Question 1

To measure amortization for a property, plant, and equipment asset, all of the following must be known except:

Accepted Answer

A) estimated useful life. 
B) historical cost. 
C) current market value. 
D) estimated residual value. 
A) estimated useful life. 
B) historical cost. 
C) current market value. 
D) estimated residual value.

Question 2

Ronnie's Wings acquired equipment on January 1, 2019, for $300,000. The equipment had an estimated useful life of 10 years and an estimated salvage value of $25,000. On January 1, 2022, Ronnie's Wings revised the total useful life of the equipment to eight years. Compute amortization expense for the year ended December 31, 2022, if Ronnie's Wings uses straight-line amortization.

Accepted Answer

A) $43,500 
B) $38,500 
C) $60,000 
D) $27,500 
A) $43,500 
B) $38,500 
C) $60,000 
D) $27,500

Question 3

Acme Investments plans to develop a shopping center. In the first quarter, they spent the following amounts: $$\begin{array} { | l | r| } 
\hline \text { Purchase land } & \$ 90,000 \
\hline \text { Surveys and legal fees } & 1,200 \
\hline \text { Land clearing } & 5,000 \
\hline \text { Install fences around the property } & 4,600 \
\hline \text { Install lighting and signage } & 2,600 \
\hline
\end{array}$$ What amount should be recorded as the land cost?

Accepted Answer

A) $90,000 
B) $91,200 
C) $103,400 
D) $96,200 
A) $90,000 
B) $91,200 
C) $103,400 
D) $96,200

Question 4

The entry to record amortization on a building is:

Accepted Answer

A)  $$\begin{array}{|l|}
\hline
Amortization ~Expense\
\hline
Accumulated ~Amortization-Building\
\hline
\end{array}$$ 
B)  $\begin{array}{|l|}
\hline
Amortization ~Expense\
\hline
Building\
\hline
\end{array}$ 
C)  $\begin{array}{|l|}
\hline
Building~ Expense\
\hline
Accumulated ~Building ~Expense\
\hline
\end{array}$ 
D)  $\begin{array}{|l|}
\hline
Building~ Expense\
\hline
Building\
\hline
\end{array}$ 
A)  $$\begin{array}{|l|}
\hline
Amortization ~Expense\
\hline
Accumulated ~Amortization-Building\
\hline
\end{array}$$ 
B)  $\begin{array}{|l|}
\hline
Amortization ~Expense\
\hline
Building\
\hline
\end{array}$ 
C)  $\begin{array}{|l|}
\hline
Building~ Expense\
\hline
Accumulated ~Building ~Expense\
\hline
\end{array}$ 
D)  $\begin{array}{|l|}
\hline
Building~ Expense\
\hline
Building\
\hline
\end{array}$

Question 5

When similar assets are exchanged and no cash is received or given up, there is no entry needed.

Accepted Answer

A) True 
 B)False

Question 6

A lump-sum purchase of assets requires an allocation of the purchase price among the assets acquired. This allocation method is called the:

Accepted Answer

A) book-value method. 
B) relative-fair-value method. 
C) accumulated method. 
D) betterment approach. 
A) book-value method. 
B) relative-fair-value method. 
C) accumulated method. 
D) betterment approach.

Question 7

A revision of an estimate that extends the asset's useful life:

Accepted Answer

A) requires restatement of prior years' financial statements. 
B) is ignored until the last year of the asset's life. 
C) decreases amortization expense per year for the remaining years of the asset's life. 
D) increases amortization expense per year for the remaining years of the asset's life. 
A) requires restatement of prior years' financial statements. 
B) is ignored until the last year of the asset's life. 
C) decreases amortization expense per year for the remaining years of the asset's life. 
D) increases amortization expense per year for the remaining years of the asset's life.

Question 8

All amounts paid to acquire an asset and to get it ready for its intended use are referred to as:

Accepted Answer

A) equity expenditures. 
B) salvage expenditures. 
C) the cost of an asset. 
D) revenue expenditures. 
A) equity expenditures. 
B) salvage expenditures. 
C) the cost of an asset. 
D) revenue expenditures.

Question 9

Goodwill is a tangible asset.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not a recognized amortization method?

Accepted Answer

A) straight-line method 
B) lower-of-cost-or-market method 
C) units-of-production method 
D) double-declining-balance method 
A) straight-line method 
B) lower-of-cost-or-market method 
C) units-of-production method 
D) double-declining-balance method

Question 11

Book value is determined by subtracting the residual value from the cost of an asset.

Accepted Answer

A) True 
 B)False

Question 12

Paving, fencing, and exterior lighting should be debited to the land account.

Accepted Answer

A) True 
 B)False

Question 13

Expenditures that increase the asset's capacity or efficiency and/ or extend its useful life are called betterments.

Accepted Answer

A) True 
 B)False

Question 14

The amortization method that initially ignores residual value in the initial calculation is:

Accepted Answer

A) double-declining-balance. 
B) straight-line. 
C) both double-declining-balance and straight-line. 
D) units-of-production. 
A) double-declining-balance. 
B) straight-line. 
C) both double-declining-balance and straight-line. 
D) units-of-production.

Question 15

The only requirement an asset must meet in order for it to be recorded as property, plant, and equipment is that it have a useful life beyond one year.

Accepted Answer

A) True 
 B)False

Question 16

Large Construction Ltd. bought land, a building, and equipment for a lump-sum of $1,800,000. Following are the appraised fair market values of the newly acquired assets: $\begin{array} { l r } \text { Land } & \$ 600,000 \ \text { Building } & 900,000 \ \text { Equipment } & 400,000 \end{array}$
Determine the cost of each asset. Round to the nearest dollar if necessary.
Land _________
Building ______
Equipment _____

Accepted Answer

$600,000 + $900,000 + $400,000 = $1,900,

Question 17

Using the double-declining balance method of amortization means that the book value should not be reduced below the residual value.

Accepted Answer

A) True 
 B)False

Question 18

Land improvements are not subject to amortization.

Accepted Answer

A) True 
 B)False

Question 19

For an asset that generates revenue fairly evenly over time, which is the most appropriate method of amortization?

Accepted Answer

A) units-of-production method 
B) double declining balance method 
C) straight-line method 
D) declining-balance method 
A) units-of-production method 
B) double declining balance method 
C) straight-line method 
D) declining-balance method

Question 20

Goodwill is equal to the excess of the cost of an acquired business over the sum of the:

Accepted Answer

A) book value of its net assets. 
B) book value of its assets. 
C) market value of its net assets. 
D) market value of its assets. 
A) book value of its net assets. 
B) book value of its assets. 
C) market value of its net assets. 
D) market value of its assets.

To measure amortization for a property, plant, and equipment asset, all of the following must be known except:

The entry to record amortization on a building is:

When similar assets are exchanged and no cash is received or given up, there is no entry needed.

A lump-sum purchase of assets requires an allocation of the purchase price among the assets acquired. This allocation method is called the:

A revision of an estimate that extends the asset's useful life:

All amounts paid to acquire an asset and to get it ready for its intended use are referred to as:

Goodwill is a tangible asset.

Which of the following is not a recognized amortization method?

Book value is determined by subtracting the residual value from the cost of an asset.

Paving, fencing, and exterior lighting should be debited to the land account.

Expenditures that increase the asset's capacity or efficiency and/ or extend its useful life are called betterments.

The amortization method that initially ignores residual value in the initial calculation is:

The only requirement an asset must meet in order for it to be recorded as property, plant, and equipment is that it have a useful life beyond one year.

Using the double-declining balance method of amortization means that the book value should not be reduced below the residual value.

Land improvements are not subject to amortization.

For an asset that generates revenue fairly evenly over time, which is the most appropriate method of amortization?

Goodwill is equal to the excess of the cost of an acquired business over the sum of the:

Accounting and the Business Environment

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations and the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Current Liabilities and Payroll

Filters

Exam 10: Property, Plant, and Equipment; Goodwill; and Intangibles

To measure amortization for a property, plant, and equipment asset, all of the following must be known except:

The entry to record amortization on a building is:

When similar assets are exchanged and no cash is received or given up, there is no entry needed.

A lump-sum purchase of assets requires an allocation of the purchase price among the assets acquired. This allocation method is called the:

A revision of an estimate that extends the asset's useful life:

All amounts paid to acquire an asset and to get it ready for its intended use are referred to as:

Goodwill is a tangible asset.

Which of the following is not a recognized amortization method?

Book value is determined by subtracting the residual value from the cost of an asset.

Paving, fencing, and exterior lighting should be debited to the land account.

Expenditures that increase the asset's capacity or efficiency and/ or extend its useful life are called betterments.

The amortization method that initially ignores residual value in the initial calculation is:

The only requirement an asset must meet in order for it to be recorded as property, plant, and equipment is that it have a useful life beyond one year.

Using the double-declining balance method of amortization means that the book value should not be reduced below the residual value.

Land improvements are not subject to amortization.

For an asset that generates revenue fairly evenly over time, which is the most appropriate method of amortization?

Goodwill is equal to the excess of the cost of an acquired business over the sum of the:

Accounting and the Business Environment

Recording Business Transactions

Measuring Business Income: The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations and the Accounting Cycle

Accounting for Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Current Liabilities and Payroll

Filters