A piece of equipment costs $250,000, has a useful life of 10 years and an estimated salvage value of $50,000. How much depreciation expense should the company recognize in year 7 if it is using the straight-line method of depreciation?
Answer(s): D
Using the straight line method an equal amount of the cost of the asset less the salvage value is charged to each year of the assets useful life. In this example the value of the equipment being used during its life is $200,000 divided evenly among 10 years.
"Book value per share" refers to:
The book value represents the company's liquidation or residual value at the amounts reported on the balance sheet. As such, it represents the "balance sheet" value of the common equity. Since total equity can include senior securities like preferred equity, "the per share value of the company's assets less the liabilities" and "the per share value of total equity of the firm" are incorrect.
Which accounting principle is consistent with reporting financial results that can be compared with previous periods?
The consistency principle requires that an accounting procedure, once adopted by a company, remain in use from one period to the next unless users are informed of the change.
Contingent losses are generally recognized when they are ________.
Answer(s): B
Contingent losses are generally recognized when they are both probable and measurable.
Which of the following is/are true about available-for-sale securities?
Marketable securities classified as "Available-for-sale" are financial securities which management does not intend to hold to maturity and may or may not sell in the near future. They may be categorized as either current or non-current assets, depending on the management's projected horizon over which they will be sold. They are reported on the balance sheet at the fair market value and changes in their values are reported as a separate component of shareholder equity.
Post your Comments and Discuss CFA CFA I exam prep with other Community members:
Our website is free, but we have to fight against AI bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the CFA I content, but please register or login to continue.