The ordinary repairs are called revenue expenditures (income statement expenditures). Revenue expenditures do not increase the capacity or efficiency of an asset or extend its useful life and are reported on the income statement as an expense in the period incurred. The correct answer is C.

Companies may present obligations that the amounts or timing (or both) are not certainly known. According to conservatism principle, these obligations must be reported in the balance sheet as liability, at an amount dependent on managements’ best estimations. These kinds of liabilities are called estimated liabilities or provisions. Some examples of provisions are provisions for employee benefits (severance allowance), provisions for warranties, restructuring provisions, etc. The correct answer is E.

The correct answer is question E. All assets given in the options are intangible assets.

Another option for companies to invest their excess funds in is equity securities. Equity securities are the instruments representing the ownership interest in an entity, such as common stocks, preferred stocks, etc. The initial value of security to record in balance sheet includes purchase price and other incidental expenditures such as brokerage commission and taxes. However, the subsequent accounting treatment for equity investment changes depending on the rate of ownership and influence acquired by investor on investee. The correct answer is B.

While a call option gives right to buy instruments, a put option provides the selling right. The correct answer is B.

It is an example of the internally developed patent. It is recorded as the patent development cost. The correct answer is A.

The matching principle indicates that the revenues of a period must be matched with the expenses of the same period for calculating the profit/loss of the period.

Assets are defined as the economic resources acquired by the business in order to benefit from them in the future. In fact, there is an expectation for the businesses to use the assets in their operations. Some of these assets can be converted into cash, sold, collected and consumed within one year or operation cycle which is shorter but some of the assets will be used in operations for more than a year. The first group of assets are called current assets whereas the latter is called non-current assets (long-term assets). Non-current assets are the assets that are acquired to use in the operations of the business for several years. Besides these assets, receivables that have due dates of more than one year will also be reported under non-current assets. Property, Plant and Equipment generally hold the largest portion in noncurrent assets. As can also be understood from the information given, “The assets that will be used in operations for more than a year.” and  “Receivables that have due dates of more than one year” can be recognized as non-current assets, so the correct answer is C.

“The assets that can be converted into cash, sold, collected and consumed within one year or operation cycle which is shorter” are called currents assets. “A factory building rented to use in the operations.” can not be reported under assets. When the business rents a building to use in the operations, it cannot be recognized as an asset because the business doesn’t have full control on building. For example, the business cannot sell the building to anyone.. But there is one exception at this point. Leasing transactions provides companies use the property, plant and equipment assets within a rental agreement. At the end of the agreement the user company called as “lessee” takes over the property of the asset from the owner (lessor) company. During the rental period, lessee makes the rental payments. Though a leasing transaction seems as if it is a rental transaction, because the ownership of the asset is handed over to the user company, according to the substance over legal form concept of accounting. The legal form of this transaction is a rental transaction but as the asset is going to be taken over from the owner at the end of the rental agreement, economic substance of the transaction steps forward and the economic resource acquired by a leasing transaction recognized as an asset.

35.000X0.4=14.000

35.000-14.000=8.400 depreciation for 2013

The correct answer to question is option A. With regard to going concern assumption held-to-maturity securities include only debt securities because equity securities do not have a maturity. 

The security that represents a credit relationship with another entity upon issuance is called debt security. By investing in a debt security issued by another enterprise, a company plays the creditor role in the market. Treasury bonds, corporate bonds, convertible debt instruments are some of the examples of debt securities. The correct answer is B. 

It is recorded as the renovation expense of minivan. The correct answer is B.

The leasehold improvements account is capitalized because the expenditure made is for the rented estate to bring it to its intended use and also it increases the value of the estate. Leasehold Improvements account is only used for rented assets. The correct answer is D.

Trading securities are reported in current assets at fair value. 

Unlike patents and copyrights, goodwill is not amortized because it is considered to have an indefinite life. Instead, the acquiring company measures the fair value of its acquired goodwill each year. If the goodwill has increased in fair value, there is nothing to record such as a gain on goodwill. However, if goodwill’s fair value has decreased, then the company records an impairment loss and goodwill must be written down. The correct answer is C.

(35.000-8.000)/5X12=1.350

Goodwill means different things to different people. Generally, it refers to a company’s good reputation and intangible assets of a business that is created from favorable attributes that relate to a company and are not attributable to any other specific asset. These include managerial skills, desirable location, good customer relations, skilled employees, high-quality products, and good relations with labor unions. A good reputation may create goodwill, but that company cannot record goodwill for its own business. The correct answer is E.

3,450,000 +1,125,000 =3,575,000

Buildings are tangible assets.

If the price exceeds the face value, security is sold at a premium. The correct answer B.