Question 1

Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.

Accepted Answer

A) True 
 B)False

Question 2

The double-declining balance method is applied by (1)computing the asset's straight-line depreciation rate,(2)doubling it,(3)subtracting salvage value from cost,and (4)multiplying the rate times the net value.

Accepted Answer

A) True 
 B)False

Question 3

Heidel Co.paid $750,000 cash to buy the plant assets of Rogers Co.that went out of business.An independent appraiser assigned the following values to the assets acquired:
Land……………………………………..$522,000
Building…………………………………. 243,000
Equipment………………………………. 135,000
Total…………………………………….. $900,000
Prepare Heidel's journal entry to record the acquisition of these assets.

Accepted Answer

Land…………………………………….. 435,000
B

Question 4

Explain how to calculate total asset turnover.Describe what it reveals about a company's financial condition,whether a higher or lower ratio is desirable,and how it is best applied for comparative purposes.

Accepted Answer

Total asset turnover is calculated by di

Question 5

On April 1 of the current year,a company disposed of an automobile that had cost $20,000.The auto had a salvage value of $2,000,and a useful life of 5 years.The accounting records showed accumulated depreciation for this automobile of $8,100 as of April 1 of the current year.The asset was discarded after an accident,and $10,500 cash was received from an insurance claim.Prepare the journal entry to record the disposal of the automobile.

Accepted Answer

Apr.1 Accumulated Depreciation-Automobil

Question 6

The straight-line depreciation method and the double-declining-balance depreciation method:

Accepted Answer

A) Produce the same total depreciation over an asset's useful life. 
B) Produce the same depreciation expense each year. 
C) Produce the same book value each year. 
D) Are acceptable for tax purposes only. 
E) Are the only acceptable methods of depreciation for financial reporting. 
A) Produce the same total depreciation over an asset's useful life. 
B) Produce the same depreciation expense each year. 
C) Produce the same book value each year. 
D) Are acceptable for tax purposes only. 
E) Are the only acceptable methods of depreciation for financial reporting.

Question 7

Natural resources:

Accepted Answer

A) Include standing timber, mineral deposits, and oil and gas fields. 
B) Are also called wasting assets. 
C) Are long-term assets. 
D) Are depleted. 
E) All of the choices are correct. 
A) Include standing timber, mineral deposits, and oil and gas fields. 
B) Are also called wasting assets. 
C) Are long-term assets. 
D) Are depleted. 
E) All of the choices are correct.

Question 8

A company had net sales of $230,000 for 2013 and $288,000 for 2014.The company's average total assets for 2013 were $150,000 and $180,000 for 2014.Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

Accepted Answer

2013: $230,000/$150,000 = 1.53
2014: $28

Question 9

The purchase of a property that included land,building,and related improvements is called a lump-sum purchase.

Accepted Answer

A) True 
 B)False

Question 10

A company bought a new display case for $42,000 and was given a trade-in of $2,000 on an old display case,so the company paid $40,000 cash with the trade-in.The old case had an original cost of $37,000 and accumulated depreciation of $34,000.If the transaction has commercial substance,the company should record the new display case at:

Accepted Answer

A) $ 2,000. 
B) $ 3,000. 
C) $40,000. 
D) $42,000. 
E) $43,000. 
A) $ 2,000. 
B) $ 3,000. 
C) $40,000. 
D) $42,000. 
E) $43,000.

Question 11

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation,except at the beginning and the end of the asset's useful life,when it is the same.

Accepted Answer

A) True 
 B)False

Question 12

Describe the accounting for natural resources,including their acquisition,cost allocation,and account titles.

Accepted Answer

The costs of natural resources are recor

Question 13

___________________ are additional costs of plant assets that do not materially increase the asset's life or productive capabilities.

Accepted Answer

Revenue ex

Question 14

Decision makers and other users of financial statements are especially interested in evaluating a company's ability to use its assets in generating sales.

Accepted Answer

A) True 
 B)False

Question 15

Endor Fishing Company exchanged an old boat for a new one.The old boat had a cost of $260,000 and accumulated depreciation of $200,000.The new boat had an invoice price of $400,000.Endor received a trade in allowance of $100,000 on the old boat,which meant the company paid $300,000 in addition to the old boat to acquire the new boat.If this transaction lacks commercial substance,what amount of gain or loss should be recorded on this exchange?

Accepted Answer

A) $0 gain or loss. 
B) $40,000 gain. 
C) $40,000 loss. 
D) $60,000 loss 
E) $100,000 loss. 
A) $0 gain or loss. 
B) $40,000 gain. 
C) $40,000 loss. 
D) $60,000 loss 
E) $100,000 loss.

Question 16

When the usefulness of plant assets used to extract natural resources is directly related to the depletion of a natural resource,their costs are depreciated using the units-of-production method of depreciation,as long as the assets will not be moved to and used at another site when extraction of the natural resources is complete.

Accepted Answer

A) True 
 B)False

Question 17

A company purchased a machine on January 1 of the current year for $750,000.Calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 20,000 hours,with a salvage value of $75,000)using each of the below-mentioned methods .During the machine's 5-year life its hourly usage was:
 3,000; 4,000; 5,000; 5,000; and 3,000 hours.
Double-
Units-of- Declining-
Year Straight-line Production Balance
Year 1 $__________ $___________ $___________
Year 2 __________ ___________ ___________
Year 3 __________ ___________ ___________
Year 4 __________ ___________ ___________
Year 5 __________ ___________ ___________
Total __________ ___________ ___________

Accepted Answer

a.($325,000 - $25,000)/8 = $37,500 for b

Question 18

Capital intensive companies have a relatively large amount invested in assets to generate a given level of sales.

Accepted Answer

A) True 
 B)False

Question 19

Betterments are a type of capital expenditure.

Accepted Answer

A) True 
 B)False

Question 20

Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000.Cambria asks $35,000 for the equipment but sells the equipment for $33,000.Compute the amount of gain or loss on the sale.

Accepted Answer

A) $3,500 loss. 
B) $5,500 gain. 
C) $5,500 loss. 
D) $3,000 gain. 
E) $3,500 gain. 
A) $3,500 loss. 
B) $5,500 gain. 
C) $5,500 loss. 
D) $3,000 gain. 
E) $3,500 gain.

Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.

The double-declining balance method is applied by (1)computing the asset's straight-line depreciation rate,(2)doubling it,(3)subtracting salvage value from cost,and (4)multiplying the rate times the net value.

Explain how to calculate total asset turnover.Describe what it reveals about a company's financial condition,whether a higher or lower ratio is desirable,and how it is best applied for comparative purposes.

The straight-line depreciation method and the double-declining-balance depreciation method:

Natural resources:

A company had net sales of $230,000 for 2013 and $288,000 for 2014.The company's average total assets for 2013 were $150,000 and $180,000 for 2014.Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

The purchase of a property that included land,building,and related improvements is called a lump-sum purchase.

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation,except at the beginning and the end of the asset's useful life,when it is the same.

Describe the accounting for natural resources,including their acquisition,cost allocation,and account titles.

___________________ are additional costs of plant assets that do not materially increase the asset's life or productive capabilities.

Decision makers and other users of financial statements are especially interested in evaluating a company's ability to use its assets in generating sales.

Capital intensive companies have a relatively large amount invested in assets to generate a given level of sales.

Betterments are a type of capital expenditure.

Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000.Cambria asks $35,000 for the equipment but sells the equipment for $33,000.Compute the amount of gain or loss on the sale.

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

Depreciation is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.

The double-declining balance method is applied by (1)computing the asset's straight-line depreciation rate,(2)doubling it,(3)subtracting salvage value from cost,and (4)multiplying the rate times the net value.

Explain how to calculate total asset turnover.Describe what it reveals about a company's financial condition,whether a higher or lower ratio is desirable,and how it is best applied for comparative purposes.

The straight-line depreciation method and the double-declining-balance depreciation method:

Natural resources:

A company had net sales of $230,000 for 2013 and $288,000 for 2014.The company's average total assets for 2013 were $150,000 and $180,000 for 2014.Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

The purchase of a property that included land,building,and related improvements is called a lump-sum purchase.

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation,except at the beginning and the end of the asset's useful life,when it is the same.

Describe the accounting for natural resources,including their acquisition,cost allocation,and account titles.

___________________ are additional costs of plant assets that do not materially increase the asset's life or productive capabilities.

Decision makers and other users of financial statements are especially interested in evaluating a company's ability to use its assets in generating sales.

Capital intensive companies have a relatively large amount invested in assets to generate a given level of sales.

Betterments are a type of capital expenditure.

Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000.Cambria asks $35,000 for the equipment but sells the equipment for $33,000.Compute the amount of gain or loss on the sale.

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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