Reading 37: Analysis of Long-Lived Assets: Part II - Analys black, assets, respect, tangible, class

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1.With respect to tangible fixed assets, SFAS 143 requires that the capitalized value of an asset:

A)   be recorded as the installed cost of the asset plus any leasehold improvements that are required to put the asset into good working order.

B)   be recorded on the balance sheet based on the market value at the time of acquisition less the cost associated with any ARO.

C)   should include the future value of any ARO which is also recorded as a liability at the time of acquisition.

D)   should include the present value of any asset retirement obligation (ARO) which is also recorded as a liability at the time of acquisition.

2.Which of the following statements regarding the financial statement impact of recording liabilities resulting from the application of SFAS 143 is TRUE? In accounting periods following an asset acquisition, liability values are:

A)   accreted in a manner similar to interest for bond amortization. The difference here is that the interest component falls through time instead of rising.

B)   accreted in a manner similar to interest for bond amortization. The difference here is that the interest component rises through time instead of falling.

C)   accreted in a manner similar to interest for bond amortization. This accretion is recorded as a gain on the income statement.

D)   recorded as an expense on the income statement that is recorded over a period of ten years or the life of an asset whichever is less.

3.Financial statements and ratio impacts resulting from the application of SFAS 143 include which one of the following? Assets, liabilities and:

A)   equity will be higher; net profit margin and times interest earned will be higher.

B)   depreciation will be higher; net profit margin and times interest earned will be higher.

C)   equity will be higher; net profit margin and times interest earned will be lower.

D)   depreciation will be higher; net profit margin and times interest earned will be lower.

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答案和详解如下：

1.With respect to tangible fixed assets, SFAS 143 requires that the capitalized value of an asset:

A)   be recorded as the installed cost of the asset plus any leasehold improvements that are required to put the asset into good working order.

B)   be recorded on the balance sheet based on the market value at the time of acquisition less the cost associated with any ARO.

C)   should include the future value of any ARO which is also recorded as a liability at the time of acquisition.

D)   should include the present value of any asset retirement obligation (ARO) which is also recorded as a liability at the time of acquisition.

The correct answer was D)

SFAS 143 makes it clear that any future expenditure that is required for environmental remediation be recorded as a liability according to the present value of its expected cost at time of acquisition.

2.Which of the following statements regarding the financial statement impact of recording liabilities resulting from the application of SFAS 143 is TRUE? In accounting periods following an asset acquisition, liability values are:

A)   accreted in a manner similar to interest for bond amortization. The difference here is that the interest component falls through time instead of rising.

B)   accreted in a manner similar to interest for bond amortization. The difference here is that the interest component rises through time instead of falling.

C)   accreted in a manner similar to interest for bond amortization. This accretion is recorded as a gain on the income statement.

D)   recorded as an expense on the income statement that is recorded over a period of ten years or the life of an asset whichever is less.

The correct answer was B)

According to SFAS 143, in accounting periods following an acquisition, liability values are accreted in a manner similar to interest for bond amortization. The liability grows until it matches expected cost of disposal at the end of the asset's life.

3.Financial statements and ratio impacts resulting from the application of SFAS 143 include which one of the following? Assets, liabilities and:

A)   equity will be higher; net profit margin and times interest earned will be higher.

B)   depreciation will be higher; net profit margin and times interest earned will be higher.

C)   equity will be higher; net profit margin and times interest earned will be lower.

D)   depreciation will be higher; net profit margin and times interest earned will be lower.

The correct answer was D)

Assets, liabilities and depreciation will be higher. Net profit margin will be lower because net income is lower and times interest earned will be lower because the interest expense is higher.