Question 1

A change in accounting estimate is:

Accepted Answer

A)  Reflected in current and future financial statements and also requires modification of past statements. 
B)  Reflected only in current and future financial statements. 
C)  Both reflected only in current and future financial statements and a change in a calculated amount used in the financial statements resulting from new information or subsequent developments and from better insight or improved judgment. 
D)  A change in a calculated amount used in the financial statements resulting from new information or subsequent developments and from better insight or improved judgment. 
E)  None of these answers is correct. 
A)  Reflected in current and future financial statements and also requires modification of past statements. 
B)  Reflected only in current and future financial statements. 
C)  Both reflected only in current and future financial statements and a change in a calculated amount used in the financial statements resulting from new information or subsequent developments and from better insight or improved judgment. 
D)  A change in a calculated amount used in the financial statements resulting from new information or subsequent developments and from better insight or improved judgment. 
E)  None of these answers is correct.

Question 2

Property, plant and equipment can be disposed of by discarding, sale, or exchange of the asset.

Accepted Answer

A) True 
 B)False

Question 3

Residual value is:

Accepted Answer

A)  The cost of an asset minus its accumulated depreciation. 
B)  The same as an asset's service life. 
C)  An estimate of the asset's value at the end of its useful life. 
D)  Another name for market value. 
E)  All of these answers are correct. 
A)  The cost of an asset minus its accumulated depreciation. 
B)  The same as an asset's service life. 
C)  An estimate of the asset's value at the end of its useful life. 
D)  Another name for market value. 
E)  All of these answers are correct.

Question 4

Inadequacy refers to the condition where the capacity of a property, plant and equipment item is too small to meet the company's productive demands.

Accepted Answer

A) True 
 B)False

Question 5

Amortization is the process of allocating the cost of intangibles over their estimated useful life.

Accepted Answer

A) True 
 B)False

Question 6

Once the estimated depreciation for an asset is calculated:

Accepted Answer

A)  The estimate itself cannot be changed, however, new information should be disclosed in financial statement footnotes. 
B)  It may be revised based on new information and any changes are accumulated and recognized when the asset is sold. 
C)  It may be revised based on new information. 
D)  It cannot be changed due to the historical cost principle. 
E)  Any changes are accumulated and recognized when the asset is sold. 
A)  The estimate itself cannot be changed, however, new information should be disclosed in financial statement footnotes. 
B)  It may be revised based on new information and any changes are accumulated and recognized when the asset is sold. 
C)  It may be revised based on new information. 
D)  It cannot be changed due to the historical cost principle. 
E)  Any changes are accumulated and recognized when the asset is sold.

Question 7

The gain or loss from disposal of property, plant and equipment is the difference between an asset's book value and the value received.

Accepted Answer

A) True 
 B)False

Question 8

Goodwill is an intangible asset.

Accepted Answer

A) True 
 B)False

Question 9

A method that allocates an equal portion of the total depreciation for a property, plant and equipment asset to each unit produced is called:

Accepted Answer

A)  Double-declining-balance depreciation. 
B)  Straight-line depreciation. 
C)  Accelerated depreciation. 
D)  Capital cost allowance. 
E)  Units-of-production depreciation. 
A)  Double-declining-balance depreciation. 
B)  Straight-line depreciation. 
C)  Accelerated depreciation. 
D)  Capital cost allowance. 
E)  Units-of-production depreciation.

Question 10

Ordinary repairs:

Accepted Answer

A)  Maintain an asset. 
B)  Do not extend an asset's useful life. 
C)  Are expenditures to keep an asset in normal operating condition. 
D)  Do not materially increase the asset's life or productive capabilities. 
E)  All of these answers are correct. 
A)  Maintain an asset. 
B)  Do not extend an asset's useful life. 
C)  Are expenditures to keep an asset in normal operating condition. 
D)  Do not materially increase the asset's life or productive capabilities. 
E)  All of these answers are correct.

Question 11

Equipment costing $14,000 with accumulated depreciation of $10,000 was sold for$3,000. The company should recognize a $1,000 loss on disposal of the equipment.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements is true with respect to intangible assets?

Accepted Answer

A)  Goodwill is an intangible asset that is amortized and tested for impairment. 
B)  Intangible assets are amortized over a period of 50 years. 
C)  An intangible asset is recorded at market value when the asset is acquired. 
D)  Intangible assets should be evaluated each year to determine if there has been any impairment in their value. 
E)  Intangible assets are expensed to income in the year they are acquired. 
A)  Goodwill is an intangible asset that is amortized and tested for impairment. 
B)  Intangible assets are amortized over a period of 50 years. 
C)  An intangible asset is recorded at market value when the asset is acquired. 
D)  Intangible assets should be evaluated each year to determine if there has been any impairment in their value. 
E)  Intangible assets are expensed to income in the year they are acquired.

Question 13

SportsWorld purchased property for $100,000. The property included a building,parking lot, and land. The building was appraised at $65,000; the land at $40,000; and the parking lot at $10,000. To the nearest dollar, the value of the land to be recorded in the books should be:

Accepted Answer

A)  $40,000. 
B)  $34,783. 
C)  $36,364. 
D)  $48,696. 
E)  $56,522. 
A)  $40,000. 
B)  $34,783. 
C)  $36,364. 
D)  $48,696. 
E)  $56,522.

Question 14

A leasehold:

Accepted Answer

A)  Is initially recorded as rent expense. 
B)  Is not an intangible asset. 
C)  Is an investment. 
D)  Is a short-term rental agreement. 
E)  Refers to the rights granted to the lessee by the lessor in a lease. 
A)  Is initially recorded as rent expense. 
B)  Is not an intangible asset. 
C)  Is an investment. 
D)  Is a short-term rental agreement. 
E)  Refers to the rights granted to the lessee by the lessor in a lease.

Question 15

An accelerated depreciation method yields smaller depreciation expense in the early years of an asset's life and larger charges in later years.

Accepted Answer

A) True 
 B)False

Question 16

SportsWorld purchased store equipment for $65,000. The equipment has an estimated residual value of $6,000, with an estimated useful life of 10 years. The annualdepreciation using the straight-line method will be $3,900 per year.

Accepted Answer

A) True 
 B)False

Question 17

Land purchased as a building site is a tangible asset called property, plant andequipment and is classified under the "Long-term Investments" section on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 18

Property, plant and equipment are:

Accepted Answer

A)  Long-term investments. 
B)  Intangible assets used in the operations of a business having a useful life of more than one accounting period. 
C)  Current assets. 
D)  Tangible assets used in the operation of business having a useful life of less than one accounting period. 
E)  Tangible assets used in the operation of a business having a useful life of more than one accounting period. 
A)  Long-term investments. 
B)  Intangible assets used in the operations of a business having a useful life of more than one accounting period. 
C)  Current assets. 
D)  Tangible assets used in the operation of business having a useful life of less than one accounting period. 
E)  Tangible assets used in the operation of a business having a useful life of more than one accounting period.

Question 19

Obsolescence:

Accepted Answer

A)  Occurs when an asset is at the end of its useful life. 
B)  Refers to a condition where a property, plant and equipment asset is no longer useful in producing goods and services. 
C)  Is the same as inadequacy. 
D)  Refers to a condition where the capacity of a property, plant and equipment asset is too small to meet the company's productive demands. 
E)  None of these answers is correct. 
A)  Occurs when an asset is at the end of its useful life. 
B)  Refers to a condition where a property, plant and equipment asset is no longer useful in producing goods and services. 
C)  Is the same as inadequacy. 
D)  Refers to a condition where the capacity of a property, plant and equipment asset is too small to meet the company's productive demands. 
E)  None of these answers is correct.

Question 20

Creek Construction purchased a machine for $26,000. It traded in an old machine and received a $4,200 trade-in allowance. The old machine cost $24,000 and hadaccumulated depreciation of $16,000 to the date of trade-in. At what value should be new asset be recorded?

Accepted Answer

A)  $21,800. 
B)  $30,200. 
C)  $29,800. 
D)  $24,000. 
E)  $26,000. 
A)  $21,800. 
B)  $30,200. 
C)  $29,800. 
D)  $24,000. 
E)  $26,000.

A change in accounting estimate is:

Property, plant and equipment can be disposed of by discarding, sale, or exchange of the asset.

Residual value is:

Inadequacy refers to the condition where the capacity of a property, plant and equipment item is too small to meet the company's productive demands.

Amortization is the process of allocating the cost of intangibles over their estimated useful life.

Once the estimated depreciation for an asset is calculated:

The gain or loss from disposal of property, plant and equipment is the difference between an asset's book value and the value received.

Goodwill is an intangible asset.

A method that allocates an equal portion of the total depreciation for a property, plant and equipment asset to each unit produced is called:

Ordinary repairs:

Equipment costing $14,000 with accumulated depreciation of $10,000 was sold for$3,000. The company should recognize a $1,000 loss on disposal of the equipment.

Which of the following statements is true with respect to intangible assets?

SportsWorld purchased property for $100,000. The property included a building,parking lot, and land. The building was appraised at $65,000; the land at $40,000; and the parking lot at $10,000. To the nearest dollar, the value of the land to be recorded in the books should be:

A leasehold:

An accelerated depreciation method yields smaller depreciation expense in the early years of an asset's life and larger charges in later years.

SportsWorld purchased store equipment for $65,000. The equipment has an estimated residual value of $6,000, with an estimated useful life of 10 years. The annualdepreciation using the straight-line method will be $3,900 per year.

Land purchased as a building site is a tangible asset called property, plant andequipment and is classified under the "Long-term Investments" section on the balance sheet.

Property, plant and equipment are:

Obsolescence:

Creek Construction purchased a machine for $26,000. It traded in an old machine and received a $4,200 trade-in allowance. The old machine cost $24,000 and hadaccumulated depreciation of $16,000 to the date of trade-in. At what value should be new asset be recorded?

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters

Exam 9: Property, Plant and Equipment and Intangibles

A change in accounting estimate is:

Property, plant and equipment can be disposed of by discarding, sale, or exchange of the asset.

Residual value is:

Inadequacy refers to the condition where the capacity of a property, plant and equipment item is too small to meet the company's productive demands.

Amortization is the process of allocating the cost of intangibles over their estimated useful life.

Once the estimated depreciation for an asset is calculated:

The gain or loss from disposal of property, plant and equipment is the difference between an asset's book value and the value received.

Goodwill is an intangible asset.

A method that allocates an equal portion of the total depreciation for a property, plant and equipment asset to each unit produced is called:

Ordinary repairs:

Equipment costing $14,000 with accumulated depreciation of $10,000 was sold for$3,000. The company should recognize a $1,000 loss on disposal of the equipment.

Which of the following statements is true with respect to intangible assets?

SportsWorld purchased property for $100,000. The property included a building,parking lot, and land. The building was appraised at $65,000; the land at $40,000; and the parking lot at $10,000. To the nearest dollar, the value of the land to be recorded in the books should be:

A leasehold:

An accelerated depreciation method yields smaller depreciation expense in the early years of an asset's life and larger charges in later years.

SportsWorld purchased store equipment for $65,000. The equipment has an estimated residual value of $6,000, with an estimated useful life of 10 years. The annualdepreciation using the straight-line method will be $3,900 per year.

Land purchased as a building site is a tangible asset called property, plant andequipment and is classified under the "Long-term Investments" section on the balance sheet.

Property, plant and equipment are:

Obsolescence:

Creek Construction purchased a machine for $26,000. It traded in an old machine and received a $4,200 trade-in allowance. The old machine cost $24,000 and hadaccumulated depreciation of $16,000 to the date of trade-in. At what value should be new asset be recorded?

Current Liabilities

Partnerships

Organization and Operation of Corporations

Corporate Reporting: Profit, Earnings Per Share, and Retained Earnings

Bonds and Long-Term Notes Payable

Accounting for Debt and Share Investments

Reporting and Analyzing Cash Flows

Analyzing Financial Statements

Filters