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ACNT 2303 – Intermediate Accounting I Exam 3 Study Guide MULTIPLE CHOICE Chapter 10 • • • • • • Know how to determine the acquisition cost (the amount to capitalize) of a fixed asset based on information provided. BONUS: Understand the process and journal entries related to asset retirement obligations (AROs). BONUS: Understand how goodwill is determined, and what journal entry is related to recording goodwill. Understand lump-sum purchase calculations and the related journal entry. Understand non-monetary exchange of fixed assets and the related journal entries based on the following scenarios: o Gain o Loss o Lacks commercial substance (cash will be paid, not received) Understand what amounts to capitalize for a self-constructed asset, including the amount of interest to capitalize. o Know the process for determining the amount of interest to capitalize. BONUS: Know the difference in the capitalization journal entries between Successful Efforts and Full-Cost Methods of Oil & Gas Accounting Chapter 11 • • • • • Understand the basic terms associated with depreciation, amortization, and depletion of fixed assets: o Service or useful life o Allocation base o Allocation method o Residual (salvage) value o Legal life (for intangible assets) Understand how to determine depreciation expense for a fixed asset using the following methods: o Straight-line o Double-declining balance o Units of production o BONUS: Sum-of-the-years’-digits (SYD) method Know how to calculate annual depreciation expense for fixed assets using the methods above for partial periods. o Understand the half-year convention when applied to depreciation and how to use it. Understand the journal entries associated with the sale of disposal of a fixed asset. Understand the process for determining impairment of a fixed asset (plant, property, and equipment) and the related journal entries. Chapter 12 • • Know the definitions of the 3 different classifications of debt investments, and be able to understand: o How unrealized holding gains and losses are treated for each classification. o How realized gains and losses are treated for each classification. o What amount to report for the investment on the balance sheet. o Understand the journal entries associated with each method. o Which methods are adjusted for fair value and how this works. Understand the different characteristics of equity investments based on the percentage of influence and/or control, and what method is to be used to report the investment for each level of influence. o Understand the journal entries associated with these levels of influence. WORKOUT PROBLEMS Look at the following problems for practice on the exam: Chapter 10 E10-4 BONUS: Asset retirement obligation (ARO) E10-18 Nonmonetary asset exchange (Parts 1, 2 and 3) E10-22 & E10-23 Interest capitalization Chapter 11 E11-1 Depreciation using various methods (Sum-of-the-years’-digits (SYD) method is BONUS E11-3 Partial-period depreciation using various methods (Sum-of-the-years’-digits (SYD) method is BONUS E11-10 & E-11-11 Disposal of property, plant, and equipment EXAM BREAKDOWN 30 multiple-choice questions 4 workout problems 2 points per question Various points per problem 60 total points 40 total points 100 points before bonus points Bonus Points on Exam: 16-20 bonus points 116 -120 total points possible on Exam 3

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Marionprofessor
School: Carnegie Mellon University

Attached.

ACNT 2303 – Intermediate Accounting I
Exam 3 Study Guide
Chapter 10


Know how to determine the acquisition cost (the amount to capitalize) of a fixed asset based on
information provided.

Acquisition of an asset is determined by adding all the relevant cost that will bring the asset in a good working
condition. Some of the cost associated with acquisition of asset include, freight costs, transportation cost in case
of an equipment, demolition costs in case of a building, and excavation costs in case of land. All these cost are
capitalized when accounting for assets.


BONUS: Understand the process and journal entries related to asset retirement obligations
(AROs).

When an asset is disposed or retired, there are a number of entries that need to be done to effect the same
accounting change. When an asset is retired there are three key journal entries that need to be made. First is the
journal entry to record the retirement of the assets under the fixed asset account. Second is the provision for
depreciation account to effect the change on the net amount for accumulated depreciation. Lastly is the disposal
account which determines the net gain or loss of the retired asset.


BONUS: Understand how goodwill is determined, and what journal entry is related to...

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