Question 1

The cost of an asset includes all normal and reasonable expenditures necessary to get it in place and ready for its intended use.

Accepted Answer

A) True 
 B)False

Question 2

The units of production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

Accepted Answer

A) True 
 B)False

Question 3

Hertzog Company purchased and installed a machine on February 1, 2019, at a total cost of $72,000. Straight-line depreciation was calculated based on the assumption of a five-year life and no residual value. The machine was disposed of on July 31, 2022. Assuming the machine was sold for $22,000, prepare the general journal entry to record the disposal

Accepted Answer

The answer of Hertzog Company purchased and installed a machine...

Question 4

Chervinski Industries recently paid $560,000 to buy a building that has an estimated useful life of 40 years and a residual value of $116,000. Calculate the depreciation expense for the third year after acquisition using double-declining-balance depreciation. Assume a full year of depreciation in the first year.

Accepted Answer

Annual rate is 2/40 @#LAT-DLM& 100 = 5%
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Question 5

During 2021, Melanie's Emporium exchanged an old truck costing $18,000 with accumulated depreciation of $13,000 to the date of exchange for a new truck. The new truck had a cash price of $30,000 and Melanie received a $6,000 trade-in allowance on the old truck. This transaction has commercial substance. Prepare the journal entry to record the exchange.

Accepted Answer

The answer of During 2021, Melanie's Emporium exchanged an old...

Question 6

A patent

Accepted Answer

A)  Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 50 years 
B)  Is an exclusive right granted to its owner to manufacture and sell a machine or device, or to use a process, for 20 years 
C)  Is an exclusive right granted to its owner to manufacture and sell a machine or device, or to use a process, for 50 years 
D)  The amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately 
E)  Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years 
A)  Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 50 years 
B)  Is an exclusive right granted to its owner to manufacture and sell a machine or device, or to use a process, for 20 years 
C)  Is an exclusive right granted to its owner to manufacture and sell a machine or device, or to use a process, for 50 years 
D)  The amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately 
E)  Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years

Question 7

Which of the following statements is true with respect to intangible assets?

Accepted Answer

A)  Goodwill is an intangible asset that is amortized and tested for impairment. 
B)  Intangible assets are amortized over a period of 50 years. 
C)  Intangible assets should be evaluated each year to determine if there has been any impairment in their value. 
D)  Intangible assets are expensed to income in the year they are acquired. 
E)  An intangible asset is recorded at market value when the asset is acquired. 
A)  Goodwill is an intangible asset that is amortized and tested for impairment. 
B)  Intangible assets are amortized over a period of 50 years. 
C)  Intangible assets should be evaluated each year to determine if there has been any impairment in their value. 
D)  Intangible assets are expensed to income in the year they are acquired. 
E)  An intangible asset is recorded at market value when the asset is acquired.

Question 8

Discuss accounting for an impairment of property, plant and equipment.

Accepted Answer

If the book value or carrying amount of

Question 9

Land purchased as a building site is a tangible asset called property, plant and equipment and is classified under the "Long-term Investments" section on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 10

Treating small-dollar-amount capital expenditures as revenue expenditures is likely to mislead users of financial statements.

Accepted Answer

A) True 
 B)False

Question 11

Revenue expenditures

Accepted Answer

A)  Are additional costs related to property, plant and equipment that do not materially increase the asset's life 
B)  Are balance sheet expenditures 
C)  Extend the asset's useful life 
D)  Benefit future periods 
E)  Are debited to asset accounts 
A)  Are additional costs related to property, plant and equipment that do not materially increase the asset's life 
B)  Are balance sheet expenditures 
C)  Extend the asset's useful life 
D)  Benefit future periods 
E)  Are debited to asset accounts

Question 12

Any expenditures for legal fees, surveying, and accrued property taxes should not be included in the cost of land.

Accepted Answer

A) True 
 B)False

Question 13

Hawaii Kai purchased a leasehold property for $8,500,000. The leasehold expires in 15 years. Prepare the journal entry to record the first year's depreciation expense.

Accepted Answer

The answer of Hawaii Kai purchased a leasehold property for...

Question 14

A copyright

Accepted Answer

A)  Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 50 years 
B)  Is an exclusive right granted to its owner to manufacture and sell a machine or device, or to use a process, for 20 years 
C)  Is an exclusive right granted to its owner to manufacture and sell a machine or device, or to use a process, for 50 years 
D)  The amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately 
E)  Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years 
A)  Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 50 years 
B)  Is an exclusive right granted to its owner to manufacture and sell a machine or device, or to use a process, for 20 years 
C)  Is an exclusive right granted to its owner to manufacture and sell a machine or device, or to use a process, for 50 years 
D)  The amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately 
E)  Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years

Question 15

At December 31, 2020, Great Coast Coffee Company's adjusted trial balance shows an espresso machine with a book value of $22,000. As part of the year end procedures GCC completed the asset impairment test on the machine and noted that the recoverable value of the machine was $6,000. Record the impairment loss on the asset.

Accepted Answer

The answer of At December 31, 2020, Great Coast Coffee...

Question 16

Property, plant and equipment can be disposed of by discarding, sale, or exchange of the asset.

Accepted Answer

A) True 
 B)False

Question 17

Matador & Company was preparing the annual financial statements and, as part of its year-end procedures, prepared the following schedule based on adjusted values at March 31, 2020:
 $\begin{array}{|l|r|r|r|}
\hline \text { Asset } & \text { Cost } & \begin{array}{r}
\text { Accumulated } \
\text { Depreciation }
\end{array} & \begin{array}{r}
\text { Recoverable } \
\text { Amount }
\end{array} \
\hline \text { Furniture } & \$ 25,000 & \$ 20,000 & \$ 15,000 \
\hline \text { Computer } & \$ 2,000 & \$ 1,000 & \$- \
\hline \text { Land } & \$ 105,000 & \$- & \$ 125,000 \
\hline \text { Machine } & \$ 90,000 & \$ 25,000 & \$ 45,000 \
\hline
\end{array}$ Record the entry for any impairment loss assuming that Matador & Company recorded no impairment losses in previous years.

Accepted Answer

The answer of Matador & Company was preparing the annual...

Question 18

Hertzog Company purchased and installed a machine on February 1, 2019, at a total cost of $72,000. Straight-line depreciation was calculated based on the assumption of a five-year life and no residual value. The machine was disposed of on July 31, 2022. Assuming the machine was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash, prepare the general journal entry to record the disposal.

Accepted Answer

The answer of Hertzog Company purchased and installed a machine...

Question 19

Timing Investments purchased land with a building for a total cost of $6,000,000 ($500,000 paid in cash and the balance on a long-term note). The appraised cost of the land and building were $3,500,000 and $1,900,000, respectively. Calculate the costs to be allocated to the land and the building and prepare the appropriate journal entry to record the acquisition.

Accepted Answer

The answer of Timing Investments purchased land with a building...

Question 20

On January 1, 2019 a machine costing $330,000 with a 4-year service life and an estimated $3,000 residual value was purchased. It was also estimated that the machine would produce 50,000 units during its life. The actual units produced during its first 2 years of operation were 9,000 and 10,000 respectively. Calculate the amount of depreciation expense for the 2019 and 2020 under each of the following assumptions:
(a) Straight-line.
(b) Double-declining-balance.
(c) Units-of-production.

Accepted Answer

(a) ($330,000 - 3,000)/4 years

The cost of an asset includes all normal and reasonable expenditures necessary to get it in place and ready for its intended use.

The units of production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

A patent

Which of the following statements is true with respect to intangible assets?

Discuss accounting for an impairment of property, plant and equipment.

Land purchased as a building site is a tangible asset called property, plant and equipment and is classified under the "Long-term Investments" section on the balance sheet.

Treating small-dollar-amount capital expenditures as revenue expenditures is likely to mislead users of financial statements.

Revenue expenditures

Any expenditures for legal fees, surveying, and accrued property taxes should not be included in the cost of land.

Hawaii Kai purchased a leasehold property for $8,500,000. The leasehold expires in 15 years. Prepare the journal entry to record the first year's depreciation expense.

A copyright

Property, plant and equipment can be disposed of by discarding, sale, or exchange of the asset.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Payroll Liabilities

Accounting Information Systems

Filters

Exam 9: Property, Plant and Equipment Intangibles

The cost of an asset includes all normal and reasonable expenditures necessary to get it in place and ready for its intended use.

The units of production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

A patent

Which of the following statements is true with respect to intangible assets?

Discuss accounting for an impairment of property, plant and equipment.

Land purchased as a building site is a tangible asset called property, plant and equipment and is classified under the "Long-term Investments" section on the balance sheet.

Treating small-dollar-amount capital expenditures as revenue expenditures is likely to mislead users of financial statements.

Revenue expenditures

Any expenditures for legal fees, surveying, and accrued property taxes should not be included in the cost of land.

Hawaii Kai purchased a leasehold property for $8,500,000. The leasehold expires in 15 years. Prepare the journal entry to record the first year's depreciation expense.

A copyright

Property, plant and equipment can be disposed of by discarding, sale, or exchange of the asset.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts for Financial Statements

Completing the Accounting Cycle and Classifying Accounts

Accounting for Merchandising Activities

Inventory Costing and Valuation

Internal Control and Cash

Receivables

Payroll Liabilities

Accounting Information Systems

Filters