Question 1

Ordinary repairs should be recognized when incurred as revenue expenditures.

Accepted Answer

A) True 
 B)False

Question 2

Equipment was purchased for $90,000. Freight charges amounted to $4,200 and there was a cost of $12,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $18,000 salvage value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

Accepted Answer

A)  $21,240. 
B)  $17,640. 
C)  $14,760. 
D)  $14,400. 
A)  $21,240. 
B)  $17,640. 
C)  $14,760. 
D)  $14,400.

Question 3

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

During 2014, Ronald Corporation reported net sales of $1,500,000, net income of $900,000, and depreciation expense of $100,000. Ronald also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Ronald's asset turnover ratio is

Accepted Answer

A)  1.5 times. 
B)  1.2 times. 
C)  0.98 times. 
D)  0.72 times. 
A)  1.5 times. 
B)  1.2 times. 
C)  0.98 times. 
D)  0.72 times.

Question 6

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 7

For each of the following unrelated transactions, (a) determine the amount of the amortization for the current year, and (b) present the adjusting entries required to record amortization at year end.
(1) Costs (it was not acquired) of $39,000 were incurred on January 1 to obtain a patent. On January 31, $38,610 was spent in legal costs to successfully defend the patent against competitors. The patent has an estimated legal life of 12 years.
(2) A company acquired a copyright for $160,000. The copyright has a useful life of 50 years.

Accepted Answer

(1) (a) Legal costs to successfully defe

Question 8

Pearson Company bought a machine on January 1, 2014. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years. The depreciation expense using the straight-line method of depreciation is

Accepted Answer

A)  $40,000. 
B)  $28,800. 
C)  $24,000. 
D)  none of these answer choices are correct. 
A)  $40,000. 
B)  $28,800. 
C)  $24,000. 
D)  none of these answer choices are correct.

Question 9

Shaffer Company acquires land for $62,000 cash. Additional costs are as follows. $$\begin{array} { l r } 
\text { Removal of shed } & \$ 300 \
\text { Filling and grading } & 1,500 \
\text { Salvage value of lumber of shed } & 120 \
\text { Broker commission } & 1,130 \
\text { Paving of parking lot } & 10,000 \
\text { Closing costs } & 560
\end{array}$$ Shaffer will record the acquisition cost of the land as

Accepted Answer

A)  $62,000. 
B)  $63,690. 
C)  $65,610. 
D)  $65,370. 
A)  $62,000. 
B)  $63,690. 
C)  $65,610. 
D)  $65,370.

Question 10

A machine with a cost of $480,000 has an estimated salvage value of $30,000 and an estimated useful life of 5 years or 15,000 hours. It is to be depreciated using the units-of-activity method of depreciation. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

Accepted Answer

A)  $150,000. 
B)  $90,000. 
C)  $130,000. 
D)  $160,000. 
A)  $150,000. 
B)  $90,000. 
C)  $130,000. 
D)  $160,000.

Question 11

All of the following statements regarding impairments are true except

Accepted Answer

A)  an impairment is a permanent decline in an asset's market value. 
B)  after an impairment write-down, depreciation is generally lower in a subsequent periods. 
C)  immediate recognition of impairment write-downs is now required. 
D)  impairments are generally recorded when the book value falls below the market value. 
A)  an impairment is a permanent decline in an asset's market value. 
B)  after an impairment write-down, depreciation is generally lower in a subsequent periods. 
C)  immediate recognition of impairment write-downs is now required. 
D)  impairments are generally recorded when the book value falls below the market value.

Question 12

Which of the following would not be included in the Equipment account?

Accepted Answer

A)  Installation costs. 
B)  Freight costs. 
C)  Cost of trial runs. 
D)  Electricity used by the machine. 
A)  Installation costs. 
B)  Freight costs. 
C)  Cost of trial runs. 
D)  Electricity used by the machine.

Question 13

The following information is provided for Nguyen Company and Northwest Corporation.   What is Nguyen's asset turnover ratio for 2014?

Accepted Answer

A)  4.00 times 
B)  1.36 times 
C)  0.25 times 
D)  0.73 times 
A)  4.00 times 
B)  1.36 times 
C)  0.25 times 
D)  0.73 times

Question 14

Equipment costing $210,000 was destroyed when it caught on fire. At the date of the fire, the accumulated depreciation on the equipment was $84,000. An insurance check for $240,000 was received based on the replacement cost of the equipment. The entry to record the insurance proceeds and the disposition of the equipment will include a

Accepted Answer

A)  gain on disposal of $30,000. 
B)  credit to the Equipment account of $126,000. 
C)  credit to the Accumulated Depreciation account for $84,000. 
D)  gain on disposal of $114,000. 
A)  gain on disposal of $30,000. 
B)  credit to the Equipment account of $126,000. 
C)  credit to the Accumulated Depreciation account for $84,000. 
D)  gain on disposal of $114,000.

Question 15

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 16

Comment on the validity of the following statements: "As an asset loses its ability to provide services, cash needs to be set aside to replace it. Depreciation accomplishes this goal."

Accepted Answer

Depreciation is the process of allocatin

Question 17

Faster Company purchased equipment in 2007 for $104,000 and estimated an $8,000 salvage value at the end of the equipment's 10-year useful life. At December 31, 2013, there was $67,200 in the Accumulated Depreciation account for this equipment using the straight-line method of depreciation. On March 31, 2014, the equipment was sold for $21,000.
Prepare the appropriate journal entries to remove the equipment from the books of Faster Company on March 31, 2014.
(b) Lewis Company sold equipment for $11,000. The equipment originally cost $25,000 in 2011 and $6,000 was spent on a major overhaul in 2014 (charged to the Equipment account). Accumulated Depreciation on the equipment to the date of disposal was $20,000.
Prepare the appropriate journal entry to record the disposition of the equipment.
(c) Selby Company sold equipment that had a book value of $13,500 for $15,000. The equipment originally cost $45,000 and it is estimated that it would cost $57,000 to replace the equipment.
Prepare the appropriate journal entry to record the disposition of the equipment.

Accepted Answer

The answer of Faster Company purchased equipment in 2007 for...

Question 18

A computer company has $3,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $3,600,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

Accepted Answer

A)  $600,000 loss. 
B)  $3,000,000 net income. 
C)  $600,000 net income. 
D)  Cannot be determined from the information provided. 
A)  $600,000 loss. 
B)  $3,000,000 net income. 
C)  $600,000 net income. 
D)  Cannot be determined from the information provided.

Question 19

Under an operating lease, both the leased asset and the liability are shown on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 20

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.

Ordinary repairs should be recognized when incurred as revenue expenditures.

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

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

The balance in the Accumulated Depreciation account represents the

Pearson Company bought a machine on January 1, 2014. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years. The depreciation expense using the straight-line method of depreciation is

Shaffer Company acquires land for $62,000 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 Shaffer will record the acquisition cost of the land as

All of the following statements regarding impairments are true except

Which of the following would not be included in the Equipment account?

The following information is provided for Nguyen Company and Northwest Corporation. What is Nguyen's asset turnover ratio for 2014?

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

Comment on the validity of the following statements: "As an asset loses its ability to provide services, cash needs to be set aside to replace it. Depreciation accomplishes this goal."

A computer company has $3,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $3,600,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

Under an operating lease, both the leased asset and the liability are shown on the balance sheet.

Goodwill

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

Filters

Exam 9: Reporting and Analyzing Long-Lived Assets

Ordinary repairs should be recognized when incurred as revenue expenditures.

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

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

The balance in the Accumulated Depreciation account represents the

Pearson Company bought a machine on January 1, 2014. The machine cost $144,000 and had an expected salvage value of $24,000. The life of the machine was estimated to be 5 years. The depreciation expense using the straight-line method of depreciation is

Shaffer Company acquires land for $62,000 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 Shaffer will record the acquisition cost of the land as

All of the following statements regarding impairments are true except

Which of the following would not be included in the Equipment account?

The following information is provided for Nguyen Company and Northwest Corporation. What is Nguyen's asset turnover ratio for 2014?

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

Comment on the validity of the following statements: "As an asset loses its ability to provide services, cash needs to be set aside to replace it. Depreciation accomplishes this goal."

A computer company has $3,000,000 in research and development costs. Before accounting for these costs, the net income of the company is $3,600,000. What is the amount of net income or loss before taxes after these research and development costs are accounted for?

Under an operating lease, both the leased asset and the liability are shown on the balance sheet.

Goodwill

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments and Acquisitions in Accounting

Filters