Question 1

If an asset is sold above its book value,the selling company records a loss.

Accepted Answer

A) True 
 B)False

Question 2

On April 1,Year 5 a company discarded a machine that had cost $10,000 and had accumulated depreciation of $8,000 as of December 31,Year 4.The asset had a 5-year life and $0 salvage value.Prepare the journal entries to record the updating of the depreciation expense and discarding of this asset in Year 5.

Accepted Answer

Apr.1 Depreciation Expense,Mac

Question 3

Land is not subject to depreciation because it has an unlimited life.This means that items which increase the usefulness of the land such as parking lots are not depreciated.

Accepted Answer

A) True 
 B)False

Question 4

A company paid $314,000 for a machine that was expected to last five years and to have a salvage value of $40,000.During the third year of the machine's life,$37,000 cash was paid for replacement parts that were expected to increase the machine's productivity by 10% each year.Prepare the journal entry to record the $37,000 cost incurred in the third year.

Accepted Answer

Machinery……………………………

Question 5

A company exchanged an old truck for a newer model.The old truck account had a cost of $76,000 and accumulated depreciation of $65,000 as of the exchange date.The new truck had a cash price of $84,000,but the company was given a $15,000 trade-in allowance and the balance of $69,000 was paid in cash.Prepare the journal entry to record the exchange,if the transaction lacks commercial substance.

Accepted Answer

Truck (new) 80,000
Accumulated

Question 6

An asset's book value is $18,000 on June 30,Year 6.The asset is being depreciated at an annual rate of $3,000 on the straight-line method.Assuming the asset is sold on December 31,Year 7 for $15,000,the company should record:

Accepted Answer

A) A loss on sale of $1,500. 
B) A gain on sale of $1,500. 
C) Neither a gain nor a loss is recognized on this type of transaction. 
D) A gain on sale of $3,000. 
E) A loss on sale of $3,000. 
A) A loss on sale of $1,500. 
B) A gain on sale of $1,500. 
C) Neither a gain nor a loss is recognized on this type of transaction. 
D) A gain on sale of $3,000. 
E) A loss on sale of $3,000.

Question 7

Dart had net sales of $35,404 million.Its average total assets for the period were $14,502 million.Dart's total asset turnover equals:

Accepted Answer

A) 0.40. 
B) 0.35. 
C) 1.45. 
D) 2.44. 
E) 3.50. 
A) 0.40. 
B) 0.35. 
C) 1.45. 
D) 2.44. 
E) 3.50.

Question 8

A company purchased a cash register on January 1 for $5,400.This register has a useful life of 10 years and a salvage value of $400.What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Accepted Answer

A) $ 500. 
B) $ 800. 
C) $ 864. 
D) $1,000. 
E) $1,080. 
A) $ 500. 
B) $ 800. 
C) $ 864. 
D) $1,000. 
E) $1,080.

Question 9

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

Accepted Answer

A) True 
 B)False

Question 10

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Accepted Answer

The first step in the accounting process

Question 11

Match each of the following terms with the appropriate definitions.

-A right granted that gives its owner the exclusive privilege to publish and sell musical, literary, or artistic work during the life of the creator plus 70 years.

Accepted Answer

A) Obsolescence 
B) Amortization 
C) Depletion 
D) Salvage value 
E) Book value
F)Land improvements
G)Copyright
H)Inadequacy
I)Patent 
A) Obsolescence 
B) Amortization 
C) Depletion 
D) Salvage value 
E) Book value
F)Land improvements
G)Copyright
H)Inadequacy
I)Patent

Question 12

Explain (in detail)how to compute each of the following depreciation methods:
 straight-line,units-of-production,and double-declining-balance.

Accepted Answer

Straight-line depreciation is calculated

Question 13

A company purchased a tract of land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The salvage value of the land is expected to be $250,000.The depletion expense per ton of ore is:

Accepted Answer

A) $0.75. 
B) $0.625. 
C) $0.875. 
D) $6.00. 
E) $8.00. 
A) $0.75. 
B) $0.625. 
C) $0.875. 
D) $6.00. 
E) $8.00.

Question 14

Carmel Company acquires a mineral deposit at a cost of $5,900,000.It incurs additional costs of $600,000 to access the deposit,which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract.Compute the depletion expense for the first year assuming 418,000 tons were mined.
A.$1,233,100.
B.$1,358,500.
C.$1,300,000.
D.$1,180,000.
E.$1,280,000.

Accepted Answer

Tons Mined
Depletion

Question 15

_____________________ are additional costs of plant assets that provide benefits extending beyond the current period; they increase or improve the type or amount of service an asset provides.

Accepted Answer

Capital ex

Question 16

Lomax Enterprises purchased a depreciable asset for $22,000 on March 1,Year 1.The asset will be depreciated using the straight-line method over its four-year useful life.Assuming the asset's salvage value is $2,000,what will be the amount of accumulated depreciation on this asset on December 31,Year 4?

Accepted Answer

A) $5,000.00 
B) $4,166.67 
C) $16,666.68 
D) $20,000.00 
E) $19,166.67 
A) $5,000.00 
B) $4,166.67 
C) $16,666.68 
D) $20,000.00 
E) $19,166.67

Question 17

Match each of the following terms with the appropriate definitions.

-The process of allocating the cost of natural resources to the periods when they are consumed.

Accepted Answer

A) Obsolescence 
B) Amortization 
C) Depletion 
D) Salvage value 
E) Book value
F)Land improvements
G)Copyright
H)Inadequacy
I)Patent 
A) Obsolescence 
B) Amortization 
C) Depletion 
D) Salvage value 
E) Book value
F)Land improvements
G)Copyright
H)Inadequacy
I)Patent

Question 18

A company paid $770,000 plus $5,000 in closing costs for property that included land appraised at $384,000; land improvements appraised at $128,000; and a building appraised at $288,000.The plan is to use the building as a manufacturing plant.Determine the amounts that should be recorded as:
(a)Land…………………. $ ______________________________________
(b)Land Improvements.... $ ______________________________________
(c)Building……………… $_______________________________________

Accepted Answer

The answer of A company paid $770,000 plus $5,000 in...

Question 19

Huffington Company traded in an old delivery truck for a new one.The old truck had a cost of $75,000 and accumulated depreciation of $60,000.The new truck had an invoice price of $125,000.Huffington was given a $12,000 trade-in allowance on the old truck,which meant they paid $113,000 in addition to the old truck to acquire the new truck.If this transaction has commercial substance,what is the recorded value of the new truck?

Accepted Answer

A) $15,000 
B) $75,000 
C) $113,000 
D) $125,000 
E) $128,000 
A) $15,000 
B) $75,000 
C) $113,000 
D) $125,000 
E) $128,000

Question 20

A company purchased a mineral deposit for $800,000.It expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000.In the current year,the company mined and sold 90,000 tons of ore.Its depletion expense for the current period equals:

Accepted Answer

A) $ 15,000. 
B) $ 60,000. 
C) $150,000. 
D) $ 56,250. 
E) $139,500. 
A) $ 15,000. 
B) $ 60,000. 
C) $150,000. 
D) $ 56,250. 
E) $139,500.

If an asset is sold above its book value,the selling company records a loss.

Land is not subject to depreciation because it has an unlimited life.This means that items which increase the usefulness of the land such as parking lots are not depreciated.

An asset's book value is $18,000 on June 30,Year 6.The asset is being depreciated at an annual rate of $3,000 on the straight-line method.Assuming the asset is sold on December 31,Year 7 for $15,000,the company should record:

Dart had net sales of $35,404 million.Its average total assets for the period were $14,502 million.Dart's total asset turnover equals:

A company purchased a cash register on January 1 for $5,400.This register has a useful life of 10 years and a salvage value of $400.What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Match each of the following terms with the appropriate definitions. -A right granted that gives its owner the exclusive privilege to publish and sell musical, literary, or artistic work during the life of the creator plus 70 years.

Explain (in detail)how to compute each of the following depreciation methods: straight-line,units-of-production,and double-declining-balance.

A company purchased a tract of land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The salvage value of the land is expected to be $250,000.The depletion expense per ton of ore is:

_____________________ are additional costs of plant assets that provide benefits extending beyond the current period; they increase or improve the type or amount of service an asset provides.

Match each of the following terms with the appropriate definitions. -The process of allocating the cost of natural resources to the periods when they are consumed.

A company purchased a mineral deposit for $800,000.It expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000.In the current year,the company mined and sold 90,000 tons of ore.Its depletion expense for the current period equals:

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

Exam 10: Plant Assets, natural Resources, and Intangibles

If an asset is sold above its book value,the selling company records a loss.

Land is not subject to depreciation because it has an unlimited life.This means that items which increase the usefulness of the land such as parking lots are not depreciated.

An asset's book value is $18,000 on June 30,Year 6.The asset is being depreciated at an annual rate of $3,000 on the straight-line method.Assuming the asset is sold on December 31,Year 7 for $15,000,the company should record:

Dart had net sales of $35,404 million.Its average total assets for the period were $14,502 million.Dart's total asset turnover equals:

A company purchased a cash register on January 1 for $5,400.This register has a useful life of 10 years and a salvage value of $400.What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Match each of the following terms with the appropriate definitions. -A right granted that gives its owner the exclusive privilege to publish and sell musical, literary, or artistic work during the life of the creator plus 70 years.

Explain (in detail)how to compute each of the following depreciation methods: straight-line,units-of-production,and double-declining-balance.

A company purchased a tract of land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The salvage value of the land is expected to be $250,000.The depletion expense per ton of ore is:

_____________________ are additional costs of plant assets that provide benefits extending beyond the current period; they increase or improve the type or amount of service an asset provides.

Match each of the following terms with the appropriate definitions. -The process of allocating the cost of natural resources to the periods when they are consumed.

A company purchased a mineral deposit for $800,000.It expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000.In the current year,the company mined and sold 90,000 tons of ore.Its depletion expense for the current period equals:

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