Question 1

Which of the following items does not affect the calculation of depreciation expense?

Accepted Answer

A)  Economic benefits generated by the asset 
B)  Useful life of the asset 
C)  Residual value of the asset 
D)  Capitalized cost of the asset 
A)  Economic benefits generated by the asset 
B)  Useful life of the asset 
C)  Residual value of the asset 
D)  Capitalized cost of the asset

Question 2

Which of McGraw-Hill's intangible assets gives it the legal right to prevent you from borrowing a textbook from a friend and photocopying several chapters from the book?

Accepted Answer

A)  Patent 
B)  Trademark 
C)  Franchise agreement 
D)  Copyright 
A)  Patent 
B)  Trademark 
C)  Franchise agreement 
D)  Copyright

Question 3

OnaRoll,Inc.amortizes its copyright of $20,000 over 40 years.Miss Hap,the bookkeeper,forgot to record the amortization in the current year.The effect of this mistake causes:

Accepted Answer

A)  assets to be overstated. 
B)  cash to be overstated. 
C)  retained earnings to be understated. 
D)  liabilities to be understated. 
A)  assets to be overstated. 
B)  cash to be overstated. 
C)  retained earnings to be understated. 
D)  liabilities to be understated.

Question 4

A productive asset:

Accepted Answer

A)  will be used up within 1 year from the balance sheet date. 
B)  is the same as stockholders' equity. 
C)  is part of inventory. 
D)  is used to produce goods or services that will be sold to customers. 
A)  will be used up within 1 year from the balance sheet date. 
B)  is the same as stockholders' equity. 
C)  is part of inventory. 
D)  is used to produce goods or services that will be sold to customers.

Question 5

Why can depreciation expense be a different amount each year using the units-of-production method?

Accepted Answer

A)  The method calculates expense based on the relationship between each year's output and total estimated output. 
B)  The method calculates expense based on cost divided by the expected useful life. 
C)  The units-of-production method is an accelerated depreciation method. 
D)  The units-of-production method is based on the difference in the appraisal value of the asset from one year to the next. 
A)  The method calculates expense based on the relationship between each year's output and total estimated output. 
B)  The method calculates expense based on cost divided by the expected useful life. 
C)  The units-of-production method is an accelerated depreciation method. 
D)  The units-of-production method is based on the difference in the appraisal value of the asset from one year to the next.

Question 6

Use the information above to answer the following question.Using the straight-line method,what is the book value of the equipment at the end of the third full year of use?

Accepted Answer

A)  $31,520 
B)  $22,120 
C)  $28,400 
D)  $25,520 
A)  $31,520 
B)  $22,120 
C)  $28,400 
D)  $25,520

Question 7

The write-down of goodwill due to impairment will cause:

Accepted Answer

A)  net income to increase. 
B)  intangible assets to decrease. 
C)  property and equipment to decrease. 
D)  long-term liabilities to increase. 
A)  net income to increase. 
B)  intangible assets to decrease. 
C)  property and equipment to decrease. 
D)  long-term liabilities to increase.

Question 8

When an asset is sold and its book value exceeds its selling price,net income will increase.

Accepted Answer

A) True 
 B)False

Question 9

The primary difference between ordinary repairs and extraordinary repairs is:

Accepted Answer

A)  ordinary repairs cost less. 
B)  ordinary repairs are expenditures for routine maintenance and upkeep, whereas extraordinary repairs increase an assets economic usefulness in the future through increased efficiency, capacity, or longer life. 
C)  extraordinary repairs only maintain the asset for a short time, whereas ordinary repairs increase the usefulness of assets beyond their original condition. 
D)  extraordinary repairs are expenditures, not expenses. 
A)  ordinary repairs cost less. 
B)  ordinary repairs are expenditures for routine maintenance and upkeep, whereas extraordinary repairs increase an assets economic usefulness in the future through increased efficiency, capacity, or longer life. 
C)  extraordinary repairs only maintain the asset for a short time, whereas ordinary repairs increase the usefulness of assets beyond their original condition. 
D)  extraordinary repairs are expenditures, not expenses.

Question 10

If a company wants exclusive rights to artistic material,it should obtain:

Accepted Answer

A)  a copyright. 
B)  a patent. 
C)  goodwill. 
D)  a license. 
A)  a copyright. 
B)  a patent. 
C)  goodwill. 
D)  a license.

Question 11

The fixed asset turnover ratio is used to evaluate:

Accepted Answer

A)  how well management uses long-lived tangible assets to generate revenues. 
B)  whether there are enough fixed assets to pay its current liabilities. 
C)  the frequency in which fixed assets are sold. 
D)  the proportion of fixed assets relative to total assets. 
A)  how well management uses long-lived tangible assets to generate revenues. 
B)  whether there are enough fixed assets to pay its current liabilities. 
C)  the frequency in which fixed assets are sold. 
D)  the proportion of fixed assets relative to total assets.

Question 12

Tidy Limited purchased a new van on January 1, 2016.The van cost $20,000.It has an estimated life of five years and the estimated residual value is $5,000.Tidy uses the double-declining-balance method to compute depreciation.
-Use the information above to answer the following question.What is the adjusted balance in the Accumulated Depreciation account at the end of 2017?

Accepted Answer

A)  $3,200 
B)  $4,800 
C)  $9,600 
D)  $12,800 
A)  $3,200 
B)  $4,800 
C)  $9,600 
D)  $12,800

Question 13

Use the following information for the next questions 104 and 105.
A corporation using the double-declining-balance method of depreciation purchased a new machine on January 1, 2016.The machine cost $200,000, had an estimated useful life of 8 years and $25,000 residual value at the end of its useful life.
-A machine is purchased on January 1,2016,for $90,000.It is expected to have a useful life of five years and a residual value of $5,000.The company closes its books on December 31.Under the double-declining balance method,what is the total amount of depreciation to be expensed during the 2017?

Accepted Answer

A)  $21,600 
B)  $22,000 
C)  $22,400 
D)  $34,000 
A)  $21,600 
B)  $22,000 
C)  $22,400 
D)  $34,000

Question 14

A company buys a piece of equipment for $48,000.The equipment has a useful life of ten years.No residual value is expected at the end of the useful life.Using the double-declining-balance method,what is the company's depreciation expense in the first year of the equipment's useful life?

Accepted Answer

A)  $9,600 
B)  $12,000 
C)  $4,800 
D)  $24,000 
A)  $9,600 
B)  $12,000 
C)  $4,800 
D)  $24,000

Question 15

Spangle Corporation uses the unit-of-production method to estimate depreciation.The company purchased a new machine for $18,000 that will produce an estimated 100,000 units over its useful life.The estimated residual value of the machine is $2,000.What is the depreciation rate per unit?

Accepted Answer

A)  $1.60 
B)  $1.80 
C)  $0.16 
D)  $0.18 
A)  $1.60 
B)  $1.80 
C)  $0.16 
D)  $0.18

Question 16

If a company wants to receive exclusive rights to a manufacturing process,it should obtain a:

Accepted Answer

A)  license. 
B)  copyright. 
C)  patent. 
D)  trademark. 
A)  license. 
B)  copyright. 
C)  patent. 
D)  trademark.

Question 17

The Doodad Company purchases a machine for $400,000.The machine has an estimated residual value of $20,000.The company expects the machine to produce two million units.The machine is used to make 400,000 units during the current period.
-Use the information above to answer the following question.If the units-of-production method is used,the depreciation rate is:

Accepted Answer

A)  $0.95 per unit. 
B)  $0.19 per unit. 
C)  $0.05 per unit. 
D)  $1.00 per unit. 
A)  $0.95 per unit. 
B)  $0.19 per unit. 
C)  $0.05 per unit. 
D)  $1.00 per unit.

Question 18

Which of the following items would not be considered a long-lived asset?

Accepted Answer

A)  Buildings 
B)  Land improvements 
C)  Inventory 
D)  Land 
A)  Buildings 
B)  Land improvements 
C)  Inventory 
D)  Land

Question 19

How does an asset impairment loss impact a company's financial statements?

Accepted Answer

A)  It increases expenses and decreases both revenue and net income 
B)  It decreases assets, stockholders' equity, and net income 
C)  It increases expenses and decreases net income with no effect on any other items 
D)  It increases liabilities and decreases stockholders' equity 
A)  It increases expenses and decreases both revenue and net income 
B)  It decreases assets, stockholders' equity, and net income 
C)  It increases expenses and decreases net income with no effect on any other items 
D)  It increases liabilities and decreases stockholders' equity

Question 20

When originally purchased,a vehicle had an estimated useful life of 8 years.The vehicle cost $25,000 and its estimated residual value is $3,000.After 3 years of straight-line depreciation,the asset's total estimated useful life was revised from 8 years to 5 years and there was no change in the estimated residual value.The Depreciation Expense in year 4 is:

Accepted Answer

A)  $6,875. 
B)  $4,400. 
C)  $4,125 
D)  $1,650. 
A)  $6,875. 
B)  $4,400. 
C)  $4,125 
D)  $1,650.

Which of the following items does not affect the calculation of depreciation expense?

Which of McGraw-Hill's intangible assets gives it the legal right to prevent you from borrowing a textbook from a friend and photocopying several chapters from the book?

OnaRoll,Inc.amortizes its copyright of $20,000 over 40 years.Miss Hap,the bookkeeper,forgot to record the amortization in the current year.The effect of this mistake causes:

A productive asset:

Why can depreciation expense be a different amount each year using the units-of-production method?

Use the information above to answer the following question.Using the straight-line method,what is the book value of the equipment at the end of the third full year of use?

The write-down of goodwill due to impairment will cause:

When an asset is sold and its book value exceeds its selling price,net income will increase.

The primary difference between ordinary repairs and extraordinary repairs is:

If a company wants exclusive rights to artistic material,it should obtain:

The fixed asset turnover ratio is used to evaluate:

A company buys a piece of equipment for $48,000.The equipment has a useful life of ten years.No residual value is expected at the end of the useful life.Using the double-declining-balance method,what is the company's depreciation expense in the first year of the equipment's useful life?

Spangle Corporation uses the unit-of-production method to estimate depreciation.The company purchased a new machine for $18,000 that will produce an estimated 100,000 units over its useful life.The estimated residual value of the machine is $2,000.What is the depreciation rate per unit?

If a company wants to receive exclusive rights to a manufacturing process,it should obtain a:

Which of the following items would not be considered a long-lived asset?

How does an asset impairment loss impact a company's financial statements?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Which of the following items does not affect the calculation of depreciation expense?

Which of McGraw-Hill's intangible assets gives it the legal right to prevent you from borrowing a textbook from a friend and photocopying several chapters from the book?

OnaRoll,Inc.amortizes its copyright of $20,000 over 40 years.Miss Hap,the bookkeeper,forgot to record the amortization in the current year.The effect of this mistake causes:

A productive asset:

Why can depreciation expense be a different amount each year using the units-of-production method?

Use the information above to answer the following question.Using the straight-line method,what is the book value of the equipment at the end of the third full year of use?

The write-down of goodwill due to impairment will cause:

When an asset is sold and its book value exceeds its selling price,net income will increase.

The primary difference between ordinary repairs and extraordinary repairs is:

If a company wants exclusive rights to artistic material,it should obtain:

The fixed asset turnover ratio is used to evaluate:

A company buys a piece of equipment for $48,000.The equipment has a useful life of ten years.No residual value is expected at the end of the useful life.Using the double-declining-balance method,what is the company's depreciation expense in the first year of the equipment's useful life?

Spangle Corporation uses the unit-of-production method to estimate depreciation.The company purchased a new machine for $18,000 that will produce an estimated 100,000 units over its useful life.The estimated residual value of the machine is $2,000.What is the depreciation rate per unit?

If a company wants to receive exclusive rights to a manufacturing process,it should obtain a:

Which of the following items would not be considered a long-lived asset?

How does an asset impairment loss impact a company's financial statements?

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters