Question 1

Which one of the following items is NOT considered a part of the cost of a truck purchased for business use?

Accepted Answer

A)  insurance during transit 
B)  truck licence 
C)  freight charges 
D)  cost of lettering on side of truck 
A)  insurance during transit 
B)  truck licence 
C)  freight charges 
D)  cost of lettering on side of truck

Question 2

If a long-lived asset is sold and the carrying amount is higher than the proceeds received,

Accepted Answer

A)  profit will be increased. 
B)  profit will be decreased. 
C)  there will be no effect on profit. 
D)  the current ratio will increase. 
A)  profit will be increased. 
B)  profit will be decreased. 
C)  there will be no effect on profit. 
D)  the current ratio will increase.

Question 3

Match between columns
                        Premises: Must be expensed when incurred
Examples are franchises and licences
When carrying amount of asset is greater than the proceeds received from its sale
A symbol that identifies a particular company or product
Occurs if proceeds of disposal exceed the carrying amount
Long-lived assets replaceable only by an act of nature
Process of allocating the cost of an depreciable asset to expense over its useful life
Can be identified only with a business as a whole

Accepted Answer

The Answer of Intangible assets and Research costs and Gain is...

Question 4

A company has the following assets:   The total amount reported under property, plant, and equipment would be

Accepted Answer

A)  $12,000,000. 
B)  $14,500,000. 
C)  $17,000,000. 
D)  $19,200,000. 
A)  $12,000,000. 
B)  $14,500,000. 
C)  $17,000,000. 
D)  $19,200,000.

Question 5

Which of the following items should NOT be capitalized?

Accepted Answer

A)  insurance paid while item is in transit 
B)  land surveying fees 
C)  building permits 
D)  truck license 
A)  insurance paid while item is in transit 
B)  land surveying fees 
C)  building permits 
D)  truck license

Question 6

Match between columns
                        Premises: Estimated useful life is expressed in terms of expected use
Cost less accumulated depreciation
Small expenditures which primarily benefit the current period
Process of allocating the cost of an depreciable asset over its useful life
Results in an equal amount of depreciation each period
Material expenditures which increase an asset's operating efficiency, productive capacity, or useful life
Expected cash value of the asset at the end of its useful life
Long-lived resources that are used in operations and are not intended for resale
An accelerated depreciation method used for income tax purposes
An accelerated depreciation method used for financial statement purposes

Accepted Answer

The Answer of Straight-line method and Capital cost allowance and is...

Question 7

The cost of land improvements is NOT depreciated because land improvements typically do not decline in value.

Accepted Answer

A) True 
 B)False

Question 8

Which depreciation method is MOST frequently used in businesses today?

Accepted Answer

A)  straight-line 
B)  diminishing-balance 
C)  units-of-production 
D)  revaluation 
A)  straight-line 
B)  diminishing-balance 
C)  units-of-production 
D)  revaluation

Question 9

Conceptually, the cost allocation procedure for natural resources parallels that of property, plant, and equipment.

Accepted Answer

A) True 
 B)False

Question 10

On January 1, 2014, Noone Industries invests $2,000,000 in land that includes a stand of timber and the rights to cut the timber. The property is expected to yield 50,000 cubic metres of timber. After the amount of lumber permitted by law has been cut, Noone expects to be able to sell the land for $400,000 less $150,000 that must be spent on reforestation. Noone invests a further $300,000 in equipment which is expected to last for the same number of units as the property yields, with no residual value.
Instructions
a. Using the units-of-production method, calculate depreciation for 2014 on both the timber investment and for the equipment, assuming that 12,000 cubic metres are sawn in the year.
b. Explain why the units-of-production method is considered the most appropriate method for depreciation of natural resources.

Accepted Answer

a. Depreciation of timber:
($2,000,000 -

Question 11

A franchise is a contractual arrangement under which the franchisor grants the franchisee the right to sell certain products and/or to provide specific services.

Accepted Answer

A) True 
 B)False

Question 12

In calculating natural resource depreciation, residual 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 13

Juang Company acquires land for $56,000 cash. Additional costs are as follows:   Juang will record the acquisition cost of the land as

Accepted Answer

A)  $56,000. 
B)  $56,690. 
C)  $69,990. 
D)  $59,990. 
A)  $56,000. 
B)  $56,690. 
C)  $69,990. 
D)  $59,990.

Question 14

The amortizable amount of an intangible should be allocated over the shorter of the estimated useful life and legal life.

Accepted Answer

A) True 
 B)False

Question 15

In the straight-line method of depreciation, the rate of depreciation remains constant over time.

Accepted Answer

A) True 
 B)False

Question 16

On July 1, 2014 Amherst Co. sells equipment for $22,000. The equipment originally cost $60,000, had an estimated 5-year life and an expected residual value of $10,000. The accumulated depreciation account had a balance of $35,000 on January 1, 2014, using the straight-line method. The gain or loss on disposal is

Accepted Answer

A)  $3,000 gain. 
B)  $2,000 loss. 
C)  $3,000 loss. 
D)  $2,000 gain. 
A)  $3,000 gain. 
B)  $2,000 loss. 
C)  $3,000 loss. 
D)  $2,000 gain.

Question 17

If a long-lived asset is sold before it is fully depreciated, and the proceeds received is less than the asset's carrying amount,

Accepted Answer

A)  a gain on disposal occurs. 
B)  a loss on disposal occurs. 
C)  there is no gain or loss on disposal. 
D)  additional depreciation expense must be recorded. 
A)  a gain on disposal occurs. 
B)  a loss on disposal occurs. 
C)  there is no gain or loss on disposal. 
D)  additional depreciation expense must be recorded.

Question 18

Additions and improvements

Accepted Answer

A)  occur frequently during the ownership of a long-lived asset. 
B)  normally involve immaterial expenditures. 
C)  increase the carrying amount of long-lived assets when incurred. 
D)  typically only benefit the current accounting period. 
A)  occur frequently during the ownership of a long-lived asset. 
B)  normally involve immaterial expenditures. 
C)  increase the carrying amount of long-lived assets when incurred. 
D)  typically only benefit the current accounting period.

Question 19

Which of the following items is considered an operating expenditure?

Accepted Answer

A)  testing new equipment 
B)  installing equipment 
C)  interest on loan to construct a building 
D)  insurance on equipment in use 
A)  testing new equipment 
B)  installing equipment 
C)  interest on loan to construct a building 
D)  insurance on equipment in use

Question 20

Subsequent to the acquisition of an asset, insurance costs would be added to the cost of the asset.

Accepted Answer

A) True 
 B)False

Which one of the following items is NOT considered a part of the cost of a truck purchased for business use?

If a long-lived asset is sold and the carrying amount is higher than the proceeds received,

A company has the following assets: The total amount reported under property, plant, and equipment would be

Which of the following items should NOT be capitalized?

The cost of land improvements is NOT depreciated because land improvements typically do not decline in value.

Which depreciation method is MOST frequently used in businesses today?

Conceptually, the cost allocation procedure for natural resources parallels that of property, plant, and equipment.

A franchise is a contractual arrangement under which the franchisor grants the franchisee the right to sell certain products and/or to provide specific services.

In calculating natural resource depreciation, residual value is

Juang Company acquires land for $56,000 cash. Additional costs are as follows: Juang will record the acquisition cost of the land as

The amortizable amount of an intangible should be allocated over the shorter of the estimated useful life and legal life.

In the straight-line method of depreciation, the rate of depreciation remains constant over time.

If a long-lived asset is sold before it is fully depreciated, and the proceeds received is less than the asset's carrying amount,

Additions and improvements

Which of the following items is considered an operating expenditure?

Subsequent to the acquisition of an asset, insurance costs would be added to the cost of the 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

Which one of the following items is NOT considered a part of the cost of a truck purchased for business use?

If a long-lived asset is sold and the carrying amount is higher than the proceeds received,

A company has the following assets: The total amount reported under property, plant, and equipment would be

Which of the following items should NOT be capitalized?

The cost of land improvements is NOT depreciated because land improvements typically do not decline in value.

Which depreciation method is MOST frequently used in businesses today?

Conceptually, the cost allocation procedure for natural resources parallels that of property, plant, and equipment.

A franchise is a contractual arrangement under which the franchisor grants the franchisee the right to sell certain products and/or to provide specific services.

In calculating natural resource depreciation, residual value is

Juang Company acquires land for $56,000 cash. Additional costs are as follows: Juang will record the acquisition cost of the land as

The amortizable amount of an intangible should be allocated over the shorter of the estimated useful life and legal life.

In the straight-line method of depreciation, the rate of depreciation remains constant over time.

If a long-lived asset is sold before it is fully depreciated, and the proceeds received is less than the asset's carrying amount,

Additions and improvements

Which of the following items is considered an operating expenditure?

Subsequent to the acquisition of an asset, insurance costs would be added to the cost of the 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