Question 1

Natural resources are generally shown on the balance sheet under

Accepted Answer

A)  Intangibles. 
B)  Investments. 
C)  Property, Plant, and Equipment. 
D)  Stockholders' Equity. 
A)  Intangibles. 
B)  Investments. 
C)  Property, Plant, and Equipment. 
D)  Stockholders' Equity.

Question 2

Companies record a gain or loss on the exchange of plant assets because most exchanges have commercial substance.

Accepted Answer

A) True 
 B)False

Question 3

Natural resources are long-lived productive assets that are extracted in operations and are replaceable only by an act of nature.

Accepted Answer

A) True 
 B)False

Question 4

A patent

Accepted Answer

A)  has a legal life of 40 years. 
B)  is nonrenewable. 
C)  can be renewed indefinitely. 
D)  is rarely subject to litigation because it is an exclusive right. 
A)  has a legal life of 40 years. 
B)  is nonrenewable. 
C)  can be renewed indefinitely. 
D)  is rarely subject to litigation because it is an exclusive right.

Question 5

Research and development costs can be classified as a property, plant, and equipment item or as an intangible asset.

Accepted Answer

A) True 
 B)False

Question 6

The Accumulated Depletion account is deducted from the cost of the natural resource in the balance sheet.

Accepted Answer

A) True 
 B)False

Question 7

The cost of a new asset acquired in an exchange that has commercial substance is the cash paid plus the

Accepted Answer

A)  book value of the old asset. 
B)  fair value of the old asset. 
C)  book value of the asset acquired. 
D)  fair value of the new asset. 
A)  book value of the old asset. 
B)  fair value of the old asset. 
C)  book value of the asset acquired. 
D)  fair value of the new asset.

Question 8

Sargent Corporation bought equipment on January 1, 2018. The equipment cost $360,000 and had an expected salvage value of $60,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

Accepted Answer

A)  $360,000. 
B)  $300,000. 
C)  $200,000. 
D)  $50,000. 
A)  $360,000. 
B)  $300,000. 
C)  $200,000. 
D)  $50,000.

Question 9

Additions and improvements

Accepted Answer

A)  occur frequently during the ownership of a plant asset. 
B)  normally involve immaterial expenditures. 
C)  increase the book value of plant assets when incurred. 
D)  typically only benefit the current accounting period. 
A)  occur frequently during the ownership of a plant asset. 
B)  normally involve immaterial expenditures. 
C)  increase the book value of plant assets when incurred. 
D)  typically only benefit the current accounting period.

Question 10

A computer company has $2,800,000 in research and development costs. Before accounting for these costs, the net income of the company is $2,000,000. What is the amount of net income or loss after these R & D costs are accounted for?

Accepted Answer

A)  $800,000 loss 
B)  $2,000,000 net income 
C)  $0 
D)  Cannot be determined from the information provided. 
A)  $800,000 loss 
B)  $2,000,000 net income 
C)  $0 
D)  Cannot be determined from the information provided.

Question 11

Angie's Blooms purchased a delivery van for $40,000. The company was given a $4,000 cash discount by the dealer, and paid $2,000 sales tax. Annual insurance on the van is $1,000. As a result of the purchase, by how much will Angie's Blooms increase its van account?

Accepted Answer

A)  $40,000 
B)  $36,000 
C)  $39,000 
D)  $38,000 
A)  $40,000 
B)  $36,000 
C)  $39,000 
D)  $38,000

Question 12

The units-of-activity method is generally not suitable for

Accepted Answer

A)  airplanes. 
B)  buildings. 
C)  delivery equipment. 
D)  factory machinery. 
A)  airplanes. 
B)  buildings. 
C)  delivery equipment. 
D)  factory machinery.

Question 13

IFRS allows companies to revalue plant assets to fair value. Which of the following statements is true regarding revaluation?

Accepted Answer

A)  At the time a company purchases an asset it must decide whether to follow revaluation procedures for the asset; once the election is made, it must be followed for the remainder of the asset's useful life. 
B)  Assets that are experiencing rapid price changes must be revalued quarterly, other assets can be revalued on an annual basis. 
C)  The journal entry to record a revaluation when the asset's price has increased includes a credit to the account revaluation surplus. 
D)  All of the choices are correct regarding revaluation of plant assets.
IFRS: 
A)  At the time a company purchases an asset it must decide whether to follow revaluation procedures for the asset; once the election is made, it must be followed for the remainder of the asset's useful life. 
B)  Assets that are experiencing rapid price changes must be revalued quarterly, other assets can be revalued on an annual basis. 
C)  The journal entry to record a revaluation when the asset's price has increased includes a credit to the account revaluation surplus. 
D)  All of the choices are correct regarding revaluation of plant assets.
IFRS:

Question 14

Natural resources have two distinguishing characteristics (1) they are physically _______________ in operations, and (2) they are _________________ only by an act of nature.

Accepted Answer

extracted

Question 15

If a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting

Accepted Answer

A)  Legal Expense. 
B)  an Intangible Loss account. 
C)  the Patent account. 
D)  a revenue expenditure account. 
A)  Legal Expense. 
B)  an Intangible Loss account. 
C)  the Patent account. 
D)  a revenue expenditure account.

Question 16

Hayden Company purchased a machine on January 1, 2018, at a cost of $90,000. It is expected to have an estimated salvage value of $5,000 at the end of its 5-year life. The company capitalized the machine and depreciated it in 2018 using the double-declining-balance method of depreciation. The company has a policy of using the straight-line method to depreciate equipment but the company accountant neglected to follow company policy when he used the double-declining-balance method. Net income for the year ended December 31, 2018 was $55,000 as the result of depreciating the machine incorrectly.
Instructions
Using the method of depreciation which the company normally follows, prepare the correcting entry and determine the corrected net income. (Show computations.)

Accepted Answer

The answer of Hayden Company purchased a machine on January...

Question 17

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

Accepted Answer

A)  expensed when incurred. 
B)  capitalized as a part of the cost of the asset. 
C)  debited to the Accumulated Depreciation account. 
D)  not recorded until they become material in amount. 
A)  expensed when incurred. 
B)  capitalized as a part of the cost of the asset. 
C)  debited to the Accumulated Depreciation account. 
D)  not recorded until they become material in amount.

Question 18

If the proceeds from the sale of a plant asset exceed its book value, a gain on disposal occurs.

Accepted Answer

A) True 
 B)False

Question 19

A term that is not synonymous with property, plant, and equipment is

Accepted Answer

A)  plant assets. 
B)  fixed assets. 
C)  intangible assets. 
D)  long-lived tangible assets. 
A)  plant assets. 
B)  fixed assets. 
C)  intangible assets. 
D)  long-lived tangible assets.

Question 20

Goodwill is not recognized in accounting unless it is acquired from purchasing another business enterprise.

Accepted Answer

A) True 
 B)False

Natural resources are generally shown on the balance sheet under

Companies record a gain or loss on the exchange of plant assets because most exchanges have commercial substance.

Natural resources are long-lived productive assets that are extracted in operations and are replaceable only by an act of nature.

A patent

Research and development costs can be classified as a property, plant, and equipment item or as an intangible asset.

The Accumulated Depletion account is deducted from the cost of the natural resource in the balance sheet.

The cost of a new asset acquired in an exchange that has commercial substance is the cash paid plus the

Sargent Corporation bought equipment on January 1, 2018. The equipment cost $360,000 and had an expected salvage value of $60,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

Additions and improvements

A computer company has $2,800,000 in research and development costs. Before accounting for these costs, the net income of the company is $2,000,000. What is the amount of net income or loss after these R & D costs are accounted for?

Angie's Blooms purchased a delivery van for $40,000. The company was given a $4,000 cash discount by the dealer, and paid $2,000 sales tax. Annual insurance on the van is $1,000. As a result of the purchase, by how much will Angie's Blooms increase its van account?

The units-of-activity method is generally not suitable for

IFRS allows companies to revalue plant assets to fair value. Which of the following statements is true regarding revaluation?

Natural resources have two distinguishing characteristics (1) they are physically _ in operations, and (2) they are ___ only by an act of nature.

If a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

If the proceeds from the sale of a plant asset exceed its book value, a gain on disposal occurs.

A term that is not synonymous with property, plant, and equipment is

Goodwill is not recognized in accounting unless it is acquired from purchasing another business enterprise.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters

Exam 9: Plant Assets, Natural Resources, and Intangible Assets

Natural resources are generally shown on the balance sheet under

Companies record a gain or loss on the exchange of plant assets because most exchanges have commercial substance.

Natural resources are long-lived productive assets that are extracted in operations and are replaceable only by an act of nature.

A patent

Research and development costs can be classified as a property, plant, and equipment item or as an intangible asset.

The Accumulated Depletion account is deducted from the cost of the natural resource in the balance sheet.

The cost of a new asset acquired in an exchange that has commercial substance is the cash paid plus the

Sargent Corporation bought equipment on January 1, 2018. The equipment cost $360,000 and had an expected salvage value of $60,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

Additions and improvements

A computer company has $2,800,000 in research and development costs. Before accounting for these costs, the net income of the company is $2,000,000. What is the amount of net income or loss after these R & D costs are accounted for?

Angie's Blooms purchased a delivery van for $40,000. The company was given a $4,000 cash discount by the dealer, and paid $2,000 sales tax. Annual insurance on the van is $1,000. As a result of the purchase, by how much will Angie's Blooms increase its van account?

The units-of-activity method is generally not suitable for

IFRS allows companies to revalue plant assets to fair value. Which of the following statements is true regarding revaluation?

Natural resources have two distinguishing characteristics (1) they are physically _______________ in operations, and (2) they are _________________ only by an act of nature.

If a company incurs legal costs in successfully defending its patent, these costs are recorded by debiting

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

If the proceeds from the sale of a plant asset exceed its book value, a gain on disposal occurs.

A term that is not synonymous with property, plant, and equipment is

Goodwill is not recognized in accounting unless it is acquired from purchasing another business enterprise.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Liabilities

Corporations: Organization, Stock Transactions

Statement of Cash Flows

Financial Statement Analysis

Specimen Financial Statements: Apple Inc

Specimen Financial Statements: Pepsico, Inc

Specimen Financial Statements: the Coca-Cola Company

Specimen Financial Statements: Amazoncom, Inc

Specimen Financial Statements: Wal-Mart Stores, Inc

Filters

Natural resources have two distinguishing characteristics (1) they are physically _ in operations, and (2) they are ___ only by an act of nature.