Question

For each statement indicate whether it is True (T) or False (F).

Compound interest, rather than simple interest, must be used to properly evaluate long- term investment proposals.
The number of compounding periods will always be one less than the number of rents when computing the future value of an ordinary annuity.
Amortization of limited-life intangible assets should not be impacted by expected residual values.
A provision differs from other liabilities in that there is greater uncertainty about the timing and amount of settlement.
Component depreciation must be calculated using the straight-line method.
Assets held for disposal should be reported at the lower of cost or net realizable value.
Companies always use the expected value, a probability-weighted amount, to estimate variable consideration.
When a company sells a product but gives the buyer the right to return it, revenue should not be recognized until the sale is collected.
A capitalized leased asset is always depreciated over the term of the lease by the lessee.
Treasury shares are a company’s own shares that have been reacquired and retired.

Answer 1

Compound interest is used for long-term investments, the number of compounding periods for an annuity is one less than the number of rents, and amortization can be impacted by expected residual values.

Step-by-step explanation:

Compound interest is used to properly evaluate long-term investment proposals. Compound interest takes into account the accumulation of interest over time, resulting in higher returns compared to simple interest.

The number of compounding periods will always be one less than the number of rents when computing the future value of an ordinary annuity. This is because each rent represents a cash flow at the end of a compounding period.

Amortization of limited-life intangible assets can be impacted by expected residual values. The expected residual value is an estimate of the asset's value at the end of its useful life and affects the amortization amount.