Question 1

Under U.S. accounting rules (generally accepted accounting principles), an asset is impaired when

Accepted Answer

A)  The asset's fair value is less than the book value 
B)  The asset's future cash inflows are less than the book value 
C)  The asset's market value is less than the book value 
D)  The asset's cost is less than the book value 
A)  The asset's fair value is less than the book value 
B)  The asset's future cash inflows are less than the book value 
C)  The asset's market value is less than the book value 
D)  The asset's cost is less than the book value

Question 2

The Giovanni Company purchased a tooling machine in 2002 for $120,000. The machine was being depreciated by the straight-line method over an estimated useful life of 20 years, with no salvage value. At the beginning of 2012, after 10 years of use, Giovanni paid $20,000 to overhaul the machine. Because of this improvement, the machine's estimated useful life would be extended an additional 5 years. What would be the depreciation expense recorded for the above machine in 2012?

Accepted Answer

A)  $4,000 
B)  $5,333 
C)  $6,000 
D)  $7,333 
A)  $4,000 
B)  $5,333 
C)  $6,000 
D)  $7,333

Question 3

Which of the following is NOT a way to dispose of an asset?

Accepted Answer

A)  Discard or scrap it 
B)  Sell it 
C)  Exchange it for another asset 
D)  All of these are ways to dispose of an asset 
A)  Discard or scrap it 
B)  Sell it 
C)  Exchange it for another asset 
D)  All of these are ways to dispose of an asset

Question 4

The periodic allocation to expense of an intangible asset's cost is

Accepted Answer

A)  Amortization 
B)  Depletion 
C)  Depreciation 
D)  Allocation 
A)  Amortization 
B)  Depletion 
C)  Depreciation 
D)  Allocation

Question 5

Wings Manufacturing Company purchased a new machine on July 1, 2011. It was expected to produce 200,000 units of product over its estimated useful life of eight years. Total cost of the machine was $600,000, and salvage value was estimated to be $60,000. Actual units produced by the machine in 2011 and 2012 are shown below:   Wings reports on a calendar-year basis and uses the units-of-production method of depreciation. The amount of depreciation expense for this machine in 2012 would be

Accepted Answer

A)  $124,200 
B)  $90,000 
C)  $81,000 
D)  $74,520 
A)  $124,200 
B)  $90,000 
C)  $81,000 
D)  $74,520

Question 6

The party who owns an asset that is rented to another is referred to as the

Accepted Answer

A)  Lessor 
B)  Mortgagee 
C)  Lessee 
D)  Principal 
A)  Lessor 
B)  Mortgagee 
C)  Lessee 
D)  Principal

Question 7

When Scranton Tools bought Tipton Hardware, included in the purchase price was a patent valued at $26,000. The patent still has 10 years remaining of its legal life. However, it is estimated that the useful life of the patent is only 8 years. The journal entry to record the annual patent amortization expense would include a

Accepted Answer

A)  Debit to Amortization Expense, patent for $2,600 
B)  Credit to Patent for $2,600 
C)  Debit to Amortization Expense, patent for $3,250 
D)  Debit to Patent for $3,250 
A)  Debit to Amortization Expense, patent for $2,600 
B)  Credit to Patent for $2,600 
C)  Debit to Amortization Expense, patent for $3,250 
D)  Debit to Patent for $3,250

Question 8

Four widely used methods of allocating the cost of equipment over its useful life are

Accepted Answer

A)  Depreciation, allocation, amortization, and depletion 
B)  Straight-line, units-of-production, declining-balance, and sum-of-the-years'-digits 
C)  FIFO, LIFO, weighted average, and specific identification 
D)  None of these are correct 
A)  Depreciation, allocation, amortization, and depletion 
B)  Straight-line, units-of-production, declining-balance, and sum-of-the-years'-digits 
C)  FIFO, LIFO, weighted average, and specific identification 
D)  None of these are correct

Question 9

The Suvari Company purchased a machine on November 1, 2003, for $148,000. At the time of acquisition, the machine was estimated to have a useful life of 10 years and a salvage value of $4,000. Suvari recorded monthly depreciation using the straight-line method. On July 1, 2012, the machine was sold for $13,000. What should be the loss recognized from the sale of the machine?

Accepted Answer

A)  $4,000 
B)  $5,000 
C)  $10,200 
D)  $13,000 
A)  $4,000 
B)  $5,000 
C)  $10,200 
D)  $13,000

Question 10

Freight costs incurred when an operating asset is purchased should generally be

Accepted Answer

A)  Expensed in the period incurred 
B)  Deducted from the accumulated depreciation account 
C)  Added to the cost of the new asset 
D)  Not recorded in the accounts 
A)  Expensed in the period incurred 
B)  Deducted from the accumulated depreciation account 
C)  Added to the cost of the new asset 
D)  Not recorded in the accounts

Under U.S. accounting rules (generally accepted accounting principles), an asset is impaired when

Which of the following is NOT a way to dispose of an asset?

The periodic allocation to expense of an intangible asset's cost is

The party who owns an asset that is rented to another is referred to as the

Four widely used methods of allocating the cost of equipment over its useful life are

Freight costs incurred when an operating asset is purchased should generally be

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

Under U.S. accounting rules (generally accepted accounting principles), an asset is impaired when

Which of the following is NOT a way to dispose of an asset?

The periodic allocation to expense of an intangible asset's cost is

The party who owns an asset that is rented to another is referred to as the

Four widely used methods of allocating the cost of equipment over its useful life are

Freight costs incurred when an operating asset is purchased should generally be

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