Question 1

How are the cash flow effects from the purchase and sale of intangible assets reported on a statement of cash flows?

Accepted Answer

A) As operating activities 
B) As investing activities 
C) As financing activities 
D) They are not reported on a statement of cash flows. 
A) As operating activities 
B) As investing activities 
C) As financing activities 
D) They are not reported on a statement of cash flows.

Question 2

Miguel Foods, Inc.purchased a patent at the beginning of 2013 for $350,000.Economic benefits were expected for 7 years, but the patent's legal life was 20 years.Also during 2013, the company incurred research and development costs of $270,000.Patent amortization expense for 2013 is

Accepted Answer

A) $11,000 
B) $17,500 
C) $31,000 
D) $50,000 
A) $11,000 
B) $17,500 
C) $31,000 
D) $50,000

Question 3

At the end of 2013, Mirror Productions determined that one of its copyrights was worthless.The copyright had a cost of $320,000.The copyright had been amortized for 8 years of its estimated 25-year legal life.Which of the following statements is the justification for removing the remaining cost of the copyright from the accounting records?

Accepted Answer

A) The copyright no longer represents a future benefit to the company. 
B) The federal government does not allow copyrights to be recorded as assets once they are deemed worthless. 
C) The cost of the copyright represents an obligation to return capital contributions to the stockholders. 
D) The cost of the copyright has usefulness that will impact the net income of future accounting periods. 
A) The copyright no longer represents a future benefit to the company. 
B) The federal government does not allow copyrights to be recorded as assets once they are deemed worthless. 
C) The cost of the copyright represents an obligation to return capital contributions to the stockholders. 
D) The cost of the copyright has usefulness that will impact the net income of future accounting periods.

Question 4

Goodwill can be recorded as an asset when an)

Accepted Answer

A) business has above normal profitability compared to other businesses in its industry. 
B) business can determine that it has created customer goodwill and name recognition. 
C) offer is received to purchase the business at a price in excess of the value of the assets. 
D) business is purchased and payment is made in excess of the value of the net assets. 
A) business has above normal profitability compared to other businesses in its industry. 
B) business can determine that it has created customer goodwill and name recognition. 
C) offer is received to purchase the business at a price in excess of the value of the assets. 
D) business is purchased and payment is made in excess of the value of the net assets.

Question 5

Arena, Inc.uses straight-line depreciation for its equipment.Arena purchased equipment for $300,000 and estimated its useful life at 8 years.The bookkeeper failed to consider the residual value of $50,000.What is the impact on earnings per share and operating income of failing to consider the residual value?

Accepted Answer

A) Earnings per share will be overstated and operating income will be understated. 
B) Earnings per share will be understated and operating income will be overstated. 
C) Both earnings per share and operating income will be overstated. 
D) Both earnings per share and operating income will be understated. 
A) Earnings per share will be overstated and operating income will be understated. 
B) Earnings per share will be understated and operating income will be overstated. 
C) Both earnings per share and operating income will be overstated. 
D) Both earnings per share and operating income will be understated.

Question 6

Which of the following costs related to the purchase of production equipment incurred by Newark Company during 2015 would be considered a revenue expenditure?

Accepted Answer

A) Installation costs for equipment 
B) Purchase price of the equipment less the cash discount 
C) Repair and maintenance costs during the equipment's first year of service 
D) Transportation charges to deliver the equipment to Newark Company 
A) Installation costs for equipment 
B) Purchase price of the equipment less the cash discount 
C) Repair and maintenance costs during the equipment's first year of service 
D) Transportation charges to deliver the equipment to Newark Company

Question 7

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

Accepted Answer

A) True 
 B)False

Question 8

Because plant and equipment are reported as long-term assets on the balance sheet, they have no impact on net income for the period until they are sold.

Accepted Answer

A) True 
 B)False

Question 9

Harkin Company purchased a building on a tract of land and allocated the entire cost of the purchase to building.Normally it depreciates buildings over 20 years using the straight-line method with zero residual value and does not depreciate land.Because of its accounting treatment of the purchase, Harkin's income before taxes for the next 20 years will be

Accepted Answer

A) overstated. 
B) understated. 
C) unaffected. 
D) in conformance with GAAP. 
A) overstated. 
B) understated. 
C) unaffected. 
D) in conformance with GAAP.

Question 10

Norwood, Inc.
Norwood, Inc.purchased a crane at a cost of $80,000.The crane has an estimated residual value of $5,000 and an estimated life of 8 years, or 12,500 hours of operation.The crane was purchased on January 1, 2015 and was used 2,700 hours in 2015 and 2,600 hours in 2016.
-Refer to the information for Norwood, Inc,
Based on this information, what method of depreciation will produce the maximum depreciation expense in 2016?

Accepted Answer

A) Straight-line 
B) Double-declining-balance 
C) Units-of-production 
D) All methods produce the same expense in 2016. 
A) Straight-line 
B) Double-declining-balance 
C) Units-of-production 
D) All methods produce the same expense in 2016.

Question 11

All of the following statements are true except:

Accepted Answer

A) IFRS requires that estimates of residual value and the life of the asset be reviewed at least annually and revised if necessary. 
B) The FASB standards do not have a specific rule that requires residual value and asset life to be reviewed annually. 
C) IFRS does not have a specific rule that requires residual value and asset life to be reviewed annually. 
D) The FASB generally requires operating assets to be recorded at acquisition cost, less depreciation, and the assets' values are not changed to reflect their fair market values or selling prices. 
A) IFRS requires that estimates of residual value and the life of the asset be reviewed at least annually and revised if necessary. 
B) The FASB standards do not have a specific rule that requires residual value and asset life to be reviewed annually. 
C) IFRS does not have a specific rule that requires residual value and asset life to be reviewed annually. 
D) The FASB generally requires operating assets to be recorded at acquisition cost, less depreciation, and the assets' values are not changed to reflect their fair market values or selling prices.

Question 12

When Carson Real Estate Company sells equipment for a loss, the Loss on Sale of Asset is treated as accumulated depreciation.

Accepted Answer

A) True 
 B)False

Question 13

On January 2, 2013, Hannah Company sold a machine for $1,000 that it had used for several years.The machine cost $12,000, and had accumulated depreciation of $9,000 at the time of sale.What gain or loss will be reported on the income statement for the sale of the machine?

Accepted Answer

A) Gain of $2,000 
B) Loss of $11,000 
C) Loss of $2,000 
D) Gain of $3,000 
A) Gain of $2,000 
B) Loss of $11,000 
C) Loss of $2,000 
D) Gain of $3,000

Question 14

Yellow Dog Transit sold an old truck on December 31, 2013, for $18,400 cash.The following data was available when the truck sold:   When this transaction is recorded, it should include an)

Accepted Answer

A) Loss on Disposal account for $3,000 
B) Decrease of $21,400 to the Truck account 
C) Gain on Disposal account for $3,000 
D) Gain on Disposal account for $5,000 
A) Loss on Disposal account for $3,000 
B) Decrease of $21,400 to the Truck account 
C) Gain on Disposal account for $3,000 
D) Gain on Disposal account for $5,000

Question 15

Calhoun, Inc.purchased equipment at the beginning of 2015 for $180,000.Rose decided to depreciate the equipment over a 5-year period using the double-declining-balance method.Calhoun estimated the equipment's residual value at $30,000.Which of the following statements is correct concerning Rose's financial statements at December 31, 2015?

Accepted Answer

A) The book value of the equipment is $108,000. 
B) The book value of the equipment is $72,000. 
C) The total accumulated depreciation is $90,000. 
D) Depreciation expense for 2015 is $60,000. 
A) The book value of the equipment is $108,000. 
B) The book value of the equipment is $72,000. 
C) The total accumulated depreciation is $90,000. 
D) Depreciation expense for 2015 is $60,000.

Question 16

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

Accepted Answer

A) Reduces working capital 
B) Increases working capital 
C) Has no effect on working capital 
D) The increases offset the decrease. 
A) Reduces working capital 
B) Increases working capital 
C) Has no effect on working capital 
D) The increases offset the decrease.

Question 17

Greer Company purchased land for $256,000.Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence and a legal fee of $8,500.What is the cost of the land?

Accepted Answer

A) $256,000 
B) $282,200 
C) $284,600 
D) $281,000 
A) $256,000 
B) $282,200 
C) $284,600 
D) $281,000

Question 18

Costs incurred to keep assets in normal operating condition are called revenue expenditures.

Accepted Answer

A) True 
 B)False

Question 19

A revenue expenditure is deducted from the cost of the asset.

Accepted Answer

A) True 
 B)False

Question 20

is an account that can only exist if one company purchases another business and the cost exceeds the fair market values of the identifiable net assets at the time acquired.

Accepted Answer

The answer of is an account that can only exist...

How are the cash flow effects from the purchase and sale of intangible assets reported on a statement of cash flows?

Miguel Foods, Inc.purchased a patent at the beginning of 2013 for $350,000.Economic benefits were expected for 7 years, but the patent's legal life was 20 years.Also during 2013, the company incurred research and development costs of $270,000.Patent amortization expense for 2013 is

Goodwill can be recorded as an asset when an)

Which of the following costs related to the purchase of production equipment incurred by Newark Company during 2015 would be considered a revenue expenditure?

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

Because plant and equipment are reported as long-term assets on the balance sheet, they have no impact on net income for the period until they are sold.

All of the following statements are true except:

When Carson Real Estate Company sells equipment for a loss, the Loss on Sale of Asset is treated as accumulated depreciation.

On January 2, 2013, Hannah Company sold a machine for $1,000 that it had used for several years.The machine cost $12,000, and had accumulated depreciation of $9,000 at the time of sale.What gain or loss will be reported on the income statement for the sale of the machine?

Yellow Dog Transit sold an old truck on December 31, 2013, for $18,400 cash.The following data was available when the truck sold: When this transaction is recorded, it should include an)

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

Greer Company purchased land for $256,000.Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence and a legal fee of $8,500.What is the cost of the land?

Costs incurred to keep assets in normal operating condition are called revenue expenditures.

A revenue expenditure is deducted from the cost of the asset.

is an account that can only exist if one company purchases another business and the cost exceeds the fair market values of the identifiable net assets at the time acquired.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 8: Operating Assets: Property, Plant, and Equipment, and Intangibles

How are the cash flow effects from the purchase and sale of intangible assets reported on a statement of cash flows?

Miguel Foods, Inc.purchased a patent at the beginning of 2013 for $350,000.Economic benefits were expected for 7 years, but the patent's legal life was 20 years.Also during 2013, the company incurred research and development costs of $270,000.Patent amortization expense for 2013 is

Goodwill can be recorded as an asset when an)

Which of the following costs related to the purchase of production equipment incurred by Newark Company during 2015 would be considered a revenue expenditure?

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

Because plant and equipment are reported as long-term assets on the balance sheet, they have no impact on net income for the period until they are sold.

All of the following statements are true except:

When Carson Real Estate Company sells equipment for a loss, the Loss on Sale of Asset is treated as accumulated depreciation.

On January 2, 2013, Hannah Company sold a machine for $1,000 that it had used for several years.The machine cost $12,000, and had accumulated depreciation of $9,000 at the time of sale.What gain or loss will be reported on the income statement for the sale of the machine?

Yellow Dog Transit sold an old truck on December 31, 2013, for $18,400 cash.The following data was available when the truck sold: When this transaction is recorded, it should include an)

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

Greer Company purchased land for $256,000.Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence and a legal fee of $8,500.What is the cost of the land?

Costs incurred to keep assets in normal operating condition are called revenue expenditures.

A revenue expenditure is deducted from the cost of the asset.

is an account that can only exist if one company purchases another business and the cost exceeds the fair market values of the identifiable net assets at the time acquired.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters