【導(dǎo)讀】A.$1,540.B.$2,100.C.$4,680.D.$177.A.$150.B.$1,200.C.$175.D.$6,000.A.$2,100.B.$2,400.C.$250.D.$1,200.method?method?year2020?A.$21,660.B.$3,273.C.$18,387.D.$15,114.BeginningInventory+Purchases-EndingInventory=COGS.SGAExpenses$2,742perannum??A.$5,.B.$5,.C.$4,.D.$4,.=908X=$.A.$4,.B.$5,.C.$5,.D.$4,.COGS=(696X4)+(212X8)=$4480.A.$5,.B.$2,.C.$5,.D.$2,.EndingInventory=353X8=$2824.method?

　　

【正文】 Compared to firms that expense costs, firms that capitalize expenses will have: A. All of these choices are correct. B. lower leverage ratios. C. lower ine variablity. D. higher cash flow from operations. A Question ID: 24761 The management of Berger Investments has changed their policy and will capitalize costs instead of expensing them. Due to the new policy, Berger will: A. report a smooth ine pattern initially, but the variance will increase over time. B. have lower ine variance as it grows, but the variance will increase as the firm matures. C. report the same ine pattern as when it expenses the costs. D. have smoother reported ine over time. D If management decides to capitalize costs instead of expensing them, it will report smoother reported ine over time. If the firm decided to expense costs as incurred, it will have greater variance in reported ine. This variance declines as the firm matures and is lower for larger firms. Question ID: 24762 Meyer Investment Advisory and Smith Brothers Investments are operationally identical except that Meyer capitalizes costs while Smith expenses costs. Compared to Smith, Meyer is likely to have: 28 A. higher cash flows in early years and then equal in later years. B. lower profitability (ROA amp。 ROE) in early years and higher in later years. C. higher cash flows from operations and lower cash flow from investing. D. higher debt/equity ratio and higher debt/assets ratio. C The cash flow remains the same regardless of which accounting method is used. But ponents of cash flows change and cash flows from operations (CFO) will be higher when costs are capitalized and lower when expensed. On the other hand, cash flows from investing (CFI) will be lower when costs are capitalized and higher when expensed. Compared to firms expensing costs, firms that capitalize costs will have a smaller debt to equity ratio and a higher initial ROA, but a lower ROA in the future. Question ID: 14866 The capitalization of interest cost during construction: A. increases future ine. B. decreases ine during the construction phase. C. increases future depreciation expense. D. decreases future depreciation expense. C Firms that capitalize interest construction costs will be able to depreciate these costs over time into the future versus firms that expense costs as incurred. Setup Text: During the current year, a firm has been constructing a building to be used for its production facility. The average cost of the building in process is $1,500,000. The firm has borrowed $750,000 at 6 percent interest to finance this construction. It has $3,000,000 of 10 percent debentures and $600,000 of percent mortgage debt outstanding. 29 Question ID: 14871 What is the capitalized (added to cost of building) construction cost? A. $300,000. B. $90,000. C. $120,000. D. $45,000. C Interest of construction debt: $750,000 x % = $45,000 Interest on debentures: $750,000 x % = $75,000 Total capitalized interest: = $120,000 Question ID: 14871 What is the total interest expense? A. $120,000. B. $390,000. C. $270,000. D. $345,000. C Total interest expense = Total interest paid Capitalized interest = $45,000 + $300,000 + $45,000 $120,000 = $270,000 Question ID: 24767 In the United States, Statement of Financial Accounting Standard (SFAS) 34 requires: A. that interest costs incurred during the construction period should be 30 expensed. B. capitalization of interest cost from funds borrowed to acquire working capital. C. that when a firm is not leveraged, return on equity should be used to calculate capitalized interest costs. D. capitalization of interest cost from specific borrowings for construction. D In the United States, SFAS 34 requires capitalization of interest costs incurred during the construction period. If the specific borrowing is less than the amount invested in the project or if there is no specific borrowing related to the project, the weighted average rate of interest on outstanding debt is applied to calculate the capitalized interest. Interest costs are capitalized only if the firm is leveraged. Question ID: 24769 Capitalization of interest costs is least likely to affect the: A. cash flows from financing (CFF). B. cash flows from operations (CFO). C. ine. D. interest coverage ratio. A The capitalization of interest cost distorts the classification of cash flows. However, the CFF will remain unchanged, while CFO is overstated and CFI is understated. Question ID: 24772 Under . Generally Accepted Accounting Principles (GAAP), patents and copyrights: A. can be capitalized only related to their development costs, except legal fees associated with registering. 31 B. have a legal life of 20 years and 50 years respectively. C. can be capitalized when purchased from other entities. D. can be capitalized when developed internally. C When patents and copyrights are internally developed, then only the legal fees incurred for registration can be capitalized. However, if the patents and copyrights are purchased from other entities, full acquisition cost can be capitalized. Question ID: 24773 Which of the following statements regarding capitalizing and expensing costs is TRUE? A. Advertising costs other than directresponse costs are expensed as incurred. B. Goodwill can be capitalized only in pooling of interest method transactions. C. In the ., firms are allowed to capitalize research and development (Ramp。D) costs when specific criteria are met. D. Franchise or license costs for agreements of less than five years are expensed as incurred. A In the ., research and development (Ramp。D) costs are always expensed when incurred