Question

1. The balance sheet reports the net value ( book value) of the equipment. The book value of the equipment is______________.

Select one or more:

a. The original cost of the asset

b. The original cost of the asset less the depreciation cost of current year  

c. The original cost of the asset less its accumulated depreciation

d. The accumulated depreciation on the asset

2.Goodwill is:

Select one or more:

a. Can be developed internally

b. Need to be amortized in twenty years

c. Recorded at the value of purchase price less the fair value of the identifiable net asset

d. Recorded by the business seller

Answer 1

1. Option c. The original cost of the asset less its accumulated depreciation

Book value of the asset is the original purchase price minus any accumulated depreciation till the record date.

2. Option a. Can be developed internally

Reason: Goodwill must be amortized in 10 years unless otherwise it has a proved useful life of more than 10 years. It is recorded by business purchases and is recorded when the purchase price is higher than the fair value of the identifiable net asset