Question 1

The cost of fees for insuring the title and any accrued property taxes are included in the cost of land.

Accepted Answer

A) True 
 B)False

Question 2

Natural resources are often called wasting assets because they are physically consumed when used.

Accepted Answer

A) True 
 B)False

Question 3

The original cost of a machine was $60,000.After $45,000 of depreciation was recorded,the machine was traded in on a new machine priced at $75,000.A $10,500 trade-in allowance was received on the old machine and the balance of $64,500 was paid in cash.This transaction has commercial substance.Prepare the general journal entry to record this trade-in.

Accepted Answer

Machine (new)……………………………………………. 75,000
A

Question 4

Goodwill:

Accepted Answer

A) Is not amortized, but is tested annually for impairment. 
B) Is amortized using the straight-line method. 
C) Is amortized using the units-of-production method. 
D) May be amortized using either the straight-line or units-of-production method. 
E) Is never amortized or tested for impairment. 
A) Is not amortized, but is tested annually for impairment. 
B) Is amortized using the straight-line method. 
C) Is amortized using the units-of-production method. 
D) May be amortized using either the straight-line or units-of-production method. 
E) Is never amortized or tested for impairment.

Question 5

During the current year,a company acquired a new computer with a cash price of $12,800 by exchanging an old one on which the company received a $1,500 trade-in allowance (with the balance of $11,300 paid in cash).The old computer cost $9,000 and its accumulated depreciation was $5,500 as of the exchange date.Assuming the exchange transaction had commercial substance,prepare the journal entry to record the exchange.

Accepted Answer

The answer of During the current year,a company acquired a...

Question 6

A company needed a new building.It found a suitable location with an existing old building on the land.The company reached an agreement to buy the land and the building for $960,000 cash.The old building was demolished to make way for the needed new building.Following is information regarding the demolition of the old building and construction of the new one:
Construction cost of new building including $660,000
for parking lot………………………………………. $9,560,000
Demolition of old building…………………………………. 300,000
Proceeds from sale of salvaged materials from old building 120,000
Prepare a single journal entry to record the above costs assuming all transactions are paid in cash.

Accepted Answer

Land ($960,000 + $300,000 - $1

Question 7

What is depreciation of plant assets?
 What are the factors to consider in computing depreciation?

Accepted Answer

Depreciation is the process of allocatin

Question 8

A company discarded a display case originally purchased for $8,000.The accumulated depreciation was $7,200.The company should recognize a (an):

Accepted Answer

A) $0 gain or loss. 
B) $800 loss. 
C) $800 gain. 
D) $8,000 loss. 
E) $7,200 loss. 
A) $0 gain or loss. 
B) $800 loss. 
C) $800 gain. 
D) $8,000 loss. 
E) $7,200 loss.

Question 9

Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate,and is reflected in the past,current,and future financial statements.

Accepted Answer

A) True 
 B)False

Question 10

Total asset turnover is used to evaluate:

Accepted Answer

A) The efficiency of management's use of assets to generate sales. 
B) The necessity for asset replacement. 
C) The number of times operating assets were sold during the year. 
D) The cash flows used to acquire assets. 
E) The relation between asset cost and book value. 
A) The efficiency of management's use of assets to generate sales. 
B) The necessity for asset replacement. 
C) The number of times operating assets were sold during the year. 
D) The cash flows used to acquire assets. 
E) The relation between asset cost and book value.

Question 11

A company sold a machine that originally cost $100,000 for $60,000 cash.The accumulated depreciation on the machine was $40,000.The company should recognize a:

Accepted Answer

A) $0 gain or loss. 
B) $20,000 gain. 
C) $20,000 loss. 
D) $40,000 loss. 
E) $60,000 gain. 
A) $0 gain or loss. 
B) $20,000 gain. 
C) $20,000 loss. 
D) $40,000 loss. 
E) $60,000 gain.

Question 12

A leasehold:

Accepted Answer

A) Is a short-term rental agreement. 
B) Is the same as a patent. 
C) Are the rights granted to the lessee by the lessor of a lease. 
D) Is recorded as revenue expenditure when paid. 
E) Is an investment asset. 
A) Is a short-term rental agreement. 
B) Is the same as a patent. 
C) Are the rights granted to the lessee by the lessor of a lease. 
D) Is recorded as revenue expenditure when paid. 
E) Is an investment asset.

Question 13

Once the estimated depreciation expense for an asset is calculated:

Accepted Answer

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

Question 14

A company purchased property for a building site.The costs associated with the property were:
Purchase price……………………… $175,000
Real estate commissions ……………………… 15,000
Legal fees ……………………… 800
Expenses of clearing the land ……………………… 2,000
Expenses to remove old building ……………………… 1,000
What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

Accepted Answer

A) $175,800 to Land; $18,800 to Building. 
B) $190,000 to Land; $3,800 to Building. 
C) $190,800 to Land; $1,000 to Building. 
D) $192,800 to Land; $0 to Building. 
E) $193,800 to Land; $0 to Building. 
A) $175,800 to Land; $18,800 to Building. 
B) $190,000 to Land; $3,800 to Building. 
C) $190,800 to Land; $1,000 to Building. 
D) $192,800 to Land; $0 to Building. 
E) $193,800 to Land; $0 to Building.

Question 15

Cowers reported net sales of $2,463 million and average total assets of $1,546 million.Its total asset turnover equals 1.59.

Accepted Answer

A) True 
 B)False

Question 16

A company exchanged its used machine for a new machine in a transaction that had commercial substance.The old machine cost $70,000,and the new one had a cash price of $95,000.The company had taken $60,000 depreciation on the old machine and was allowed a $2,500 trade-in allowance and the balance of $92,500 was paid in cash.What gain or loss should be recorded on the exchange?

Accepted Answer

The answer of A company exchanged its used machine for...

Question 17

Accounting for the exchange of assets depends on whether the transaction has commercial substance; commercial substance implies that it alters the company's future cash flows.

Accepted Answer

A) True 
 B)False

Question 18

Since goodwill is an intangible,it is amortized each year using the straight-line method,the same as other intangibles are amortized.

Accepted Answer

A) True 
 B)False

Question 19

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

Accepted Answer

A) True 
 B)False

Question 20

Monte Ray leases office space for $7,000 per month.On January 3,Monte Ray incurs $75,000 to improve his leased office space.These improvements are expected to yield benefits for 8 years.Ray has 6 years remaining on his lease.What journal entry would be needed to record the expense for the first year related to the improvements.

Accepted Answer

A) Debit Amortization Expense $12,500; credit Accumulated Amortization $12,500. 
B) Debit Depletion Expense $12,500; credit Accumulated Depletion $12,500. 
C) Debit Depreciation Expense $12,500; credit Accumulated Depreciation $12,500. 
D) Debit Depletion Expense $9,375; credit Accumulated Depletion $9,375. 
E) Debit Amortization Expense $9,375; credit Accumulated Amortization $9,375. 
A) Debit Amortization Expense $12,500; credit Accumulated Amortization $12,500. 
B) Debit Depletion Expense $12,500; credit Accumulated Depletion $12,500. 
C) Debit Depreciation Expense $12,500; credit Accumulated Depreciation $12,500. 
D) Debit Depletion Expense $9,375; credit Accumulated Depletion $9,375. 
E) Debit Amortization Expense $9,375; credit Accumulated Amortization $9,375.

The cost of fees for insuring the title and any accrued property taxes are included in the cost of land.

Natural resources are often called wasting assets because they are physically consumed when used.

Goodwill:

What is depreciation of plant assets? What are the factors to consider in computing depreciation?

A company discarded a display case originally purchased for $8,000.The accumulated depreciation was $7,200.The company should recognize a (an):

Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate,and is reflected in the past,current,and future financial statements.

Total asset turnover is used to evaluate:

A company sold a machine that originally cost $100,000 for $60,000 cash.The accumulated depreciation on the machine was $40,000.The company should recognize a:

A leasehold:

Once the estimated depreciation expense for an asset is calculated:

Cowers reported net sales of $2,463 million and average total assets of $1,546 million.Its total asset turnover equals 1.59.

Accounting for the exchange of assets depends on whether the transaction has commercial substance; commercial substance implies that it alters the company's future cash flows.

Since goodwill is an intangible,it is amortized each year using the straight-line method,the same as other intangibles are amortized.

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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Exam 10: Plant Assets, natural Resources, and Intangibles

The cost of fees for insuring the title and any accrued property taxes are included in the cost of land.

Natural resources are often called wasting assets because they are physically consumed when used.

Goodwill:

What is depreciation of plant assets? What are the factors to consider in computing depreciation?

A company discarded a display case originally purchased for $8,000.The accumulated depreciation was $7,200.The company should recognize a (an):

Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate,and is reflected in the past,current,and future financial statements.

Total asset turnover is used to evaluate:

A company sold a machine that originally cost $100,000 for $60,000 cash.The accumulated depreciation on the machine was $40,000.The company should recognize a:

A leasehold:

Once the estimated depreciation expense for an asset is calculated:

Cowers reported net sales of $2,463 million and average total assets of $1,546 million.Its total asset turnover equals 1.59.

Accounting for the exchange of assets depends on whether the transaction has commercial substance; commercial substance implies that it alters the company's future cash flows.

Since goodwill is an intangible,it is amortized each year using the straight-line method,the same as other intangibles are amortized.

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

Filters