Question 1

Patents, land held for investment and copyrights are intangible assets.

Accepted Answer

A) True 
 B)False

Question 2

Depreciation refers to the decrease in the market value of an asset.

Accepted Answer

A) True 
 B)False

Question 3

All of the following refer to the handling of a decline in value of property, plant, and equipment except:

Accepted Answer

A) depreciation. 
B) realization principle. 
C) impairment. 
D) conservatism constraint. 
A) depreciation. 
B) realization principle. 
C) impairment. 
D) conservatism constraint.

Question 4

The balance of an Accumulated Depletion account is subtracted from the related natural resource account to determine the book value of the natural resource.

Accepted Answer

A) True 
 B)False

Question 5

Tangible personal property is depreciated but real property is not depreciated.

Accepted Answer

A) True 
 B)False

Question 6

Use of the sum-of-the-years'-digits method of depreciation results in lower depreciation charges in the early years of an asset's life and higher charges in the later years.

Accepted Answer

A) True 
 B)False

Question 7

Patents, trademarks, and copyrights are examples of --------------assets.

Accepted Answer

The answer of Patents, trademarks, and copyrights are examples of...

Question 8

When the sum-of-the-years'-digits method is used to depreciate an asset with a four-year life, the depreciation expense is computed by multiplying a fractional part of the asset's cost less the salvage value. The denominator of the fraction each year is the number------------ .

Accepted Answer

The answer of When the sum-of-the-years'-digits method is used to...

Question 9

Harrod's Landscape Artists acquired a new truck for $42,000 less the trade-in allowance of $4,000 for his old truck. The old truck was purchased for $31,000 and had a book value of $5,000 on the exchange date. The entry to record the acquisition of the new truck will include a:

Accepted Answer

A) credit to Gain on Trade-in of Truck $1,000. 
B) credit to Truck (old)for $5,000. 
C) debit to Loss on Trade-in of Truck for $1,000. 
D) credit to cash for $4,000. 
A) credit to Gain on Trade-in of Truck $1,000. 
B) credit to Truck (old)for $5,000. 
C) debit to Loss on Trade-in of Truck for $1,000. 
D) credit to cash for $4,000.

Question 10

The cost of land reported on the balance sheet is not depreciated.

Accepted Answer

A) True 
 B)False

Question 11

Depletion is the process of allocating the cost of natural resources to expense over the period in which the resource produces revenue.

Accepted Answer

A) True 
 B)False

Question 12

The entry to record amortization of the acquisition cost of an intangible asset includes a credit directly to the intangible asset account.

Accepted Answer

A) True 
 B)False

Question 13

Modern Products Company purchased new packaging equipment for $245,000 on January 1, 2019. The equipment is expected to be used for 6 years, or 60,000 operating hours. It has an estimated salvage value of $5,000. The equipment was used for 10,000 hours in 2019, 15,000 hours in 2020, and 12,000 hours in 2021.
Compute annual depreciation expense for the first three years, using the straight-line method, the double-declining balance method, and the units of output method.
 $\begin{array}{|c|c|c|c|}
\hline & \text { Straight-Line } & \begin{array}{c}
\text { Double-Declining } \
\text { Balance }
\end{array} & \text { Units of Output } \
\hline & \text { Method } & \text { Method } & \text { Method } \
\hline 2019 & & & \
\hline 2020 & & & \
\hline 2021 & & & \
\hline
\end{array}$

Accepted Answer

None

Question 14

The book value of an asset is:

Accepted Answer

A) cost of the asset minus accumulated depreciation. 
B) cost of the asset minus the salvage value. 
C) cost of the asset minus salvage value minus depreciation expense. 
D) the replacement cost of the asset. 
A) cost of the asset minus accumulated depreciation. 
B) cost of the asset minus the salvage value. 
C) cost of the asset minus salvage value minus depreciation expense. 
D) the replacement cost of the asset.

Question 15

In 2019, Lucky Mining Company paid $1,200,000 for mining rights. It is estimated that a total of 1,000,000 kilograms of ore are available to be extracted. During 2019, 135,000 kilograms of ore were mined. What is the amount of Depletion Expense recorded in the adjusting entry for 2019?

Accepted Answer

The answer of In 2019, Lucky Mining Company paid $1,200,000...

Question 16

Under federal income tax rules, neither gains or losses are recognized on trade-ins.

Accepted Answer

A) True 
 B)False

Question 17

The steps in the process of determining an impairment loss in their proper order are:

Accepted Answer

A) apply the recoverability test, review circumstances that suggest impairment, compute the amount of the impairment. 
B) apply the recoverability test, review circumstances that suggest impairment, record the amount of the impairment. 
C) review circumstances that suggest impairment, apply the recoverability test, and compute the amount of the impairment. 
D) review circumstances that suggest impairment, apply the recoverability test, record the amount of the impairment. 
A) apply the recoverability test, review circumstances that suggest impairment, compute the amount of the impairment. 
B) apply the recoverability test, review circumstances that suggest impairment, record the amount of the impairment. 
C) review circumstances that suggest impairment, apply the recoverability test, and compute the amount of the impairment. 
D) review circumstances that suggest impairment, apply the recoverability test, record the amount of the impairment.

Question 18

Interest costs incurred during the construction of a long-term asset are capitalized as part of the asset cost along with permits fees, insurance and measurable direct overhead considered reasonable and necessary during the construction period.

Accepted Answer

A) True 
 B)False

Question 19

In computing the current period expense associated with the depletion of a natural resource, the depletion per unit is calculated by dividing the cost of the natural resource by the total estimated amount of the resource to be extracted and then multiplying by the units extracted.

Accepted Answer

A) True 
 B)False

Question 20

The full disclosure principle requires businesses to show balance information in the depreciable asset accounts, accumulated depreciation amounts and methods used to compute depreciation expense.

Accepted Answer

A) True 
 B)False

Exam 18: Property, Plant, and Equipment

Patents, land held for investment and copyrights are intangible assets.

Depreciation refers to the decrease in the market value of an asset.

All of the following refer to the handling of a decline in value of property, plant, and equipment except:

The balance of an Accumulated Depletion account is subtracted from the related natural resource account to determine the book value of the natural resource.

Tangible personal property is depreciated but real property is not depreciated.

Use of the sum-of-the-years'-digits method of depreciation results in lower depreciation charges in the early years of an asset's life and higher charges in the later years.

Patents, trademarks, and copyrights are examples of --------------assets.

When the sum-of-the-years'-digits method is used to depreciate an asset with a four-year life, the depreciation expense is computed by multiplying a fractional part of the asset's cost less the salvage value. The denominator of the fraction each year is the number------------ .

Harrod's Landscape Artists acquired a new truck for $42,000 less the trade-in allowance of $4,000 for his old truck. The old truck was purchased for $31,000 and had a book value of $5,000 on the exchange date. The entry to record the acquisition of the new truck will include a:

The cost of land reported on the balance sheet is not depreciated.

Depletion is the process of allocating the cost of natural resources to expense over the period in which the resource produces revenue.

The entry to record amortization of the acquisition cost of an intangible asset includes a credit directly to the intangible asset account.

The book value of an asset is:

In 2019, Lucky Mining Company paid $1,200,000 for mining rights. It is estimated that a total of 1,000,000 kilograms of ore are available to be extracted. During 2019, 135,000 kilograms of ore were mined. What is the amount of Depletion Expense recorded in the adjusting entry for 2019?

Under federal income tax rules, neither gains or losses are recognized on trade-ins.

The steps in the process of determining an impairment loss in their proper order are:

Interest costs incurred during the construction of a long-term asset are capitalized as part of the asset cost along with permits fees, insurance and measurable direct overhead considered reasonable and necessary during the construction period.

In computing the current period expense associated with the depletion of a natural resource, the depletion per unit is calculated by dividing the cost of the natural resource by the total estimated amount of the resource to be extracted and then multiplying by the units extracted.

The full disclosure principle requires businesses to show balance information in the depreciable asset accounts, accumulated depreciation amounts and methods used to compute depreciation expense.

Accounting: The Language of Business

Analyzing Business Transactions

Analyzing Business Transactions Using T Accounts

The General Journal and the General Ledger

Adjustments and the Worksheet

Closing Entries and Teh Postclosing Trial Balance

Accounting for Sales and Accounts Receivable

Accounting for Purchases and Accounts Payable

Cash Receipts, Cash Payments, and Banking Procedures

Payroll Computations, Records, and Payment

Payroll Taxes, Deposits, and Reports

Accruals, Deferrals, and the Worksheet

Financial Statements and Closing Procedures

Accounting Principles and Reporting Standards

Accounts Receivable and Uncollectible Accounts

Notes Payable and Notes Receivable

Merchandise Inventory

Accounting for Partnerships

Corporations: Formation and Capital Stock Transactions

Corporate Earnings and Capital Transactions

Long-Term Bonds

Financial Statement Analysis

The Statement of Cash Flows

Departmentalized Profit and Cost Centers

Accounting for Manufacturing Activities

Job Order Cost Accounting

Process Cost Accounting

Controlling Manufacturing Costs: Standard Costs

Cost-Revenue Analysis for Decision Making

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