Question 1

Intangible assets are the rights and privileges that result from ownership of long-lived assets that

Accepted Answer

A)  must be generated internally. 
B)  are depletable natural resources. 
C)  have been exchanged at a gain. 
D)  do not have physical substance. 
A)  must be generated internally. 
B)  are depletable natural resources. 
C)  have been exchanged at a gain. 
D)  do not have physical substance.

Question 2

Hull Company acquires land for $86000 cash. Additional costs are as follows: $\begin{array} { l r } 
\text { Removal of shed } & \$ 300 \
\text { Filling and grading } & 1,500 \
\text { Salvage value of lumber of shed } & 120 \
\text { Broker commission } & 1,130 \
\text { Paving of parking lot } & 10,000 \
\text { Closing costs } & 560
\end{array}$
Hull will record the acquisition cost of the land as

Accepted Answer

A)  $96000. 
B)  $87690. 
C)  $89610. 
D)  $89370. 
A)  $96000. 
B)  $87690. 
C)  $89610. 
D)  $89370.

Question 3

Adding paneling to the body of an open pickup truck would be classified as a(n)

Accepted Answer

A)  revenue expenditure. 
B)  addition. 
C)  improvement. 
D)  ordinary repair. 
A)  revenue expenditure. 
B)  addition. 
C)  improvement. 
D)  ordinary repair.

Question 4

On July 1 2017 Jenks Company purchased the copyright to Jackson Computer tutorials for $324000. It is estimated that the copyright will have a useful life of 5 years with an estimated salvage value of $24000. The amount of Amortization Expense recognized for the year 2017 would be

Accepted Answer

A)  $64800. 
B)  $30000. 
C)  $60000. 
D)  $32400. 
A)  $64800. 
B)  $30000. 
C)  $60000. 
D)  $32400.

Question 5

If the proceeds from the sale of a plant asset exceed its ______________ a gain on disposal will occur.

Accepted Answer

The answer of If the proceeds from the sale of...

Question 6

If a plant asset is sold at a gain the gain on disposal should reduce the cost of goods sold section of the income statement.

Accepted Answer

A) True 
 B)False

Question 7

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 8

In computing depletion salvage value is

Accepted Answer

A)  always immaterial. 
B)  ignored. 
C)  impossible to estimate. 
D)  included in the calculation. 
A)  always immaterial. 
B)  ignored. 
C)  impossible to estimate. 
D)  included in the calculation.

Question 9

Indicate whether each of the following expenditures should be classified as land (L) land improvements (LI) buildings (B) equipment (E) or none of these (X).

Accepted Answer

1. LI 6. L
2. 7. E
3

Question 10

Match between columns
                        Premises: Lubricants, rosin, and polishing compounds used in manufacturing
Oak and pine wood used in desks and chairs
Insurance on factory building
Advertising in trade magazines
Salesperson's commissions
Wages of assembly line workers
Rent on leased factory machinery
Depreciation on delivery equipment
Wages of factory maintenance workers
Depreciation on factory machinery

Accepted Answer

The Answer of Direct materials cost and Direct labor cost is...

Question 11

The ________________ method of computing depreciation expense results in an equal amount of periodic depreciation throughout the service life of the plant asset.

Accepted Answer

The answer of The ________________ method of computing depreciation expense...

Question 12

A factory machine was purchased for $375000 on January 1 2017. It was estimated that it would have a $75000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 40000 hours in the 5 years. The company ran the machine for 4000 actual hours in 2017. If the company uses the units-of-activity method of depreciation the amount of depreciation expense for 2017 would be

Accepted Answer

A)  $37500. 
B)  $60000. 
C)  $75000. 
D)  $30000. 
A)  $37500. 
B)  $60000. 
C)  $75000. 
D)  $30000.

Question 13

Additions and improvements to a plant asset that increase the asset's operating efficiency productive capacity or expected useful life are generally expensed in the period incurred.

Accepted Answer

A) True 
 B)False

Question 14

All of the following factors in computing depreciation are estimates except

Accepted Answer

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

Question 15

A plant asset originally cost $64000 and was estimated to have a $4000 salvage value at the end of its 5-year useful life. If at the end of three years the asset was sold for $12000 and had accumulated depreciation recorded of $36000 the company should recognize a ______________ on disposal in the amount of $____________.

Accepted Answer

The answer of A plant asset originally cost $64000 and...

Question 16

On January 2 2017 Olathe Company purchased a patent for $240000. The patent has an 8-year estimated useful life and a legal life of 20 years.
Instructions
Prepare the journal entry to record patent amortization.

Accepted Answer

Amortizati

Question 17

Farr Company purchased a new van for floral deliveries on January 1 2017. The van cost $56000 with an estimated life of 5 years and $14000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2018?

Accepted Answer

A)  $8960 
B)  $26880 
C)  $35840 
D)  $13440 
A)  $8960 
B)  $26880 
C)  $35840 
D)  $13440

Question 18

Karley Company sold equipment on July 1 2017 for $75000. The equipment had cost $210000 and had $120000 of accumulated depreciation as of January 1 2017. Depreciation for the first 6 months of 2017 was $12000.
Instructions
Prepare the journal entry to record the sale of the equipment.

Accepted Answer

None

Question 19

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 20

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.

Exam 10: Plant Assets, Natural Resources, and Intangible Assets

Intangible assets are the rights and privileges that result from ownership of long-lived assets that

Hull Company acquires land for $86000 cash. Additional costs are as follows: Removal of shed \ 300 Filling and grading 1,500 Salvage value of lumber of shed 120 Broker commission 1,130 Paving of parking lot 10,000 Closing costs 560 Hull will record the acquisition cost of the land as

Adding paneling to the body of an open pickup truck would be classified as a(n)

On July 1 2017 Jenks Company purchased the copyright to Jackson Computer tutorials for $324000. It is estimated that the copyright will have a useful life of 5 years with an estimated salvage value of $24000. The amount of Amortization Expense recognized for the year 2017 would be

If the proceeds from the sale of a plant asset exceed its ______________ a gain on disposal will occur.

If a plant asset is sold at a gain the gain on disposal should reduce the cost of goods sold section of the income statement.

Intangible assets

In computing depletion salvage value is

Indicate whether each of the following expenditures should be classified as land (L) land improvements (LI) buildings (B) equipment (E) or none of these (X).

The ________________ method of computing depreciation expense results in an equal amount of periodic depreciation throughout the service life of the plant asset.

Additions and improvements to a plant asset that increase the asset's operating efficiency productive capacity or expected useful life are generally expensed in the period incurred.

All of the following factors in computing depreciation are estimates except

On January 2 2017 Olathe Company purchased a patent for $240000. The patent has an 8-year estimated useful life and a legal life of 20 years. Instructions Prepare the journal entry to record patent amortization.

Karley Company sold equipment on July 1 2017 for $75000. The equipment had cost $210000 and had $120000 of accumulated depreciation as of January 1 2017. Depreciation for the first 6 months of 2017 was $12000. Instructions Prepare the journal entry to record the sale of the equipment.

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

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

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Incremental Analysis and Capital Budgeting

Time Value of Money

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