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ThuyLinhLy
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Posted: 08 Oct 2010 at 23:44 \| IP Logged

FAR

In December 31, 2007, Bit Co. had capitalized costs for a new computer software product with an economic life of five years. Sales for 2008 were 30 percent of expected total sales of the software. At December 31, 2008, the software had a net realizable value equal to 90 percent of the capitalized cost. What percentage of the original capitalized cost should be reported as the net amount on Bit's December 31, 2008, balance sheet?

A) 70%

Hi Andrew, I do not understand the explanation for the answer to this question. How are we supposed to know that the service life method is used? Are we just supposed to assume?

Mars
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Posted: 09 Oct 2010 at 13:05 \| IP Logged

AndrewCPA wrote:

Today’s question: BEC

All of the following are examples of a decision support system (DSS) EXCEPT for a

A) Financial modeling application.

B) Transaction processing system.

C) Database query application.

D) Sensitivity analysis application.

AndrewCPA
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Posted: 10 Oct 2010 at 13:14 \| IP Logged

ThuyLinhLy wrote:

FAR

In December 31, 2007, Bit Co. had capitalized costs for a
new computer software product with an economic life of
five years. Sales for 2008 were 30 percent of expected
total sales of the software. At December 31, 2008, the
software had a net realizable value equal to 90 percent
of the capitalized cost. What percentage of the original
capitalized cost should be reported as the net amount on
Bit's December 31, 2008, balance sheet?

A) 70%

Hi Andrew, I do not understand the explanation for the
answer to this question. How are we supposed to know that
the service life method is used? Are we just supposed to
assume?

The amortized costs should be the greater of A) current
revenue/expected revenue x cost (service life method) or
B) NRV of the asset. Since 2008 sales were 30% of
expected total sales, which is greater than the 10%
reduction of NRV, this method is used. The original
explanation wasn't very comprehensive--hope this helps!

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AndrewCPA
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Posted: 11 Oct 2010 at 16:58 \| IP Logged

Correct Answer: B

Explanation: A transaction processing system is not a DSS. A transaction processing system processes (usually accounting) transactions at the basic level of an organization, providing outputs usually on scheduled reports. A DSS, on the other hand, provides support for unstructured or semi-structured decisions and suggests possible choices, accessing a database or a decision-making model. A financial modeling application is an example of a DSS. These systems provide support for unstructured or semi-structured decisions and suggest possible choices, accessing a database or a decision making model. A database query application is an example of a DSS. These systems provide support for unstructured or semi-structured decisions and suggest possible choices, accessing a database or a decision-making model. A sensitivity analysis application is an example of a DSS. Sensitivity analysis involves making changes to some parameters or inputs and observing the impact of such changes on the result. DSSs, likewise, provide support for unstructured or semi-structured decisions and suggest possible choices, accessing a database or a decision-making model.

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AndrewCPA
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Posted: 11 Oct 2010 at 19:01 \| IP Logged

Today's question: AUD

One of a CPA firm's basic objectives is to provide professional services that conform with professional standards. Reasonable assurance of achieving this basic objective is provided through:

A) A system of quality control

B) A system of peer review

C) Continuing professional education

D) Compliance with generally accepted reporting standards

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