Question 1

Perfuncto,Inc.built a machine.The costs for the new machine were:
   What should Perfuncto,Inc.record as the cost of the machine?

Accepted Answer

$80,000 +

Question 2

Which of the following is an example of a physical control over assets?

Accepted Answer

A) unlocked storage rooms 
B) cash register 
C) complete and reliable record-keeping 
D) the people who have physical custody of assets should be different from the people who maintain the records for those assets 
A) unlocked storage rooms 
B) cash register 
C) complete and reliable record-keeping 
D) the people who have physical custody of assets should be different from the people who maintain the records for those assets

Question 3

On January 1,2011,Ace Electronics paid $400,000 cash for a computer that would be used to store and process its accounting information.The computer has a 5-year useful life,after which it will be worthless because it will be obsolete.Ace Electronics uses the double-declining balance method to depreciate its assets.The book value of the computer at December 31,2013 is ________.

Accepted Answer

A) $0 
B) $313,600 
C) $86,400 
D) $57,600 
A) $0 
B) $313,600 
C) $86,400 
D) $57,600

Question 4

Intangible assets provide specific legal rights to the owner.

Accepted Answer

A) True 
 B)False

Question 5

International Financial Reporting Standards (IFRS)allow revaluation of assets to their fair value if fair value can be measured reliably.

Accepted Answer

A) True 
 B)False

Question 6

What is the most significant risk related to long-term assets?

Accepted Answer

A) Managers will NOT  use the assets to satisfy the customers. 
B) Someone will steal or misappropriate the assets. 
C) They will NOT  be paid for on time. 
D) They will NOT be sold before they get old. 
A) Managers will NOT  use the assets to satisfy the customers. 
B) Someone will steal or misappropriate the assets. 
C) They will NOT  be paid for on time. 
D) They will NOT be sold before they get old.

Question 7

When a long-term asset is sold,both its cost and the related accumulated depreciation must be removed from the accounting records.

Accepted Answer

A) True 
 B)False

Question 8

Sharp Company owns a copyright and a patent.The copyright was acquired at a cost of $160,000 and the patent was purchased for $475,000.The copyright has an estimated useful life of 25 years and the patent has a 19-year estimated useful life.Both assets have estimated salvage values of zero.
Required:
1.Describe this information's effect on the income statement.Assume the assets are used for a full year.
2.Calculate the balance sheet carrying value of each asset after three years of use.
3.Explain how intangible assets have value.

Accepted Answer

1.The income statement will report $6,40

Question 9

Drudge Company has a 25% marginal tax rate.Assume that the company has income before depreciation and taxes of $20,000 and elects a tax depreciation method that results in $8,000 of depreciation for tax purposes.What will be the company's tax liability this year?

Accepted Answer

A) $12,000 
B) $5,000 
C) $3,000 
D) $2,000 
A) $12,000 
B) $5,000 
C) $3,000 
D) $2,000

Question 10

On January 1,2011,Ace Electronics paid $400,000 cash for a computer that would be used to store and process its accounting information.The computer has a 5-year useful life,after which it will be worthless because it will be obsolete.Ace Electronics uses the straight-line method to depreciate its assets.The book value of the computer at December 31,2011 is ________.

Accepted Answer

A) $320,000 
B) $400,000 
C) $480,000 
D) $80,000 
A) $320,000 
B) $400,000 
C) $480,000 
D) $80,000

Question 11

On January 1,2011,Ace Electronics paid $400,000 cash for a computer that would be used to store and process its accounting information.The computer has a 5-year useful life,after which it will be worthless because it will be obsolete.How much depreciation expense should Ace Electronics record for the year ended December 31,2013,using the double-declining balance method?

Accepted Answer

A) $57,600 
B) $40,000 
C) $80,000 
D) $160,000 
A) $57,600 
B) $40,000 
C) $80,000 
D) $160,000

Question 12

Which of the following is typically a long-term asset?

Accepted Answer

A) an intangible asset such as a patent or copyright 
B) cash 
C) common stock 
D) depreciation expense 
A) an intangible asset such as a patent or copyright 
B) cash 
C) common stock 
D) depreciation expense

Question 13

Identify the three acceptable depreciation methods discussed in the textbook.

Accepted Answer

A) straight-line,capitalization of expense,and activity methods 
B) straight-line,operating,and accumulated methods 
C) activity,carrying value,and straight-line methods 
D) double-declining balance,straight-line,and activity methods 
A) straight-line,capitalization of expense,and activity methods 
B) straight-line,operating,and accumulated methods 
C) activity,carrying value,and straight-line methods 
D) double-declining balance,straight-line,and activity methods

Question 14

To be capitalized,an expenditure must ________.

Accepted Answer

A) extend the useful life of a long-term asset 
B) enhance the operating efficiency of a long-term asset 
C) be reasonable and necessary to put a long-term asset into a working condition 
D) all of these 
A) extend the useful life of a long-term asset 
B) enhance the operating efficiency of a long-term asset 
C) be reasonable and necessary to put a long-term asset into a working condition 
D) all of these

Question 15

Identify each of the assets listed below with the appropriate classification:
A = Balance sheet,Current asset section
B = Balance sheet,Property,plant,and equipment section
C = None of the above
______ 1.Accumulated depreciation,equipment
______ 2.Depreciation expense
______ 3.Land
______ 4.Machinery
______ 5.Building
______ 6.Cash
______ 7.Notes receivable,due in 9 months
______ 8.Office supplies
______ 9.Trucks
______ 10.Sales
______ 11.Inventory
______ 12.Cost of goods sold
______ 13.Goodwill
______ 14.Computers
______ 15.Office furniture

Accepted Answer

The answer of Identify each of the assets listed below...

Question 16

Long-term assets refer to assets that will last and provide benefits for more than one year.

Accepted Answer

A) True 
 B)False

Question 17

The people who have physical custody of assets should be different from the people who maintain the records for those assets.

Accepted Answer

A) True 
 B)False

Question 18

All of the following costs would be included in the Land account when land is purchased EXCEPT ________.

Accepted Answer

A) the costs associated with paving a parking lot on the land 
B) the realtor's fee 
C) costs to prepare the land for use such as removing a tree stump 
D) the fee paid to transfer title to the land 
A) the costs associated with paving a parking lot on the land 
B) the realtor's fee 
C) costs to prepare the land for use such as removing a tree stump 
D) the fee paid to transfer title to the land

Question 19

Under International Financial Reporting Standards (IFRS),when assets are written down because of impairment,the impairment losses can be reversed if circumstances change.

Accepted Answer

A) True 
 B)False

Question 20

On November 1,2011,Frigate Shipping Company bought equipment that cost $400,000,with an estimated useful life of 8 years and an estimated salvage value of $28,000.The company uses the straight-line method of depreciation and has a fiscal year ending on October 31.At October 31,2013,Frigate Company will report accumulated depreciation of ________.

Accepted Answer

A) $100,000 
B) $66,666 
C) $93,000 
D) $46,500 
A) $100,000 
B) $66,666 
C) $93,000 
D) $46,500

Perfuncto,Inc.built a machine.The costs for the new machine were: What should Perfuncto,Inc.record as the cost of the machine?

Which of the following is an example of a physical control over assets?

Intangible assets provide specific legal rights to the owner.

International Financial Reporting Standards (IFRS)allow revaluation of assets to their fair value if fair value can be measured reliably.

What is the most significant risk related to long-term assets?

When a long-term asset is sold,both its cost and the related accumulated depreciation must be removed from the accounting records.

Drudge Company has a 25% marginal tax rate.Assume that the company has income before depreciation and taxes of $20,000 and elects a tax depreciation method that results in $8,000 of depreciation for tax purposes.What will be the company's tax liability this year?

Which of the following is typically a long-term asset?

Identify the three acceptable depreciation methods discussed in the textbook.

To be capitalized,an expenditure must ________.

Long-term assets refer to assets that will last and provide benefits for more than one year.

The people who have physical custody of assets should be different from the people who maintain the records for those assets.

All of the following costs would be included in the Land account when land is purchased EXCEPT ________.

Under International Financial Reporting Standards (IFRS),when assets are written down because of impairment,the impairment losses can be reversed if circumstances change.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters

Exam 6: Acquisition and Use of Long-Term Assets

Perfuncto,Inc.built a machine.The costs for the new machine were: What should Perfuncto,Inc.record as the cost of the machine?

Which of the following is an example of a physical control over assets?

Intangible assets provide specific legal rights to the owner.

International Financial Reporting Standards (IFRS)allow revaluation of assets to their fair value if fair value can be measured reliably.

What is the most significant risk related to long-term assets?

When a long-term asset is sold,both its cost and the related accumulated depreciation must be removed from the accounting records.

Drudge Company has a 25% marginal tax rate.Assume that the company has income before depreciation and taxes of $20,000 and elects a tax depreciation method that results in $8,000 of depreciation for tax purposes.What will be the company's tax liability this year?

Which of the following is typically a long-term asset?

Identify the three acceptable depreciation methods discussed in the textbook.

To be capitalized,an expenditure must ________.

Long-term assets refer to assets that will last and provide benefits for more than one year.

The people who have physical custody of assets should be different from the people who maintain the records for those assets.

All of the following costs would be included in the Land account when land is purchased EXCEPT ________.

Under International Financial Reporting Standards (IFRS),when assets are written down because of impairment,the impairment losses can be reversed if circumstances change.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters