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Homework answers / question archive / 17
17. Which of the following is NOT required to be reported in the financial statements or disclosed in the accompanying notes? (2 Points) A general description of the cost allocation methods used with respect to major classes of noncurrent operating assets O Balances of major classes of noncurrent operating assets at the balance sheet date Gross historical cost and accumulated amortization for intangible assets at the balance sheet date Gross historical cost and accumulated depreciation for tangible noncurrent operating assets at the balance sheet date
18. Which of the following is NOT required to be reported in the financial statements or disclosed in the accompanying notes? * (2 Points) A general description of the cost allocation methods used with respect to major classes of noncurrent operating assets O Balances of major classes of noncurrent operating assets at the balance sheet date Gross historical cost and accumulated amortization for intangible assets at the balance sheet date Gross historical cost and accumulated depreciation for tangible honcurrent operating assets at the balance sheet date
Option a) a general description of cost allocation method used with respect to major classes of non current operating assets.
18
cost allocation is the process of identifying, accumulating, and assigning costs to costs objects such as departments, products, programs or a branch of a company
For ex:
Department cost centre
?????? total costs 500$
Cost allocation to
Project A (50%) - 250$
Project B (30%) - 150$
Miscellaneous costs -100$
Various cost allocation methods are used to allocate costs to units of production.
Some of them are
(a) direct method,
(b) sequential method &
(c) reciprocal method
Allocations are performed in order to create financial statements in compliance with applicable accounting framework.
-the cost statements shall diclose the basis of assignment of administrative overheads to the cost objects- disclosure is to ensure the consistency and compliance of requirements of cost accounting standards.
-disclosure shall be made in the body of the cost statement or as a foot note or as a seperate schedule.
*as per SCHEDULE-III (section 129) part-I Balance Sheet the balances of non current operating assets or long term assest should be disclosed under the head non current assets and assigned by specified nature.
*amortization refers to capitalizing the value of an intangible asset over time. Amortization occurs when the value of an asset, usually an intangible asset like R&D is reduced over a specific time period which is usually the assets estimated useful life
-accumulated amortization is the total sum of amortization expense recorded for an intangible asset
According to US GAAP disclosures the gross carrying amounts and accumulated amortization in total and by major class of intangible assets, the aggregate amortization expense for the period and the estimated amortization expense for the next five fiscal years must be diclosed.
*Historical cost is a measure of value in which the value of an asset on the balance sheet is disclosed at its original cost when acquired by the company
*Accumulated depreciation is the cummulative depreciation of an asset upto a single point in its life. Accumulated depreciation is generally a contra asset account means its natural balance is a credit that reduces the overall asset value
The matching principle under generally accepted accounting principles dictates that expenses must be matched to the same accounting period in which the related revenue is generated
*accumulated depreciation is presented on the sheet just below the related capital asset line.
CONCLUSIONS:-
By considering above points the general description regarding cost allocation methods are neither presented in financial statements nor disclosed in accompanying notes whereas it was disclosed in cost audit report.
