Question 1

A long-term operating asset should be acquired if

Accepted Answer

A)  The cost of purchasing the long-term operating asset is less than the expected cash inflows, adjusted for the time-value of money, generated by the long-term operating asset 
B)  The cost of purchasing the long-term operating asset is more than the expected cash inflows, adjusted for the time-value of money, generated by the long-term operating asset 
C)  The cost of purchasing the long-term operating asset is less than the expected cash inflows, not adjusted for the time-value of money, generated by the long-term operating asset 
D)  The cost of purchasing the long-term operating asset is more than the expected cash inflows, not adjusted for the time-value of money, generated by the long-term operating asset 
A)  The cost of purchasing the long-term operating asset is less than the expected cash inflows, adjusted for the time-value of money, generated by the long-term operating asset 
B)  The cost of purchasing the long-term operating asset is more than the expected cash inflows, adjusted for the time-value of money, generated by the long-term operating asset 
C)  The cost of purchasing the long-term operating asset is less than the expected cash inflows, not adjusted for the time-value of money, generated by the long-term operating asset 
D)  The cost of purchasing the long-term operating asset is more than the expected cash inflows, not adjusted for the time-value of money, generated by the long-term operating asset

Question 2

Atchison Corporation purchased equipment, a building, and land for $1,000,000 ($200,000 in cash and $800,000 in notes). After the purchase, the property was appraised. Fair market values were determined to be $240,000 for the equipment, $540,000 for the building, and $420,000 for the land.
Prepare the entry to record the purchase of this property by Atchison Corporation.

Accepted Answer

@#IMG-DLM& Allocatio

Question 3

Saria Supply Printing Company, a calendar-year corporation, purchased a new scale for $165,000 on April 1, 2012. Additional costs of the scale included sales tax of 5 percent, freight-in of $5,800, and installation costs of $5,100. The scale has a useful life of 5 years with no salvage value.

Accepted Answer

The answer of Saria Supply Printing Company, a calendar-year corporation,...

Question 4

Assume that a company leases equipment for a 5-year period under a capital lease and agrees to pay an annual rental of $16,000 at the end of each year. If the present value of the lease payments is $59,200, the entry to record the leasing transaction would include

Accepted Answer

A)  A debit to Lease Expense of $59,200 
B)  A debit to Leased Equipment of $59,200 
C)  A debit to Leased Equipment of $80,000 
D)  A credit to Rent Payable of $16,000 
A)  A debit to Lease Expense of $59,200 
B)  A debit to Leased Equipment of $59,200 
C)  A debit to Leased Equipment of $80,000 
D)  A credit to Rent Payable of $16,000

Question 5

Rexford Company purchased a machine on January 1, 2012, for $57,600 cash. The machine has an estimated useful life of 8 years and a salvage value of $15,040. Rexford uses the double declining-balance method of depreciation for all its assets. What will be the machine's book value as of December 31, 2013?

Accepted Answer

A)  $10,800 
B)  $32,400 
C)  $43,200 
D)  $14,400 
A)  $10,800 
B)  $32,400 
C)  $43,200 
D)  $14,400

Question 6

Occasionally, events occur that change an asset's value after purchase. Which of the following is true regarding these changes in value?

Accepted Answer

A)  Reductions in asset value are recognized. 
B)  Increases in asset value are recognized. 
C)  Both decreases and increases are recognized. 
D)  Neither decreases nor increases are recognized. 
A)  Reductions in asset value are recognized. 
B)  Increases in asset value are recognized. 
C)  Both decreases and increases are recognized. 
D)  Neither decreases nor increases are recognized.

Question 7

When the cost of equipment is divided by its estimated useful life, the result is referred to as

Accepted Answer

A)  Book value 
B)  Accumulated depreciation 
C)  Carrying value 
D)  Depreciation expense 
A)  Book value 
B)  Accumulated depreciation 
C)  Carrying value 
D)  Depreciation expense

Question 8

Which of the following depreciation methods initially ignores salvage value in its calculation?

Accepted Answer

A)  Straight-line 
B)  Sum-of-the-years'-digits 
C)  Declining-balance 
D)  Units-of-production 
A)  Straight-line 
B)  Sum-of-the-years'-digits 
C)  Declining-balance 
D)  Units-of-production

Question 9

Rapid Deliveries purchased a delivery truck on July 1, 2012, at a cost of $16,800. The truck has an estimated useful life of 4 years or 40,000 miles and a salvage value of $1,200. The depreciation expense for the year ending December 31, 2012, under the straight-line depreciation method would be

Accepted Answer

A)  $1,950 
B)  $1,352 
C)  $3,900 
D)  $1,092 
A)  $1,950 
B)  $1,352 
C)  $3,900 
D)  $1,092

Question 10

On January 1, 2011, Milner Company purchased a machine for $138,000. The machine cost $1,200 to deliver and $4,800 to install. At the end of 10 years, Milner expects to sell the machine for $12,000. Compute depreciation expense for 2011 and 2012 using the following methods:

Accepted Answer

The answer of On January 1, 2011, Milner Company purchased...

Question 11

How is Accumulated Depreciation classified?

Accepted Answer

A)  Equity 
B)  Liability 
C)  Contra-asset 
D)  Expense 
A)  Equity 
B)  Liability 
C)  Contra-asset 
D)  Expense

Question 12

Whiting Company purchased a machine in 2007 for $150,000. The machine was being depreciated by the straight-line method over an estimated useful life of 10 years, with no salvage value. At the beginning of 2012, after 5 years of use, Whiting paid $30,000 on maintenance to the machine. Whiting determined that $5,000 of this expense was normal maintenance and did not extend the life of the machine. However, the rest of the expenditure was an overhaul of the machine and was expected to extend the machine's estimated useful life by an additional 5 years. What would be the depreciation expense recorded for the above machine in 2012?

Accepted Answer

The answer of Whiting Company purchased a machine in 2007...

Question 13

Which of the following assets is NOT usually depreciated, depleted, or amortized?

Accepted Answer

A)  Furniture 
B)  Mineral deposits 
C)  Land 
D)  Patents 
A)  Furniture 
B)  Mineral deposits 
C)  Land 
D)  Patents

Question 14

Ferrott Company purchased a machine that was installed and placed in service on January 2, 2011, at a total cost of $480,000. Salvage value was estimated at $80,000. The machine is being depreciated over ten years by the double-declining-balance method. For the year 2012, Ferrott should record depreciation expense of

Accepted Answer

A)  $64,000 
B)  $76,800 
C)  $80,000 
D)  $96,000 
A)  $64,000 
B)  $76,800 
C)  $80,000 
D)  $96,000

Question 15

Which of the following assets would normally involve a straight-line method of cost allocation?

Accepted Answer

A)  An oil well 
B)  Land 
C)  A timber tract 
D)  Patent 
A)  An oil well 
B)  Land 
C)  A timber tract 
D)  Patent

Question 16

The ratio that measures how efficiently a company is using its property, plant, and equipment is the

Accepted Answer

A)  Property, plant, and equipment usage ratio 
B)  Accounts receivable turnover ratio 
C)  Asset turnover ratio 
D)  Fixed asset turnover ratio 
A)  Property, plant, and equipment usage ratio 
B)  Accounts receivable turnover ratio 
C)  Asset turnover ratio 
D)  Fixed asset turnover ratio

Question 17

Claflin Construction Company purchased a machine on January 1, 2011 for $411,000. The machine has an estimated useful life of 8 years and a salvage value of $27,000. In 2013, Claflin determines that the machine will actually have a total useful life of 5 years and the salvage value will be $15,000. If Claflin uses straight-line depreciation, what will be the balance of the accumulated depreciation account on December 31, 2013?

Accepted Answer

A)  $100,000 
B)  $144,000 
C)  $244,000 
D)  $196,000 
A)  $100,000 
B)  $144,000 
C)  $244,000 
D)  $196,000

Question 18

On January 1, 2010, Wayne's Waffle House purchased a freezer for $45,000. The freezer had an estimated useful life of 10 years and an estimated residual value of $3,000 at the time of purchase. Wayne spent $10,000 on January 1, 2012, to replace the freezer motor. This replacement increased the freezer's life by 5 years and the residual value by $2,000. Assuming that straight-line depreciation is used, what will be the depreciation expense for 2012?

Accepted Answer

A)  $3,200 
B)  $3,585 
C)  $8,320 
D)  $3,431 
A)  $3,200 
B)  $3,585 
C)  $8,320 
D)  $3,431

Question 19

Intangible assets are usually amortized using

Accepted Answer

A)  The straight-line method 
B)  The units-of-production method 
C)  The declining-balance method 
D)  The sum-of-the-years'-digits method 
A)  The straight-line method 
B)  The units-of-production method 
C)  The declining-balance method 
D)  The sum-of-the-years'-digits method

Question 20

Which depreciation formula does NOT include salvage value?

Accepted Answer

A)  Units-of-production method 
B)  Straight-line method 
C)  Sum-of-the-years'-digits method 
D)  Double-declining-balance method 
A)  Units-of-production method 
B)  Straight-line method 
C)  Sum-of-the-years'-digits method 
D)  Double-declining-balance method

A long-term operating asset should be acquired if

Saria Supply Printing Company, a calendar-year corporation, purchased a new scale for $165,000 on April 1, 2012. Additional costs of the scale included sales tax of 5 percent, freight-in of $5,800, and installation costs of $5,100. The scale has a useful life of 5 years with no salvage value.

Assume that a company leases equipment for a 5-year period under a capital lease and agrees to pay an annual rental of $16,000 at the end of each year. If the present value of the lease payments is $59,200, the entry to record the leasing transaction would include

Occasionally, events occur that change an asset's value after purchase. Which of the following is true regarding these changes in value?

When the cost of equipment is divided by its estimated useful life, the result is referred to as

Which of the following depreciation methods initially ignores salvage value in its calculation?

Rapid Deliveries purchased a delivery truck on July 1, 2012, at a cost of $16,800. The truck has an estimated useful life of 4 years or 40,000 miles and a salvage value of $1,200. The depreciation expense for the year ending December 31, 2012, under the straight-line depreciation method would be

On January 1, 2011, Milner Company purchased a machine for $138,000. The machine cost $1,200 to deliver and $4,800 to install. At the end of 10 years, Milner expects to sell the machine for $12,000. Compute depreciation expense for 2011 and 2012 using the following methods:

How is Accumulated Depreciation classified?

Which of the following assets is NOT usually depreciated, depleted, or amortized?

Which of the following assets would normally involve a straight-line method of cost allocation?

The ratio that measures how efficiently a company is using its property, plant, and equipment is the

Intangible assets are usually amortized using

Which depreciation formula does NOT include salvage value?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

Filters

Exam 9: Investments: Property, Plant, and Equipment and Intangible Assets

A long-term operating asset should be acquired if

Saria Supply Printing Company, a calendar-year corporation, purchased a new scale for $165,000 on April 1, 2012. Additional costs of the scale included sales tax of 5 percent, freight-in of $5,800, and installation costs of $5,100. The scale has a useful life of 5 years with no salvage value.

Assume that a company leases equipment for a 5-year period under a capital lease and agrees to pay an annual rental of $16,000 at the end of each year. If the present value of the lease payments is $59,200, the entry to record the leasing transaction would include

Occasionally, events occur that change an asset's value after purchase. Which of the following is true regarding these changes in value?

When the cost of equipment is divided by its estimated useful life, the result is referred to as

Which of the following depreciation methods initially ignores salvage value in its calculation?

Rapid Deliveries purchased a delivery truck on July 1, 2012, at a cost of $16,800. The truck has an estimated useful life of 4 years or 40,000 miles and a salvage value of $1,200. The depreciation expense for the year ending December 31, 2012, under the straight-line depreciation method would be

On January 1, 2011, Milner Company purchased a machine for $138,000. The machine cost $1,200 to deliver and $4,800 to install. At the end of 10 years, Milner expects to sell the machine for $12,000. Compute depreciation expense for 2011 and 2012 using the following methods:

How is Accumulated Depreciation classified?

Which of the following assets is NOT usually depreciated, depleted, or amortized?

Which of the following assets would normally involve a straight-line method of cost allocation?

The ratio that measures how efficiently a company is using its property, plant, and equipment is the

Intangible assets are usually amortized using

Which depreciation formula does NOT include salvage value?

Accounting Information: Users and Uses

Financial Statements: An Overview

The Accounting Cycle: The Mechanics of Accounting

Completing the Accounting Cycle

Internal Controls: Ensuring the Integrity of Financial Information

Receivables: Selling a Product or a Service

Inventory and the Cost of Sales

Completing the Operating Cycle

Financing: Long-Term Liabilities

Financing: Equity

Investments: Debt and Equity Securities

Statement of Cash Flows

Analyzing Financial Statements

Management Accounting and Cost Concepts

Cost Flows and Business Organizations

Activity-Based Costing

Budgeting and Control

Controlling Cost and Profit

Inventory Management and Variable and Absorption Costing

Cost Behavior and Decisions Using C-V-P Analysis

Relevant Information and Decisions

Capital Investment Decisions

New Measures of Performance

Filters