In testing for impairment of an operational asset, an impairment loss has occurred if the:

A) Asset's book value exceeds the present value of its expected future cash flows.

B) Expected future cash flows exceeds the asset's book value.

C) Present value of expected future cash flows exceeds its carrying value.

D) Asset's book value exceeds the expected future cash flows.

Answer: D

The amount of impairment loss is the excess of book value over:

A) Carrying value.

B) Future cash flows.

C) Fair value.

D) Future revenues.

Answer: C

Accounting for impairment losses:

A) Involves a two-step process to first test for impairment and then record the loss.

B) Applies only to depreciable, operational assets.

C) Applies only to assets with finite lives.

D) All of these.

Answer: A

The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 at the beginning and end of the year,

The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 at the beginning and end of the year, respectively. The return on assets for the year is 10%.
What is Hidden Valley's net income for the year?

A) $5,000,000.

B) $55,000.

C) $5,500,000.

D) $50,000.

Answer: D

The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 at the beginning and end of the year, respectively. Net income and sales for the year are $100,000 and $800,000, respectively.
What is Hidden Valley's asset turnover?

A) 1.6 times.

B) 1.8 times.

C) 1.5 times.

D) 0.2 times.

Answer: A

Recognition of impairment for long-term assets is required if book value exceeds:

A) Original cost.

B) Fair value.

C) Future cash flows.

D) Accumulated depreciation.

Answer: C

Which one of the following regarding the book value of an asset is correct?

A) It is the fair value of the asset if the asset is sold.

B) It reflects the original cost of the asset less accumulated depreciation.

C) It is the original cost of the asset minus the depreciation expense for that asset during the year.

D) It is the original cost at which the asset was purchased.

Answer: B

The factors used to compute depreciation expense are an asset's:

A) Cost, residual value, and physical life.

B) Cost, residual value, and service life.

C) Fair value, residual value, and economic life.

D) Cost, replacement value, and service life.

Answer: B

Which of the following is considered a "contra" account?

A) Deferred Revenue.

B) Goodwill.

C) Accumulated Depreciation.

D) Cost of Goods Sold.

Answer: C