Questions from Financial Accounting

Q: Johnson & Johnson, the maker of Tylenol, uses GAAP.

Johnson & Johnson, the maker of Tylenol, uses GAAP. Bayer, the maker of aspirin, uses IFRS. Explain what complications might arise when comparing the long-lived assets of these two companies.

Q: How does depletion affect the balance sheet and income statement? Why

How does depletion affect the balance sheet and income statement? Why is depletion accounted for in a manner that differs from depreciation and amortization?

Q: Under the cost principle, what amounts should be recorded as a

Under the cost principle, what amounts should be recorded as a cost of a long-lived asset?

Q: Over what period should an addition to an existing long-lived

Over what period should an addition to an existing long-lived asset be depreciated? Explain.

Q: What is the term for recording costs as assets rather than as

What is the term for recording costs as assets rather than as expenses? Describe how the decision to record costs as assets, rather than expenses, affects the balance sheet and income statement

Q: Waste Management, Inc., regularly incurs costs (e.g

Waste Management, Inc., regularly incurs costs (e.g., salaries, legal fees, travel) to find new locations for landfill sites. What reasons support capitalizing these costs? What reasons support expens...

Q: Distinguish between ordinary repairs and extraordinary repairs. How is each accounted

Distinguish between ordinary repairs and extraordinary repairs. How is each accounted for?

Q: Describe the relationship between the expense recognition (“matching”) principle and

Describe the relationship between the expense recognition (“matching”) principle and accounting for long-lived assets

Q: Describe the relationship between the expense recognition (“matching”) principle and

Describe the relationship between the expense recognition (“matching”) principle and accounting for long-lived assets

Q: Describe the equation that provides the structure for the statement of cash

Describe the equation that provides the structure for the statement of cash flows. Explain the three major types of activities reported on the statement.