Question 1

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 2

Depreciable cost is the

Accepted Answer

A) book value of an asset less its salvage value. 
B) cost of an asset less its salvage value. 
C) cost of an asset less accumulated depreciation. 
D) book value of an asset. 
A) book value of an asset less its salvage value. 
B) cost of an asset less its salvage value. 
C) cost of an asset less accumulated depreciation. 
D) book value of an asset.

Question 3

A company exchanges its old office equipment and $80,000 for new office equipment. The old office equipment has a book value of $56,000 and a fair value of $40,000 on the date of the exchange. The cost of the new office equipment would be recorded at

Accepted Answer

A) $136,000. 
B) $120,000. 
C) $96,000. 
D) cannot be determined. 
A) $136,000. 
B) $120,000. 
C) $96,000. 
D) cannot be determined.

Question 4

The book value of a plant asset is always equal to its fair market value.

Accepted Answer

A) True 
 B)False

Question 5

The asset turnover is computed by dividing

Accepted Answer

A) net income by average total assets. 
B) net sales by average total assets. 
C) net income by ending total assets. 
D) net sales by ending total assets. 
A) net income by average total assets. 
B) net sales by average total assets. 
C) net income by ending total assets. 
D) net sales by ending total assets.

Question 6

Don's Copy Shop bought equipment for $450,000 on January 1, 2014. Don estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used. On January 1, 2015, Don decides that the business will use the equipment for a total of 5 years. What is the revised depreciation expense for 2015?

Accepted Answer

A) $150,000 
B) $ 60,000 
C) $ 75,000 
D) $112,500 
A) $150,000 
B) $ 60,000 
C) $ 75,000 
D) $112,500

Question 7

Which of the following methods of computing depreciation is production based?

Accepted Answer

A) Straight-line 
B) Declining-balance 
C) Units-of-activity 
D) None of these answer choices are correct. 
A) Straight-line 
B) Declining-balance 
C) Units-of-activity 
D) None of these answer choices are correct.

Question 8

The balance in the Accumulated Depreciation account represents the

Accepted Answer

A) cash fund to be used to replace plant assets. 
B) amount to be deducted from the cost of the plant asset to arrive at its fair market value. 
C) amount charged to expense in the current period. 
D) amount charged to expense since the acquisition of the plant asset. 
A) cash fund to be used to replace plant assets. 
B) amount to be deducted from the cost of the plant asset to arrive at its fair market value. 
C) amount charged to expense in the current period. 
D) amount charged to expense since the acquisition of the plant asset.

Question 9

Each of the following is used in computing revised annual depreciation for a change in estimate except

Accepted Answer

A) book value. 
B) cost. 
C) depreciable cost. 
D) remaining useful life. 
A) book value. 
B) cost. 
C) depreciable cost. 
D) remaining useful life.

Question 10

Depletion expense is computed by multiplying the depletion cost per unit by the

Accepted Answer

A) total estimated units. 
B) total actual units. 
C) number of units extracted. 
D) number of units sold. 
A) total estimated units. 
B) total actual units. 
C) number of units extracted. 
D) number of units sold.

Question 11

Farr Company purchased a new van for floral deliveries on January 1, 2015. The van cost $56,000 with an estimated life of 5 years and $14,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2015?

Accepted Answer

A) $11,200 
B) $8,400 
C) $16,800 
D) $22,400 
A) $11,200 
B) $8,400 
C) $16,800 
D) $22,400

Question 12

A factory machine was purchased for $375,000 on January 1, 2015. It was estimated that it would have a $75,000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40,000 hours in the 5 years. The company ran the machine for 4,000 actual hours in 2015. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2015 would be

Accepted Answer

A) $37,500. 
B) $60,000. 
C) $75,000. 
D) $30,000. 
A) $37,500. 
B) $60,000. 
C) $75,000. 
D) $30,000.

Question 13

The cost of land does not include

Accepted Answer

A) real estate brokers' commission. 
B) annual property taxes. 
C) accrued property taxes assumed by the purchaser. 
D) title fees. 
A) real estate brokers' commission. 
B) annual property taxes. 
C) accrued property taxes assumed by the purchaser. 
D) title fees.

Question 14

The amortization period for a patent cannot exceed

Accepted Answer

A) 50 years. 
B) 40 years. 
C) 20 years. 
D) 10 years. 
A) 50 years. 
B) 40 years. 
C) 20 years. 
D) 10 years.

Question 15

Recording depreciation on plant assets affects the balance sheet and the income statement.

Accepted Answer

A) True 
 B)False

Question 16

The cost of natural resources is not allocated to expense because the natural resources are replaceable only by an act of nature.

Accepted Answer

A) True 
 B)False

Question 17

The depreciable cost of a plant asset is its original cost minus obsolescence.

Accepted Answer

A) True 
 B)False

Question 18

A company purchases a remote site building for computer operations. The building will be suitable for operations after some expenditures. The wiring must be replaced to computer specifications. The roof is leaky and must be replaced. All rooms must be repainted and recarpeted and there will also be some plumbing work done. Which of the following statements is true?

Accepted Answer

A) The cost of the building will not include the repainting and recarpeting costs. 
B) The cost of the building will include the cost of replacing the roof. 
C) The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as Building Improvements. 
D) The wiring is part of the computer costs, not the building cost. 
A) The cost of the building will not include the repainting and recarpeting costs. 
B) The cost of the building will include the cost of replacing the roof. 
C) The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as Building Improvements. 
D) The wiring is part of the computer costs, not the building cost.

Question 19

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 20

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.

Additions and improvements

Depreciable cost is the

A company exchanges its old office equipment and $80,000 for new office equipment. The old office equipment has a book value of $56,000 and a fair value of $40,000 on the date of the exchange. The cost of the new office equipment would be recorded at

The book value of a plant asset is always equal to its fair market value.

The asset turnover is computed by dividing

Which of the following methods of computing depreciation is production based?

The balance in the Accumulated Depreciation account represents the

Each of the following is used in computing revised annual depreciation for a change in estimate except

Depletion expense is computed by multiplying the depletion cost per unit by the

Farr Company purchased a new van for floral deliveries on January 1, 2015. The van cost $56,000 with an estimated life of 5 years and $14,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2015?

The cost of land does not include

The amortization period for a patent cannot exceed

Recording depreciation on plant assets affects the balance sheet and the income statement.

The cost of natural resources is not allocated to expense because the natural resources are replaceable only by an act of nature.

The depreciable cost of a plant asset is its original cost minus obsolescence.

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

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

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

Filters

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

Additions and improvements

Depreciable cost is the

A company exchanges its old office equipment and $80,000 for new office equipment. The old office equipment has a book value of $56,000 and a fair value of $40,000 on the date of the exchange. The cost of the new office equipment would be recorded at

The book value of a plant asset is always equal to its fair market value.

The asset turnover is computed by dividing

Which of the following methods of computing depreciation is production based?

The balance in the Accumulated Depreciation account represents the

Each of the following is used in computing revised annual depreciation for a change in estimate except

Depletion expense is computed by multiplying the depletion cost per unit by the

Farr Company purchased a new van for floral deliveries on January 1, 2015. The van cost $56,000 with an estimated life of 5 years and $14,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2015?

The cost of land does not include

The amortization period for a patent cannot exceed

Recording depreciation on plant assets affects the balance sheet and the income statement.

The cost of natural resources is not allocated to expense because the natural resources are replaceable only by an act of nature.

The depreciable cost of a plant asset is its original cost minus obsolescence.

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

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

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

Filters