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74 the gain on the disposal of equipment is recognized when a the book value of the 4298089



74. The gain on the disposal of equipment is recognized when: 
A. The book value of the equipment is greater than the value received.
B. The book value of the equipment is less than the value received.
C. A salvage value exists.
D. A gain should not be recognized on the disposal of an asset.



75. For financial reporting purposes, the gain or loss on the sale of a plant asset is determined by comparing the asset's: 
A. Cost with its book value.
B. Sales price with its book value.
C. Tax basis with its book value.
D. Sales price with its tax basis.



76. The gain or loss on the disposal of a depreciable asset reported in financial statements often differs from that reported for income tax purposes. The principal reason for the difference is: 
A. The cost of the asset is different for financial reporting and income tax purposes.
B. The sales price of the asset is different for financial reporting and income tax purposes.
C. Different depreciation methods have been used in financial statements and in income tax returns.
D. The company has made an error because the same amount of gain or loss should appear in the income tax return as in the financial statements.



77. When a company uses straight-line depreciation and the half-year convention, assets with a five-year life: 
A. Will have the same depreciation expense in the first and last years.
B. Will be depreciated over six accounting years.
C. Book value will equal its salvage value at the end of its economic life.
D. All of the above statements are correct.



78. Which of the following assets is not subject to depreciation and whose usefulness does not decline over time? 
A. Patents.
B. Copyrights.
C. Land.
D. Coal mine.



79. Intangible assets are assets used in business operations but which: 
A. Lack physical substance.
B. Cannot be sold.
C. Have been depreciated below their estimated salvage values.
D. Cannot be specifically identified.



80. For the financial statements of publicly traded companies, MACRS: 
A. Is recommended.
B. Is required.
C. Is optional.
D. Is not considered to be in conformity with GAAP.



81. The inclusion of the intangible asset goodwill in the financial statements of a company indicates: 
A. That the company has a favorable reputation with its customers.
B. A monopoly position in the industry or superior management.
C. An unbroken record of annual earnings and dividends.
D. That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets.



82. Expenditures for research and development intended to lead to new products of commercial value: 
A. Should be recorded as intangible assets and amortized during the years in which benefits are expected.
B. Should be charged to expense when incurred.
C. Should be capitalized only if patents are expected to be granted.
D. Should be classified as deferred charges.



83. The basic purpose of the matching principle is to allocate the cost of an asset to expense over the years in which the asset contributes to revenue. Current accounting practice does not strictly apply this principle to expenditures for: 
A. Natural resources.
B. Research and development.
C. Trademarks.
D. Equipment.




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