Question 1

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

Accepted Answer

A) True 
 B)False

Question 2

All of the following intangible assets are amortized except

Accepted Answer

A) copyrights. 
B) limited-life franchises. 
C) patents. 
D) trademarks. 
A) copyrights. 
B) limited-life franchises. 
C) patents. 
D) trademarks.

Question 3

Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.

Accepted Answer

A) True 
 B)False

Question 4

Land improvements should be depreciated over the useful life of the

Accepted Answer

A) land. 
B) buildings on the land. 
C) land or land improvements, whichever is longer. 
D) land improvements. 
A) land. 
B) buildings on the land. 
C) land or land improvements, whichever is longer. 
D) land improvements.

Question 5

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. 
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.

Question 6

The cost of a purchased building includes all of the following except

Accepted Answer

A) closing costs. 
B) real estate broker's commission. 
C) remodeling costs. 
D) All of these answers are correct. 
A) closing costs. 
B) real estate broker's commission. 
C) remodeling costs. 
D) All of these answers are correct.

Question 7

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

Accepted Answer

A) Salvage value 
B) Estimated useful life 
C) Cash needed to replace the plant asset 
D) Cost 
A) Salvage value 
B) Estimated useful life 
C) Cash needed to replace the plant asset 
D) Cost

Question 8

Once an asset is fully depreciated, no additional depreciation can be taken even though the asset is still being used by the business.

Accepted Answer

A) True 
 B)False

Question 9

If a mining company extracts 1,500,000 tons in a period but only sells 1,200,000 tons,

Accepted Answer

A) total depletion on the mine is based on the 1,200,000 tons. 
B) depletion expense is recognized on the 1,500,000 tons extracted. 
C) depletion expense is recognized on the 1,200,000 tons extracted and sold. 
D) a separate accumulated depletion account is set up to record depletion on the 300,000 tons extracted but not sold. 
A) total depletion on the mine is based on the 1,200,000 tons. 
B) depletion expense is recognized on the 1,500,000 tons extracted. 
C) depletion expense is recognized on the 1,200,000 tons extracted and sold. 
D) a separate accumulated depletion account is set up to record depletion on the 300,000 tons extracted but not sold.

Question 10

Equipment costing $70,000 with a salvage value of $14,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 5 years and no change in the salvage value, the depreciation expense for year 3 would be

Accepted Answer

A) $ 8,400. 
B) $18,667. 
C) $14,000. 
D) $11,200. 
A) $ 8,400. 
B) $18,667. 
C) $14,000. 
D) $11,200.

Question 11

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

Accepted Answer

A) True 
 B)False

Question 12

A patent should

Accepted Answer

A) be amortized over a period of 20 years. 
B) not be amortized if it has an indefinite life. 
C) be amortized over its useful life or 20 years, whichever is longer. 
D) be amortized over its useful life or 20 years, whichever is shorter. 
A) be amortized over a period of 20 years. 
B) not be amortized if it has an indefinite life. 
C) be amortized over its useful life or 20 years, whichever is longer. 
D) be amortized over its useful life or 20 years, whichever is shorter.

Question 13

The fair value of a plant asset is always the same as its book value.

Accepted Answer

A) True 
 B)False

Question 14

Improvements are

Accepted Answer

A) revenue expenditures. 
B) debited to an appropriate asset account when they increase useful life. 
C) debited to accumulated depreciation when they do not increase useful life. 
D) debited to an appropriate expense account when they do not increase useful life. 
A) revenue expenditures. 
B) debited to an appropriate asset account when they increase useful life. 
C) debited to accumulated depreciation when they do not increase useful life. 
D) debited to an appropriate expense account when they do not increase useful life.

Question 15

During 2015, Stein Corporation reported net sales of $5,000,000 and net income of $2,100,000. Stein also reported beginning total assets of $1,000,000 and ending total assets of $1,500,000. Stein's asset turnover is

Accepted Answer

A) 5.0 times. 
B) 4.0 times. 
C) 3.3 times. 
D) 1.7 times. 
A) 5.0 times. 
B) 4.0 times. 
C) 3.3 times. 
D) 1.7 times.

Question 16

Intangible assets

Accepted Answer

A) should be reported under the heading Property, Plant, and Equipment. 
B) are not reported on the balance sheet because they lack physical substance. 
C) should be reported as Current Assets on the balance sheet. 
D) should be reported as a separate classification on the balance sheet. 
A) should be reported under the heading Property, Plant, and Equipment. 
B) are not reported on the balance sheet because they lack physical substance. 
C) should be reported as Current Assets on the balance sheet. 
D) should be reported as a separate classification on the balance sheet.

Question 17

If an acquired franchise or license has an indefinite life, the cost of the asset is not amortized.

Accepted Answer

A) True 
 B)False

Question 18

Units-of-activity is an appropriate depreciation method to use when

Accepted Answer

A) it is impossible to determine the productivity of the asset. 
B) the asset's use will be constant over its useful life. 
C) the productivity of the asset varies significantly from one period to another. 
D) the company is a manufacturing company. 
A) it is impossible to determine the productivity of the asset. 
B) the asset's use will be constant over its useful life. 
C) the productivity of the asset varies significantly from one period to another. 
D) the company is a manufacturing company.

Question 19

The cost of successfully defending a patent in an infringement suit should be

Accepted Answer

A) charged to Legal Expenses. 
B) deducted from the book value of the patent. 
C) added to the cost of the patent. 
D) recognized as a loss in the current period. 
A) charged to Legal Expenses. 
B) deducted from the book value of the patent. 
C) added to the cost of the patent. 
D) recognized as a loss in the current period.

Question 20

Cost allocation of an intangible asset is referred to as

Accepted Answer

A) amortization. 
B) depletion. 
C) accretion. 
D) capitalization. 
A) amortization. 
B) depletion. 
C) accretion. 
D) capitalization.

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

All of the following intangible assets are amortized except

Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.

Land improvements should be depreciated over the useful life of the

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

The cost of a purchased building includes all of the following except

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

Once an asset is fully depreciated, no additional depreciation can be taken even though the asset is still being used by the business.

If a mining company extracts 1,500,000 tons in a period but only sells 1,200,000 tons,

Equipment costing $70,000 with a salvage value of $14,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 5 years and no change in the salvage value, the depreciation expense for year 3 would be

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

A patent should

The fair value of a plant asset is always the same as its book value.

Improvements are

During 2015, Stein Corporation reported net sales of $5,000,000 and net income of $2,100,000. Stein also reported beginning total assets of $1,000,000 and ending total assets of $1,500,000. Stein's asset turnover is

Intangible assets

If an acquired franchise or license has an indefinite life, the cost of the asset is not amortized.

Units-of-activity is an appropriate depreciation method to use when

The cost of successfully defending a patent in an infringement suit should be

Cost allocation of an intangible asset is referred to as

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

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

All of the following intangible assets are amortized except

Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.

Land improvements should be depreciated over the useful life of the

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

The cost of a purchased building includes all of the following except

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

Once an asset is fully depreciated, no additional depreciation can be taken even though the asset is still being used by the business.

If a mining company extracts 1,500,000 tons in a period but only sells 1,200,000 tons,

Equipment costing $70,000 with a salvage value of $14,000 and an estimated life of 8 years has been depreciated using the straight-line method for 2 years. Assuming a revised estimated total life of 5 years and no change in the salvage value, the depreciation expense for year 3 would be

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

A patent should

The fair value of a plant asset is always the same as its book value.

Improvements are

During 2015, Stein Corporation reported net sales of $5,000,000 and net income of $2,100,000. Stein also reported beginning total assets of $1,000,000 and ending total assets of $1,500,000. Stein's asset turnover is

Intangible assets

If an acquired franchise or license has an indefinite life, the cost of the asset is not amortized.

Units-of-activity is an appropriate depreciation method to use when

The cost of successfully defending a patent in an infringement suit should be

Cost allocation of an intangible asset is referred to as

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