years the annual production of widgets has been 80,000, 50,000, and 30,000 units, respectively. On January 1, 2020, the machine...

Answer each question by True or False. Justify your answer. (1) True or False? The set...

Answer each question by True or False. Justify your answer. (1) True or False? The set V = {p ∈ P2: p (7) = 0, p’ (7) = 0} is a subspace of P2. (2) True or False? The set of 2 by 2 matrices whose entries are either all 0 or all nonzero is a subspace of the set of all 2 by 2 matrices M2×2(R). (3) True or False? The set of all functions in C([0, 1]) such...

Answer True or False for each of the following. If your answer is FALSE, provide an...

Answer True or False for each of the following. If your answer is FALSE, provide an example that proves your point. If your answer is true, explain. Given a typical set of numerical data with an ODD number of values. 1. The mean is always one of the data values. 2. The median is always one of the data values 3. The mode is always one of the data values. 4. The range measures the variability of the given data...

Subjects