Question 1

The depletion calculation is similar to which of the following depreciation methods?

Accepted Answer

A)  Double-declining-balance 
B)  Straight-line 
C)  Group 
D)  Production 
A)  Double-declining-balance 
B)  Straight-line 
C)  Group 
D)  Production

Question 2

The cost to defend a patent successfully should be added to the acquisition cost of the patent.

Accepted Answer

A) True 
 B)False

Question 3

A copyright should be amortized over useful life of the copyright and not the life of the author,plus 70 years.

Accepted Answer

A) True 
 B)False

Question 4

Licenses are properly classified as intangible assets.

Accepted Answer

A) True 
 B)False

Question 5

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.Assume that the truck was disposed of for $2,000 cash.The entry to record this event is:

Accepted Answer

A)  Accumulated Depreciation- Truck 3,000
Truck 3,000 
B)  Accumulated Depreciation- Truck 9,000
Loss on Sale of Truck 3,000
Truck 12,000 
C)  Cash 2,000
Accumulated Depreciation- Truck 9,000
Loss on Sale of Truck 1,000
Truck 12,000 
D)  Truck 9,000
Accumulated Depreciation- Truck 9,000 
A)  Accumulated Depreciation- Truck 3,000
Truck 3,000 
B)  Accumulated Depreciation- Truck 9,000
Loss on Sale of Truck 3,000
Truck 12,000 
C)  Cash 2,000
Accumulated Depreciation- Truck 9,000
Loss on Sale of Truck 1,000
Truck 12,000 
D)  Truck 9,000
Accumulated Depreciation- Truck 9,000

Question 6

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

Accepted Answer

In the year of purchase,both net income

Question 7

Which of the following would not be included in the cost of land?

Accepted Answer

A)  Grading the land 
B)  Sewer assessment from local government 
C)  Cost of making a driveway 
D)  Commission to real estate agent 
A)  Grading the land 
B)  Sewer assessment from local government 
C)  Cost of making a driveway 
D)  Commission to real estate agent

Question 8

Plant assets used in conjunction with a natural resource typically are depreciated

Accepted Answer

A)  using income tax depreciation. 
B)  using an accelerated depreciation method. 
C)  on the same basis as depletion is computed. 
D)  on a straight-line basis. 
A)  using income tax depreciation. 
B)  using an accelerated depreciation method. 
C)  on the same basis as depletion is computed. 
D)  on a straight-line basis.

Question 9

The cost of assets acquired for a lump sum should be apportioned between the acquired assets.

Accepted Answer

A) True 
 B)False

Question 10

A delivery truck was purchased for $32,000 two years ago.It has a carrying value of $24,000 and an estimated residual value of $4,000.Assuming the use of straight-line depreciation,the truck's estimated useful life must have been

Accepted Answer

A)  three and one-half years. 
B)  seven years. 
C)  14 years. 
D)  impossible to determine from the facts given. 
A)  three and one-half years. 
B)  seven years. 
C)  14 years. 
D)  impossible to determine from the facts given.

Question 11

A company purchases for $24,000 an asset that has a useful life of six years and no salvage value.After two years,the company spends $4,000 for a major overhaul that will extend the machine's useful life four years beyond the original six.Assuming straight-line depreciation,how much depreciation should be taken in year 3?

Accepted Answer

A)  $2,800 
B)  $2,500 
C)  $2,000 
D)  $4,000 
A)  $2,800 
B)  $2,500 
C)  $2,000 
D)  $4,000

Question 12

What is goodwill and when may it be recorded?

Accepted Answer

Goodwill represents the excess

Question 13

Which of the following accounting principles best justifies accelerated depreciation accounting?

Accepted Answer

A)  Materiality 
B)  Matching 
C)  Cost-benefit 
D)  Conservatism 
A)  Materiality 
B)  Matching 
C)  Cost-benefit 
D)  Conservatism

Question 14

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life.

Accepted Answer

A) True 
 B)False

Question 15

John Jackson obtained a ten-year sublease on a busy corner to open a used car business.To obtain the sublease,he had to pay $14,000 to the current tenant,who had 12 years to go on his lease.The annual cost of the lease is $18,000.In addition to paying for the sublease,Bob paid $10,000 to pave the lot.The paving will have no residual value after its useful life of ten years.Prepare entries in journal form to record the following (omit explanations):
a.The payment for the sublease
b.The payment for the paving
c.The lease payment for the first year
d.The expense,if any,associated with the sublease for the first year
e.The expense,if any,associated with the paving,using the straight-line method for the first year

Accepted Answer

The answer of John Jackson obtained a ten-year sublease on...

Question 16

A tractor held by a farm equipment company for sale to farmers is classified as a long-term asset.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following would not be a basis for estimating the useful life of a piece of equipment?

Accepted Answer

A)  Potential production in units 
B)  Potential miles of service 
C)  Salvage value 
D)  Years of service 
A)  Potential production in units 
B)  Potential miles of service 
C)  Salvage value 
D)  Years of service

Question 18

Depreciation for tax purposes is identical to depreciation for financial reporting purposes.

Accepted Answer

A) True 
 B)False

Question 19

When an intangible asset becomes worthless,

Accepted Answer

A)  it should remain on the books at its existing carrying value. 
B)  its remaining carrying value should be written off immediately as a loss. 
C)  prior years' accounting records should be adjusted retroactively. 
D)  its remaining carrying value should be amortized over 20 years. 
A)  it should remain on the books at its existing carrying value. 
B)  its remaining carrying value should be written off immediately as a loss. 
C)  prior years' accounting records should be adjusted retroactively. 
D)  its remaining carrying value should be amortized over 20 years.

Question 20

A graph depicting yearly depreciation expense under an accelerated depreciation method will contain a line that goes

Accepted Answer

A)  vertically straight down. 
B)  down as one goes from left to right. 
C)  down and then up as one goes from left to right. 
D)  up and down in a zig-zag as one goes from left to right. 
A)  vertically straight down. 
B)  down as one goes from left to right. 
C)  down and then up as one goes from left to right. 
D)  up and down in a zig-zag as one goes from left to right.

The depletion calculation is similar to which of the following depreciation methods?

The cost to defend a patent successfully should be added to the acquisition cost of the patent.

A copyright should be amortized over useful life of the copyright and not the life of the author,plus 70 years.

Licenses are properly classified as intangible assets.

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.Assume that the truck was disposed of for $2,000 cash.The entry to record this event is:

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

Which of the following would not be included in the cost of land?

Plant assets used in conjunction with a natural resource typically are depreciated

The cost of assets acquired for a lump sum should be apportioned between the acquired assets.

A delivery truck was purchased for $32,000 two years ago.It has a carrying value of $24,000 and an estimated residual value of $4,000.Assuming the use of straight-line depreciation,the truck's estimated useful life must have been

What is goodwill and when may it be recorded?

Which of the following accounting principles best justifies accelerated depreciation accounting?

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life.

A tractor held by a farm equipment company for sale to farmers is classified as a long-term asset.

Which of the following would not be a basis for estimating the useful life of a piece of equipment?

Depreciation for tax purposes is identical to depreciation for financial reporting purposes.

When an intangible asset becomes worthless,

A graph depicting yearly depreciation expense under an accelerated depreciation method will contain a line that goes

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters

Exam 10: Long Term Assets

The depletion calculation is similar to which of the following depreciation methods?

The cost to defend a patent successfully should be added to the acquisition cost of the patent.

A copyright should be amortized over useful life of the copyright and not the life of the author,plus 70 years.

Licenses are properly classified as intangible assets.

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.Assume that the truck was disposed of for $2,000 cash.The entry to record this event is:

If the purchase of machinery is treated incorrectly as a revenue expenditure,what will be the effect on net income and total assets in the year of purchase and in the following year,and why?

Which of the following would not be included in the cost of land?

Plant assets used in conjunction with a natural resource typically are depreciated

The cost of assets acquired for a lump sum should be apportioned between the acquired assets.

A delivery truck was purchased for $32,000 two years ago.It has a carrying value of $24,000 and an estimated residual value of $4,000.Assuming the use of straight-line depreciation,the truck's estimated useful life must have been

What is goodwill and when may it be recorded?

Which of the following accounting principles best justifies accelerated depreciation accounting?

Depreciation refers to the periodic allocation of the cost of a tangible long-lived asset over its estimated useful life.

A tractor held by a farm equipment company for sale to farmers is classified as a long-term asset.

Which of the following would not be a basis for estimating the useful life of a piece of equipment?

Depreciation for tax purposes is identical to depreciation for financial reporting purposes.

When an intangible asset becomes worthless,

A graph depicting yearly depreciation expense under an accelerated depreciation method will contain a line that goes

Uses of Accounting Information and the Financial Statements

Analyzing Business Transactions

Measuring Business Income

Supplement - Closing Entries and the Work Sheet

Financial Reporting and Analysis

The Operating Cycle and Merchandising Operations

Inventories

Cash and Receivables

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Performance Measurement

Investments

Filters