Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Land improvements are generally charged to the Land account.

Accepted Answer

A) True 
 B)False

Question 3

Ordinary repairs should be recognized when incurred as revenue expenditures.

Accepted Answer

A) True 
 B)False

Question 4

A gain on sale of a plant asset occurs when the proceeds of the sale are greater than the

Accepted Answer

A) salvage value of the asset sold. 
B) market value of the asset sold. 
C) book value of the asset sold. 
D) accumulated depreciation on the asset sold. 
A) salvage value of the asset sold. 
B) market value of the asset sold. 
C) book value of the asset sold. 
D) accumulated depreciation on the asset sold.

Question 5

A truck was purchased for $180,000 and it was estimated to have a $36,000 salvage value at the end of its useful life. Monthly depreciation expense of $3,000 was recorded using the straight-line method. The annual depreciation rate is

Accepted Answer

A) 20%. 
B) 2%. 
C) 8%. 
D) 25%. 
A) 20%. 
B) 2%. 
C) 8%. 
D) 25%.

Question 6

In recording the acquisition cost of an entire business,

Accepted Answer

A) goodwill is recorded as the excess of cost over the fair value of identifiable net assets. 
B) assets are recorded at the seller's book values. 
C) goodwill, if it exists, is never recorded. 
D) goodwill is recorded as the excess of cost over the book value of identifiable net assets. 
A) goodwill is recorded as the excess of cost over the fair value of identifiable net assets. 
B) assets are recorded at the seller's book values. 
C) goodwill, if it exists, is never recorded. 
D) goodwill is recorded as the excess of cost over the book value of identifiable net assets.

Question 7

Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has been recorded was disposed of for $180,000 cash. The entry to record this event would include a

Accepted Answer

A) gain of $40,000. 
B) loss of $40,000. 
C) credit to the Equipment account for $220,000. 
D) credit to Accumulated Depreciation for $200,000. 
A) gain of $40,000. 
B) loss of $40,000. 
C) credit to the Equipment account for $220,000. 
D) credit to Accumulated Depreciation for $200,000.

Question 8

Sargent Corporation bought equipment on January 1, 2015. 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

Losses on an exchange of plant assets that has commercial substance are

Accepted Answer

A) not possible. 
B) deferred. 
C) recognized immediately. 
D) deducted from the cost of the new asset acquired. 
A) not possible. 
B) deferred. 
C) recognized immediately. 
D) deducted from the cost of the new asset acquired.

Question 10

On October 1, 2015, Holt Company places a new asset into service. The cost of the asset is $120,000 with an estimated 5-year life and $30,000 salvage value at the end of its useful life. What is the depreciation expense for 2015 if Holt Company uses the straight-line method of depreciation?

Accepted Answer

A) $4,500 
B) $24,000 
C) $6,000 
D) $12,000 
A) $4,500 
B) $24,000 
C) $6,000 
D) $12,000

Question 11

A company has the following assets:   The total amount reported under Property, Plant, and Equipment would be

Accepted Answer

A) $19,360,000. 
B) $14,400,000. 
C) $18,400,000. 
D) $15,360,000. 
A) $19,360,000. 
B) $14,400,000. 
C) $18,400,000. 
D) $15,360,000.

Question 12

Which of the following is not true of ordinary repairs?

Accepted Answer

A) They primarily benefit the current accounting period. 
B) They can be referred to as revenue expenditures. 
C) They maintain the expected productive life of the asset. 
D) They increase the productive capacity of the asset. 
A) They primarily benefit the current accounting period. 
B) They can be referred to as revenue expenditures. 
C) They maintain the expected productive life of the asset. 
D) They increase the productive capacity of the asset.

Question 13

Which of the following statements concerning financial statement presentation is not a true statement?

Accepted Answer

A) Intangibles are reported separately under Intangible Assets. 
B) The balances of major classes of assets may be disclosed in the footnotes. 
C) The balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes. 
D) The balances of all individual assets, as they appear in the subsidiary plant ledger, should be disclosed in the footnotes. 
A) Intangibles are reported separately under Intangible Assets. 
B) The balances of major classes of assets may be disclosed in the footnotes. 
C) The balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes. 
D) The balances of all individual assets, as they appear in the subsidiary plant ledger, should be disclosed in the footnotes.

Question 14

An exchange of plant assets has commercial substance if the future cash flows change as a result of the exchange.

Accepted Answer

A) True 
 B)False

Question 15

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods, but not to prior periods.

Accepted Answer

A) True 
 B)False

Question 16

A company purchased factory equipment on April 1, 2015 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2015 is

Accepted Answer

A) $16,000. 
B) $14,000. 
C) $10,500. 
D) $12,000. 
A) $16,000. 
B) $14,000. 
C) $10,500. 
D) $12,000.

Question 17

Capital expenditures are expenditures that increase the company's investment in productive facilities.

Accepted Answer

A) True 
 B)False

Question 18

The asset turnover is calculated as total sales divided by ending total assets.

Accepted Answer

A) True 
 B)False

Question 19

The entry to record patent amortization usually includes a credit to

Accepted Answer

A) Amortization Expense. 
B) Accumulated Amortization. 
C) Accumulated Depreciation. 
D) Patents. 
A) Amortization Expense. 
B) Accumulated Amortization. 
C) Accumulated Depreciation. 
D) Patents.

Question 20

On July 1, 2015, Jenks Company purchased the copyright to Jackson Computer tutorials for $324,000. It is estimated that the copyright will have a useful life of 5 years with an estimated salvage value of $24,000. The amount of Amortization Expense recognized for the year 2015 would be

Accepted Answer

A) $64,800. 
B) $30,000. 
C) $60,000. 
D) $32,400. 
A) $64,800. 
B) $30,000. 
C) $60,000. 
D) $32,400.

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

Land improvements are generally charged to the Land account.

Ordinary repairs should be recognized when incurred as revenue expenditures.

A gain on sale of a plant asset occurs when the proceeds of the sale are greater than the

A truck was purchased for $180,000 and it was estimated to have a $36,000 salvage value at the end of its useful life. Monthly depreciation expense of $3,000 was recorded using the straight-line method. The annual depreciation rate is

In recording the acquisition cost of an entire business,

Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has been recorded was disposed of for $180,000 cash. The entry to record this event would include a

Sargent Corporation bought equipment on January 1, 2015. 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

Losses on an exchange of plant assets that has commercial substance are

On October 1, 2015, Holt Company places a new asset into service. The cost of the asset is $120,000 with an estimated 5-year life and $30,000 salvage value at the end of its useful life. What is the depreciation expense for 2015 if Holt Company uses the straight-line method of depreciation?

A company has the following assets: The total amount reported under Property, Plant, and Equipment would be

Which of the following is not true of ordinary repairs?

Which of the following statements concerning financial statement presentation is not a true statement?

An exchange of plant assets has commercial substance if the future cash flows change as a result of the exchange.

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods, but not to prior periods.

A company purchased factory equipment on April 1, 2015 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2015 is

Capital expenditures are expenditures that increase the company's investment in productive facilities.

The asset turnover is calculated as total sales divided by ending total assets.

The entry to record patent amortization usually includes a credit to

On July 1, 2015, Jenks Company purchased the copyright to Jackson Computer tutorials for $324,000. It is estimated that the copyright will have a useful life of 5 years with an estimated salvage value of $24,000. The amount of Amortization Expense recognized for the year 2015 would be

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

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

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

Land improvements are generally charged to the Land account.

Ordinary repairs should be recognized when incurred as revenue expenditures.

A gain on sale of a plant asset occurs when the proceeds of the sale are greater than the

A truck was purchased for $180,000 and it was estimated to have a $36,000 salvage value at the end of its useful life. Monthly depreciation expense of $3,000 was recorded using the straight-line method. The annual depreciation rate is

In recording the acquisition cost of an entire business,

Equipment that cost $420,000 and on which $200,000 of accumulated depreciation has been recorded was disposed of for $180,000 cash. The entry to record this event would include a

Sargent Corporation bought equipment on January 1, 2015. 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

Losses on an exchange of plant assets that has commercial substance are

On October 1, 2015, Holt Company places a new asset into service. The cost of the asset is $120,000 with an estimated 5-year life and $30,000 salvage value at the end of its useful life. What is the depreciation expense for 2015 if Holt Company uses the straight-line method of depreciation?

A company has the following assets: The total amount reported under Property, Plant, and Equipment would be

Which of the following is not true of ordinary repairs?

Which of the following statements concerning financial statement presentation is not a true statement?

An exchange of plant assets has commercial substance if the future cash flows change as a result of the exchange.

A change in the estimated useful life of a plant asset may cause a change in the amount of depreciation recognized in the current and future periods, but not to prior periods.

A company purchased factory equipment on April 1, 2015 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2015 is

Capital expenditures are expenditures that increase the company's investment in productive facilities.

The asset turnover is calculated as total sales divided by ending total assets.

The entry to record patent amortization usually includes a credit to

On July 1, 2015, Jenks Company purchased the copyright to Jackson Computer tutorials for $324,000. It is estimated that the copyright will have a useful life of 5 years with an estimated salvage value of $24,000. The amount of Amortization Expense recognized for the year 2015 would be

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, Dividends, and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

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