Question

1)Assets acquired by donation will have zero value for financial reporting purposes.

True

False

2)GAAP requires companies to disclose any costs of research and development acquired and written off as well as where the information can be found on the income statement.

True

False

3)For a non-interest-bearing note, the maturity value of the note includes both principal and interest.

True

False

4)Because a larger number of investors are involved in factoring than in securitization, companies can factor much larger amounts of receivables.

True

False

5)Purchased intangible assets are generally expensed at their acquisition costs because the future economic benefits associate with them are difficult to measure.

True

False

6)Sarbanes-Oxley Act requires all U.S. companies to maintain adequate internal control systems.

True

False

Answer 1

Answer -1 ) False.   Donations have a "worth" and must be counted as an asset for that company. The value of assets that have been donated is normally based on what those assets would cost if purchased, or their "market value."

Answer -2 ) True.   GAAP requires that a company expense all research and development (R&D) costs as incurred, although R&D costs often benefit future periods. The requirement to expense R&D costs was based primarily on the belief that uniform treatment of R&D costs enhances comparability and eliminates the possibility of income manipulation.

Answer -3 ) True. In the case of a non-interest-bearing note, the maturity value (the amount to be collected, which includes principal and interest) is listed as the face value. Many companies record short-term non-interest-bearing trade notes at their maturity values. A conceptually better approach is to record the notes receivable at its present value and to recognize interest revenue as it is earned. The difference between the face value of the note and its present value is treated as a discount on notes receivable. The discount is a contra account and is deducted from Notes Receivable to report the net realizable value.

Answer -4 ) True. In a securitization, accounts receivable will be transferred to another entity, usually a trust or subsidiary. This entity then sells financial securities (usually debt instruments) that are collaterazied by the accounts receivable, which allow investors to receive cash as the accounts receivable are paid. Because a larger number of investors are involved in a securitization relative to factoring, companies can ofien securitize much
larger amounts,

Answer -5 ) False. The external acquisition of an intangible asset provides a faithful representation of its future economic benefits. Therefore, purchased intangible assets are capitalized at their acquisition cost (the cost to obtain the asset and prepare it for use) ---you already know the market value so you can figure out the economic benefit kinda

Answer -6 ) False. Sarbanes–Oxley, Sarbox or SOX, is a United States federal law that set new or expanded requirements for all U.S. public company boards, management and public accounting firms. There are also a number of provisions of the Act that also apply to privately held companies; for example, the willful destruction of evidence to impede a Federal investigation.