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**** SS #9 ****

Why are the monthly costs of operating equipment NOT included in the capitalized amount of the asset? The operating expenses:

A) are a normal cost of operating a business.

B) are related to operations and not investments.

C) are recurring over the useful life of the asset.

D) were not incurred prior to placing the asset in service.

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Zuma Corporation has a patent valued at $40,000 that it would like to amortize over the next 25 years. In reviewing the different methods, they have decided to use the double declining balance method. What would be Zuma’s amortization for year 1?

A) $3,200.

B) The double declining method of depreciation cannot be used for amortization.

C) $1,000.

D) $1,500.

I believe the first one is letter D)

the second is B) because double declining method is only used for tangible assets

I would say B/B

nah, I agree with showtyme, and it’s d and b

My choices are:

d) were not incurred prior to placing the asset in service - cost of equipment include all expenditures made prior to placing asset in service and should be included in capitalized amount of the asset and monthly operational costs don’t belongto taht group of expenditures

b) the double declining method of depreciation cannot be used for amortization - for intangible assets only straignt line method of amortization can be used

you guys are right.

1 - D)
2 - B)

i like the second question a lot! keep it up, lola!

1 d
2 b
these questions are good concept checker.