CB Inventory and Fixed Assets Flashcards
6 cards from real CB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CB Inventory and Fixed Assets flashcards as text
The units-of-production depreciation method ties depreciation expense directly to:
Answer: Actual output or usage of the asset
Units-of-production depreciation calculates expense per unit produced or hour used, so depreciation is higher in periods of greater activity.
An impairment loss on a long-lived asset is recognized when the asset's carrying amount exceeds its:
Answer: Recoverable amount (fair value)
An asset is impaired when its book value can no longer be recovered through use or sale, requiring a write-down to fair value.
Which inventory system updates the inventory account after EVERY purchase and sale transaction?
Answer: Perpetual system
A perpetual inventory system maintains a running, real-time balance by recording each purchase and sale as it occurs.
Under the periodic inventory system, Cost of Goods Sold is determined by:
Answer: Beginning inventory + Purchases − Ending inventory
In a periodic system, COGS is calculated at period-end as Beginning Inventory plus net Purchases minus the physical count of Ending Inventory.
Intangible assets with indefinite useful lives, such as goodwill, are:
Answer: Not amortized but tested annually for impairment
Under US GAAP, goodwill and indefinite-lived intangibles are not amortized; instead they are tested at least annually for impairment.
A company purchases equipment for $55,000, estimates a $5,000 salvage value, and a 9-year useful life. Annual straight-line depreciation is:
Answer: $5,556
Straight-line depreciation = ($55,000 − $5,000) ÷ 9 = $50,000 ÷ 9 = $5,556 per year.