Question 1

Which of the following properly describes accumulated depreciation?

Accepted Answer

A)  Accumulated depreciation is a contra liability account. 
B)  Accumulated depreciation is an expense account. 
C)  Accumulated depreciation is a contra equity account. 
D)  Accumulated depreciation is a contra asset account. 
A)  Accumulated depreciation is a contra liability account. 
B)  Accumulated depreciation is an expense account. 
C)  Accumulated depreciation is a contra equity account. 
D)  Accumulated depreciation is a contra asset account.

Question 2

A mine is purchased for $4,000,000.There will be a salvage value of $300,000 when the land is restored after mining is completed.The mine has an estimated 250,000 tons of coal.During 2012,there were 35,000 tons of coal removed.What is the depletion expense for 2012?

Accepted Answer

A)  $518,000 
B)  $466,550 
C)  $560,000 
D)  $300,000 
A)  $518,000 
B)  $466,550 
C)  $560,000 
D)  $300,000

Question 3

Which of the following is NOT a characteristic of a plant asset?

Accepted Answer

A)  The asset is used in the production of income for the business. 
B)  The asset is available for sale to customers in the ordinary course of business. 
C)  The asset has physical form. 
D)  The asset has future usefulness and value. 
A)  The asset is used in the production of income for the business. 
B)  The asset is available for sale to customers in the ordinary course of business. 
C)  The asset has physical form. 
D)  The asset has future usefulness and value.

Question 4

The cost of land includes the cost of removing unwanted buildings.

Accepted Answer

A) True 
 B)False

Question 5

On January 1,2012,a company buys a truck for $42,000 cash.It has estimated residual value of $2,000,and an estimated life of 4 years,or 200,000 miles.Assume the company uses units-of-production depreciation.The truck drove 40,000 miles in 2012,60,000 miles in 2013,80,000 miles in 2014,and 20,000 miles in 2015.Please complete the depreciation schedule below.  $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$\text { Depreciation for the Year }$
$$\begin{array} { | c | c | c | c | c | c | c | } 
\hline \text { Date } & \text { Asset Cost } & \begin{array} { c } 
\text { Depreciable } \
\text { Cost }
\end{array} & \begin{array} { c } 
\text { Depreciation } \
\text { Rate }
\end{array} & \begin{array} { c } 
\text { Depreciation } \
\text { Expense }
\end{array} & \begin{array} { c } 
\text { Accumulated } \
\text { Depreciation }
\end{array} & \begin{array} { c } 
\text { Book } \
\text { Value }
\end{array} \
\hline 1 - 1 - 2012 & & & & & & \
\hline 12 - 31 - 2012 & & & & & & \
\hline 12 - 31 - 2013 & & & & & & \
\hline 12 - 31 - 2014 & & & & & & \
\hline 12 - 31 - 2015 & & & & & & \
\hline
\end{array}$$

Accepted Answer

@#LAT-DLM& @#LAT-DLM& @#LAT-DLM& @#LAT-DLM& @#LAT-DLM& @#LAT-DLM& @#LAT-DLM& @#LAT-DLM& @#LAT-DLM& @#LAT-DLM& @#LAT-DLM& @#LAT-DLM&@#LAT-DLM&\[\begin{array} { | c | r |

Question 6

Kelly Petroleum Products owns fully depreciated furniture that was purchased for $26,500.The furniture had an estimated useful life of 8 years and an estimated residual value of $2,500.The furniture was sold for $2,700.Which of the following is the correct entry to record the transaction?

Accepted Answer

A)  $$\begin{array} { | l | r | r | } 
\hline \text { Accumulated depreciation } & 26,500 & \
\hline \text { Cash } & 2,700 & \
\hline \text { Gain on sale } & & 2,700 \
\hline \text { Furniture } & & 26,500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Accumulated depreciation } & 24,000 & \
\hline \text { Cash } & 2,700 & \
\hline \text { Gain on sale } & & 200 \
\hline \text { Furniture } & & 26,500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Furniture } & 26,500 & \
\hline \text { Gain on sale } & 200 & \
\hline \text { Cash } & & 2,700 \
\hline \text { Accumulated depreciation } & & 24,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Furniture } & 2,000 & \
\hline \text { Cash } & 2,700 & \
\hline \text { Loss on sale } & 19,300 & \
\hline \text { Accumulated depreciation } & & 24,000 \
\hline
\end{array}$$ 
A)  $$\begin{array} { | l | r | r | } 
\hline \text { Accumulated depreciation } & 26,500 & \
\hline \text { Cash } & 2,700 & \
\hline \text { Gain on sale } & & 2,700 \
\hline \text { Furniture } & & 26,500 \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | r | r | } 
\hline \text { Accumulated depreciation } & 24,000 & \
\hline \text { Cash } & 2,700 & \
\hline \text { Gain on sale } & & 200 \
\hline \text { Furniture } & & 26,500 \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | r | r | } 
\hline \text { Furniture } & 26,500 & \
\hline \text { Gain on sale } & 200 & \
\hline \text { Cash } & & 2,700 \
\hline \text { Accumulated depreciation } & & 24,000 \
\hline
\end{array}$$ 
D)  $$\begin{array} { | l | r | r | } 
\hline \text { Furniture } & 2,000 & \
\hline \text { Cash } & 2,700 & \
\hline \text { Loss on sale } & 19,300 & \
\hline \text { Accumulated depreciation } & & 24,000 \
\hline
\end{array}$$

Question 7

Which of the following is the proper accounting treatment for a purchased patent?

Accepted Answer

A)  A purchased patent must be expensed. 
B)  A purchased patent must be capitalized and expensed each year to the extent that the value has declined. 
C)  A purchased patent must be capitalized and amortized over 20 years or less. 
D)  A purchased patent must be capitalized and amortized over 70 years or less. 
A)  A purchased patent must be expensed. 
B)  A purchased patent must be capitalized and expensed each year to the extent that the value has declined. 
C)  A purchased patent must be capitalized and amortized over 20 years or less. 
D)  A purchased patent must be capitalized and amortized over 70 years or less.

Question 8

Pallmall Company has a truck that was purchased in prior years for $60,000.At the end of 2014,there is $30,000 of accumulated depreciation.The value of the truck has been impaired,and its remaining value is now estimated at $18,000.When Pallmall adjusts for the loss of value,how much will the loss on impairment be?

Accepted Answer

A)  $6,000 
B)  $12,000 
C)  $18,000 
D)  $42,000 
A)  $6,000 
B)  $12,000 
C)  $18,000 
D)  $42,000

Question 9

Research and development costs are treated the same under GAAP and IFRS.

Accepted Answer

A) True 
 B)False

Question 10

On January 1,2013,Zane Manufacturing Company purchased a machine for $40,000.The company expects to use the machine a total of 24,000 hours over the next 6 years.The estimated sales price of the machine at the end of 6 years is $4,000.The company used the machine 8,000 hours in 2013 and 12,000 in 2014.
-What is the book value of the machine at the end of 2014 if the company uses double-declining-balance depreciation?

Accepted Answer

A)  $20,000 
B)  $17,778 
C)  $13,333 
D)  $28,000 
A)  $20,000 
B)  $17,778 
C)  $13,333 
D)  $28,000

Which of the following properly describes accumulated depreciation?

A mine is purchased for $4,000,000.There will be a salvage value of $300,000 when the land is restored after mining is completed.The mine has an estimated 250,000 tons of coal.During 2012,there were 35,000 tons of coal removed.What is the depletion expense for 2012?

Which of the following is NOT a characteristic of a plant asset?

The cost of land includes the cost of removing unwanted buildings.

Kelly Petroleum Products owns fully depreciated furniture that was purchased for $26,500.The furniture had an estimated useful life of 8 years and an estimated residual value of $2,500.The furniture was sold for $2,700.Which of the following is the correct entry to record the transaction?

Which of the following is the proper accounting treatment for a purchased patent?

Research and development costs are treated the same under GAAP and IFRS.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters

Exam 9: Plant Assets and Intangibles

Which of the following properly describes accumulated depreciation?

A mine is purchased for $4,000,000.There will be a salvage value of $300,000 when the land is restored after mining is completed.The mine has an estimated 250,000 tons of coal.During 2012,there were 35,000 tons of coal removed.What is the depletion expense for 2012?

Which of the following is NOT a characteristic of a plant asset?

The cost of land includes the cost of removing unwanted buildings.

Kelly Petroleum Products owns fully depreciated furniture that was purchased for $26,500.The furniture had an estimated useful life of 8 years and an estimated residual value of $2,500.The furniture was sold for $2,700.Which of the following is the correct entry to record the transaction?

Which of the following is the proper accounting treatment for a purchased patent?

Research and development costs are treated the same under GAAP and IFRS.

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandising Inventory

Internal Control and Cash

Receivables

Current Liabilities and Payroll

Long-Term Liabilities, bonds Payable, and Classification of Liabilities on the Balance Sheet

Filters