Question 1

A company using the diminishing-balance method of depreciation will have higher profit in the early years of the asset.

Accepted Answer

A) True 
 B)False

Question 2

A company purchased property for $300,000. The property included an acre of land valued at $50,000, a building valued at $150,000, and equipment valued at $125,000.
-The land will be recorded at a cost of

Accepted Answer

A)  $45,000. 
B)  $48,234. 
C)  $46,154. 
D)  $50,000. 
A)  $45,000. 
B)  $48,234. 
C)  $46,154. 
D)  $50,000.

Question 3

A coal company invests $12 million in a mine estimated to have 20 million tonnes of coal and no residual value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tonnes of coal are extracted and sold. What is the depreciation included in cost of goods sold for the first year?

Accepted Answer

A)  $600,000 
B)  $240,000 
C)  $60,000 
D)  Cannot be determined from the information provided. 
A)  $600,000 
B)  $240,000 
C)  $60,000 
D)  Cannot be determined from the information provided.

Question 4

Revaluation model is allowed under IFRS mainly because it is useful in countries where

Accepted Answer

A)  there is a high inventory turnover. 
B)  companies cannot estimate fair value of assets. 
C)  there is a high inflation rates. 
D)  companies cannot determine an appropriate method of depreciation. 
A)  there is a high inventory turnover. 
B)  companies cannot estimate fair value of assets. 
C)  there is a high inflation rates. 
D)  companies cannot determine an appropriate method of depreciation.

Question 5

A company purchased factory equipment on June 1, 2014 for $48,000. It is estimated that the equipment will have a $6,000 residual value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2014 is

Accepted Answer

A)  $4,800. 
B)  $4,200. 
C)  $2,450. 
D)  $6,000. 
A)  $4,800. 
B)  $4,200. 
C)  $2,450. 
D)  $6,000.

Question 6

Depreciation is the process of allocating the cost of a long-lived asset (such as property, plant, and equipment) over its service life in a(n)

Accepted Answer

A)  equal and equitable manner. 
B)  accelerated and accurate manner. 
C)  systematic and rational manner. 
D)  conservative market-based manner. 
A)  equal and equitable manner. 
B)  accelerated and accurate manner. 
C)  systematic and rational manner. 
D)  conservative market-based manner.

Question 7

Which of the following methods of calculating depreciation uses measures other than time?

Accepted Answer

A)  Straight-line 
B)  Diminishing-balance 
C)  Units-of-production 
D)  None of these 
A)  Straight-line 
B)  Diminishing-balance 
C)  Units-of-production 
D)  None of these

Question 8

Dorchester Company purchased a new van for floral deliveries on July 1, 2014. The van cost $20,000 with an estimated life of 5 years and $5,000 residual value at the end of its useful life. The double diminishing-balance method of depreciation will be used.
-What is the depreciation expense for 2014?

Accepted Answer

A)  $4,000 
B)  $3,000 
C)  $6,000 
D)  $8,000 
A)  $4,000 
B)  $3,000 
C)  $6,000 
D)  $8,000

Question 9

For the year ended December 31, 2014, Akito Co. has net sales of $1,000,000 and profit of $290,000. Total assets on January 1, 2014 were $1,750,000 and total assets at December 31, 2014 are $1,245,000. Akito's return on assets for 2014 is

Accepted Answer

A)  19.4%. 
B)  23.3%. 
C)  66.8%. 
D)  80.3%. 
A)  19.4%. 
B)  23.3%. 
C)  66.8%. 
D)  80.3%.

Question 10

The four subdivisions for property, plant, and equipment are normally

Accepted Answer

A)  land, land improvements, buildings, and equipment. 
B)  intangibles, land, buildings, and equipment. 
C)  furnishings and fixtures, land, buildings, and equipment. 
D)  property, plant, equipment, and land. 
A)  land, land improvements, buildings, and equipment. 
B)  intangibles, land, buildings, and equipment. 
C)  furnishings and fixtures, land, buildings, and equipment. 
D)  property, plant, equipment, and land.

Question 11

Kabale Company purchased factory equipment with an invoice price of $92,000. Other costs incurred were freight costs, $2,500; installation of wiring and foundation, $2,200; material and labour costs in testing equipment, $700; oil lubricants and supplies to be used with equipment, $500; one-year fire insurance policy covering equipment, $1,400. The equipment is estimated to have an $8,000 residual value at the end of its 5-year useful service life.
Instructions
a. Calculate the acquisition cost of the equipment. Identify each element of cost clearly.
b. If the double diminishing-balance method of depreciation was used, the constant percentage applied to a diminishing carrying amount would be __________.

Accepted Answer

@#IMG-DLM& 
b. If the diminishing-balanc

Question 12

Goodwill can be recorded

Accepted Answer

A)  when customers keep returning because they are satisfied with the company's products. 
B)  when the company acquires a good location for its business. 
C)  when the company has exceptional management. 
D)  only when an entire business is purchased. 
A)  when customers keep returning because they are satisfied with the company's products. 
B)  when the company acquires a good location for its business. 
C)  when the company has exceptional management. 
D)  only when an entire business is purchased.

Question 13

The Bartallas Clinic purchased a new surgical laser for $75,000. The estimated residual value is $7,500. The laser has a useful life of four years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,100 hours in year 2; 3,400 hours in year 3; 2,900 hours in year 4.
Instructions
a. Calculate the annual depreciation for each of the four years under each of the following methods:
i. straight-line
ii. units-of-production
b. If you were the administrator of the clinic, which method would you deem as most appropriate? Justify your answer.
c. Which method would result in the lowest reported profit in the first year? Which method would result in the lowest total reported profit over the four-year period?
d. Which method would result in the lowest cash flow in Year 1? Over the life of the asset?

Accepted Answer

@#IMG-DLM& b. The units-of-production method can b

Question 14

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

Question 15

Which of the following assets has indefinite life?

Accepted Answer

A)  land Improvements 
B)  patent 
C)  goodwill 
D)  copyright 
A)  land Improvements 
B)  patent 
C)  goodwill 
D)  copyright

Question 16

Goodwill

Accepted Answer

A)  may be expensed upon purchase if desired. 
B)  can be sold by itself to another company. 
C)  can be purchased and charged directly to owner's equity. 
D)  should be recorded as an intangible asset and carried on the balance sheet unless an impairment in value occurs. 
A)  may be expensed upon purchase if desired. 
B)  can be sold by itself to another company. 
C)  can be purchased and charged directly to owner's equity. 
D)  should be recorded as an intangible asset and carried on the balance sheet unless an impairment in value occurs.

Question 17

Krantz Company's delivery truck, which originally cost $28,000, was destroyed by fire. At the time of the fire, the balance of the accumulated depreciation account amounted to $19,000. The company received $16,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

Accepted Answer

A)  $12,000 loss. 
B)  $7,000 loss. 
C)  $12,000 gain. 
D)  $7,000 gain. 
A)  $12,000 loss. 
B)  $7,000 loss. 
C)  $12,000 gain. 
D)  $7,000 gain.

Question 18

The cost of natural resources is NOT allocated to expense because the natural resources are replaceable only by an act of nature.

Accepted Answer

A) True 
 B)False

Question 19

The cost of property, plant, and equipment includes all of the following items EXCEPT

Accepted Answer

A)  annual maintenance. 
B)  purchase price. 
C)  installation fee. 
D)  freight charges. 
A)  annual maintenance. 
B)  purchase price. 
C)  installation fee. 
D)  freight charges.

Question 20

A higher trade-in value will increase the profit of the company disposing of an asset.

Accepted Answer

A) True 
 B)False

A company using the diminishing-balance method of depreciation will have higher profit in the early years of the asset.

A company purchased property for $300,000. The property included an acre of land valued at $50,000, a building valued at $150,000, and equipment valued at $125,000. -The land will be recorded at a cost of

Revaluation model is allowed under IFRS mainly because it is useful in countries where

A company purchased factory equipment on June 1, 2014 for $48,000. It is estimated that the equipment will have a $6,000 residual value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2014 is

Depreciation is the process of allocating the cost of a long-lived asset (such as property, plant, and equipment) over its service life in a(n)

Which of the following methods of calculating depreciation uses measures other than time?

For the year ended December 31, 2014, Akito Co. has net sales of $1,000,000 and profit of $290,000. Total assets on January 1, 2014 were $1,750,000 and total assets at December 31, 2014 are $1,245,000. Akito's return on assets for 2014 is

The four subdivisions for property, plant, and equipment are normally

Goodwill can be recorded

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

Which of the following assets has indefinite life?

Goodwill

Krantz Company's delivery truck, which originally cost $28,000, was destroyed by fire. At the time of the fire, the balance of the accumulated depreciation account amounted to $19,000. The company received $16,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

The cost of natural resources is NOT allocated to expense because the natural resources are replaceable only by an act of nature.

The cost of property, plant, and equipment includes all of the following items EXCEPT

A higher trade-in value will increase the profit of the company disposing of an asset.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters

Exam 9: Long-Lived Assets

A company using the diminishing-balance method of depreciation will have higher profit in the early years of the asset.

A company purchased property for $300,000. The property included an acre of land valued at $50,000, a building valued at $150,000, and equipment valued at $125,000. -The land will be recorded at a cost of

Revaluation model is allowed under IFRS mainly because it is useful in countries where

A company purchased factory equipment on June 1, 2014 for $48,000. It is estimated that the equipment will have a $6,000 residual value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2014 is

Depreciation is the process of allocating the cost of a long-lived asset (such as property, plant, and equipment) over its service life in a(n)

Which of the following methods of calculating depreciation uses measures other than time?

For the year ended December 31, 2014, Akito Co. has net sales of $1,000,000 and profit of $290,000. Total assets on January 1, 2014 were $1,750,000 and total assets at December 31, 2014 are $1,245,000. Akito's return on assets for 2014 is

The four subdivisions for property, plant, and equipment are normally

Goodwill can be recorded

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

Which of the following assets has indefinite life?

Goodwill

The cost of natural resources is NOT allocated to expense because the natural resources are replaceable only by an act of nature.

The cost of property, plant, and equipment includes all of the following items EXCEPT

A higher trade-in value will increase the profit of the company disposing of an asset.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completion of the Accounting Cycle

Accounting for Merchandising Operations

Inventory Costing

Internal Control and Cash

Current Liabilities

Accounting Principles

Accounting for Partnerships

Introduction to Corporations

Corporations: Additional Topics and Ifrs

Non-Current Liabilities

The Cash Flow Statement

Financial Statement Analysis

Investments

Filters