Question 1

A gain or loss on disposal of a plant asset is determined by comparing the

Accepted Answer

A) replacement cost of the asset with the asset's original cost. 
B) book value of the asset with the asset's original cost. 
C) original cost of the asset with the proceeds received from its sale. 
D) book value of the asset with the proceeds received from its sale. 
A) replacement cost of the asset with the asset's original cost. 
B) book value of the asset with the asset's original cost. 
C) original cost of the asset with the proceeds received from its sale. 
D) book value of the asset with the proceeds received from its sale.

Question 2

In calculating depreciation, both plant asset cost and useful life are based on estimates.

Accepted Answer

A) True 
 B)False

Question 3

The book value of a plant asset is the difference between the

Accepted Answer

A) replacement cost of the asset and its historical cost. 
B) cost of the asset and the amount of depreciation expense for the year. 
C) cost of the asset and the accumulated depreciation to date. 
D) proceeds received from the sale of the asset and its original cost. 
A) replacement cost of the asset and its historical cost. 
B) cost of the asset and the amount of depreciation expense for the year. 
C) cost of the asset and the accumulated depreciation to date. 
D) proceeds received from the sale of the asset and its original cost.

Question 4

Management should select the depreciation method that

Accepted Answer

A) is easiest to apply. 
B) best measures the plant asset's market value over its useful life. 
C) best measures the plant asset's contribution to revenue over its useful life. 
D) has been used most often in the past by the company. 
A) is easiest to apply. 
B) best measures the plant asset's market value over its useful life. 
C) best measures the plant asset's contribution to revenue over its useful life. 
D) has been used most often in the past by the company.

Question 5

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 book value of the plant asset on the December 31, 2015, balance sheet assuming that Holt Company uses the double-declining-balance method of depreciation?

Accepted Answer

A) $78,000 
B) $90,000 
C) $108,000 
D) $114,000 
A) $78,000 
B) $90,000 
C) $108,000 
D) $114,000

Question 6

Goodwill

Accepted Answer

A) is only recorded when generated internally. 
B) can be subdivided and sold in parts. 
C) can only be identified with the business as a whole. 
D) can be defined as normal earnings less accumulated amortization. 
A) is only recorded when generated internally. 
B) can be subdivided and sold in parts. 
C) can only be identified with the business as a whole. 
D) can be defined as normal earnings less accumulated amortization.

Question 7

All of the following are intangible assets except

Accepted Answer

A) copyrights. 
B) goodwill. 
C) patents. 
D) research and development costs. 
A) copyrights. 
B) goodwill. 
C) patents. 
D) research and development costs.

Question 8

If a plant asset is sold before it is fully depreciated,

Accepted Answer

A) only a gain on disposal can occur. 
B) only a loss on disposal can occur. 
C) either a gain or a loss can occur. 
D) neither a gain nor a loss can occur. 
A) only a gain on disposal can occur. 
B) only a loss on disposal can occur. 
C) either a gain or a loss can occur. 
D) neither a gain nor a loss can occur.

Question 9

Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as

Accepted Answer

A) capital expenditures. 
B) expense expenditures. 
C) ordinary repairs. 
D) revenue expenditures. 
A) capital expenditures. 
B) expense expenditures. 
C) ordinary repairs. 
D) revenue expenditures.

Question 10

Equipment was purchased for $85,000 on January 1, 2015. Freight charges amounted to $3,500 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2016, if the straight-line method of depreciation is used?

Accepted Answer

A) $33,400 
B) $16,700 
C) $14,300 
D) $28,600 
A) $33,400 
B) $16,700 
C) $14,300 
D) $28,600

Question 11

Under the double-declining-balance method, the depreciation rate used each year remains constant.

Accepted Answer

A) True 
 B)False

Question 12

Powell's Courier Service recorded a loss of $9,000 when it sold a van that originally cost $84,000 for $15,000. Accumulated depreciation on the van must have been

Accepted Answer

A) $78,000. 
B) $24,000. 
C) $75,000. 
D) $60,000. 
A) $78,000. 
B) $24,000. 
C) $75,000. 
D) $60,000.

Question 13

Accumulated Depletion

Accepted Answer

A) is used by all companies with natural resources. 
B) has a normal debit balance. 
C) is a contra-asset account. 
D) is never shown on the balance sheet. 
A) is used by all companies with natural resources. 
B) has a normal debit balance. 
C) is a contra-asset account. 
D) is never shown on the balance sheet.

Question 14

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 depreciation expense using the straight-line method of depreciation is

Accepted Answer

A) $70,000. 
B) $72,000. 
C) $50,000. 
D) None of these answer choices are correct. 
A) $70,000. 
B) $72,000. 
C) $50,000. 
D) None of these answer choices are correct.

Question 15

A company decides to exchange its old machine and $231,000 cash for a new machine. The old machine has a book value of $189,000 and a fair value of $210,000 on the date of the exchange. The cost of the new machine would be recorded at

Accepted Answer

A) $420,000. 
B) $441,000. 
C) $399,000. 
D) cannot be determined. 
A) $420,000. 
B) $441,000. 
C) $399,000. 
D) cannot be determined.

Question 16

A plant asset cost $288,000 and is estimated to have a $36,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be

Accepted Answer

A) $24,120. 
B) $40,500. 
C) $35,436. 
D) $27,570. 
A) $24,120. 
B) $40,500. 
C) $35,436. 
D) $27,570.

Question 17

A plant asset was purchased on January 1 for $60,000 with an estimated salvage value of $12,000 at the end of its useful life. The current year's Depreciation Expense is $6,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $30,000. The remaining useful life of the plant asset is

Accepted Answer

A) 10 years. 
B) 8 years. 
C) 5 years. 
D) 3 years. 
A) 10 years. 
B) 8 years. 
C) 5 years. 
D) 3 years.

Question 18

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 19

The factor that is not relevant in computing depreciation is

Accepted Answer

A) replacement value. 
B) cost. 
C) salvage value. 
D) useful life. 
A) replacement value. 
B) cost. 
C) salvage value. 
D) useful life.

Question 20

Yanik Company's delivery truck, which originally cost $84,000, was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $57,000. The company received $48,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

Accepted Answer

A) $36,000 loss. 
B) $21,000 loss. 
C) $36,000 gain. 
D) $21,000 gain. 
A) $36,000 loss. 
B) $21,000 loss. 
C) $36,000 gain. 
D) $21,000 gain.

A gain or loss on disposal of a plant asset is determined by comparing the

In calculating depreciation, both plant asset cost and useful life are based on estimates.

The book value of a plant asset is the difference between the

Management should select the depreciation method that

Goodwill

All of the following are intangible assets except

If a plant asset is sold before it is fully depreciated,

Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as

Under the double-declining-balance method, the depreciation rate used each year remains constant.

Powell's Courier Service recorded a loss of $9,000 when it sold a van that originally cost $84,000 for $15,000. Accumulated depreciation on the van must have been

Accumulated Depletion

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 depreciation expense using the straight-line method of depreciation is

A company decides to exchange its old machine and $231,000 cash for a new machine. The old machine has a book value of $189,000 and a fair value of $210,000 on the date of the exchange. The cost of the new machine would be recorded at

A plant asset cost $288,000 and is estimated to have a $36,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be

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

The factor that is not relevant in computing depreciation is

Yanik Company's delivery truck, which originally cost $84,000, was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $57,000. The company received $48,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

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 gain or loss on disposal of a plant asset is determined by comparing the

In calculating depreciation, both plant asset cost and useful life are based on estimates.

The book value of a plant asset is the difference between the

Management should select the depreciation method that

Goodwill

All of the following are intangible assets except

If a plant asset is sold before it is fully depreciated,

Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as

Under the double-declining-balance method, the depreciation rate used each year remains constant.

Powell's Courier Service recorded a loss of $9,000 when it sold a van that originally cost $84,000 for $15,000. Accumulated depreciation on the van must have been

Accumulated Depletion

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 depreciation expense using the straight-line method of depreciation is

A company decides to exchange its old machine and $231,000 cash for a new machine. The old machine has a book value of $189,000 and a fair value of $210,000 on the date of the exchange. The cost of the new machine would be recorded at

A plant asset cost $288,000 and is estimated to have a $36,000 salvage value at the end of its 8-year useful life. The annual depreciation expense recorded for the third year using the double-declining-balance method would be

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

The factor that is not relevant in computing depreciation is

Yanik Company's delivery truck, which originally cost $84,000, was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $57,000. The company received $48,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

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