Question 1

The useful life of a plant asset is:

Accepted Answer

A) The length of time it is productively used in a company's operations. 
B) Never related to its physical life. 
C) Its productive life,but not to exceed one year. 
D) Determined by the FASB. 
E) Determined by law. 
A) The length of time it is productively used in a company's operations. 
B) Never related to its physical life. 
C) Its productive life,but not to exceed one year. 
D) Determined by the FASB. 
E) Determined by law.

Question 2

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

Accepted Answer

A) True 
 B)False

Question 3

Match between columns
                        Premises: The process of allocating the cost of natural resources to the periods when they are consumed.
Assets that increase the benefits of land, have a limited useful life, and are subject to depreciation.
Improvements to leased property made by the lessee.
A process of becoming outdated and no longer used.
The total cost of a plant asset less its accumulated depreciation.
Major repairs that extend the useful life of a plant asset beyond its original estimate.
An exclusive right granted to its owner to manufacture and sell an item, or to use a process, for 20 years.
A right granted that gives its owner the exclusive privilege to publish and sell musical, literary, or artistic work during the life of the creator plus 70 years.
The insufficient capacity of plant assets to meet the company's productive demands.
An estimate of an asset's value at the end its benefit period.

Accepted Answer

The Answer of Copyright and Book value and Salvage value is...

Question 4

Victory Company purchases office equipment at the beginning of the year at a cost of $15,000.The machine is depreciated using the straight-line method.The machine's useful life is estimated to be 7 years with a $1,000 salvage value.The book value at the end of 7 years is:

Accepted Answer

A) $2,143. 
B) $1,000. 
C) $2,000. 
D) $14,000. 
E) $0. 
A) $2,143. 
B) $1,000. 
C) $2,000. 
D) $14,000. 
E) $0.

Question 5

Peavey Enterprises purchased a depreciable asset for $22,000 on April 1,Year 1.The asset will be depreciated using the straight-line method over its four-year useful life.Assuming the asset's salvage value is $2,000,what will be the amount of accumulated depreciation on this asset on December 31,Year 3?

Accepted Answer

A) $5,000 
B) $15,000 
C) $15,125 
D) $20,000 
E) $13,750 
A) $5,000 
B) $15,000 
C) $15,125 
D) $20,000 
E) $13,750

Question 6

Revenue expenditures to keep an asset in good operating condition; they are necessary if an asset is to perform to expectations over its useful life are called ________.

Accepted Answer

The answer of Revenue expenditures to keep an asset in...

Question 7

A company had average total assets of $887,000.Its gross sales were $1,090,000 and its net sales were $1,000,000.The company's total asset turnover equals:

Accepted Answer

A) 0.81. 
B) 0.89. 
C) 1.09. 
D) 1.13. 
E) 1.23. 
A) 0.81. 
B) 0.89. 
C) 1.09. 
D) 1.13. 
E) 1.23.

Question 8

Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor.The real estate consists of land appraised at $35,000,a building appraised at $105,000,and paddleboats appraised at $210,000.Compute the cost that should be allocated to the land.

Accepted Answer

A) $93,000. 
B) $140,000. 
C) $32,500. 
D) $31,000. 
E) $97,500. 
A) $93,000. 
B) $140,000. 
C) $32,500. 
D) $31,000. 
E) $97,500.

Question 9

A company purchased property for $100,000.The property included a building,a parking lot,and land.The building was appraised at $62,000; the land at $35,000,and the parking lot at $18,000.Land should be recorded in the accounting records with an allocated cost of:

Accepted Answer

A) $0. 
B) $30,435. 
C) $35,000. 
D) $46,087. 
E) $100,000. 
A) $0. 
B) $30,435. 
C) $35,000. 
D) $46,087. 
E) $100,000.

Question 10

On April 1,Year 1,Astor Corp.purchased and placed a plant asset in service.The following information is available regarding the plant asset:
  Make the necessary adjusting journal entries at December 31,Year 1,and December 31,Year 2 to record depreciation for each year under the straight-line depreciation method.

Accepted Answer

The answer of On April 1,Year 1,Astor Corp.purchased and placed...

Question 11

What is depreciation of plant assets? What are the factors necessary in computing depreciation?

Accepted Answer

Depreciation is the process of allocatin

Question 12

Plant assets are reported on a balance sheet at their book value (acquisition costs less accumulated depreciation),and not necessarily at fair (market)value.

Accepted Answer

A) True 
 B)False

Question 13

A company paid $320,000 for equipment that was expected to last five years and to have a salvage value of $40,000.During the third year of the equipment's life,$39,000 cash was paid for replacement parts that were expected to increase productivity by 10% each year.Prepare the journal entry to record the $39,000 cost incurred in the third year.

Accepted Answer

The answer of A company paid $320,000 for equipment that...

Question 14

Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems.

Accepted Answer

A) True 
 B)False

Question 15

Bering Rock acquires a granite quarry at a cost of $590,000,which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove.Compute the depletion expense for the first year assuming 38,000 tons were removed and sold.

Accepted Answer

A) $98,333. 
B) $93,158. 
C) $38,000. 
D) $12,881. 
E) $112,100. 
A) $98,333. 
B) $93,158. 
C) $38,000. 
D) $12,881. 
E) $112,100.

Question 16

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 17

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000.The machine's useful life is estimated to be 5 years,or 300,000 units of product,with a $15,000 salvage value.During its first year,the machine produces 64,500 units of product.
-Determine the machines' first year depreciation under the units-of-production method.

Accepted Answer

A) $27,000. 
B) $54,000. 
C) $24,000. 
D) $25,800. 
E) $48,000. 
A) $27,000. 
B) $54,000. 
C) $24,000. 
D) $25,800. 
E) $48,000.

Question 18

Explain in detail how to compute each of the following depreciation methods: straight-line,units-of-production,and double-declining-balance.

Accepted Answer

Straight-line depreciation is calculated

Question 19

Extraordinary repairs are expenditures extending the asset's useful life beyond its original estimate,and are capital expenditures because they benefit future periods.

Accepted Answer

A) True 
 B)False

Question 20

Marlow Company purchased a point of sale system on January 1 for $3,400.This system has a useful life of 10 years and a salvage value of $400.
-What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Accepted Answer

A) $680. 
B) $480. 
C) $544. 
D) $600. 
E) $300. 
A) $680. 
B) $480. 
C) $544. 
D) $600. 
E) $300.

Exam 8: Accounting for Long-Term Assets

The useful life of a plant asset is:

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

Victory Company purchases office equipment at the beginning of the year at a cost of $15,000.The machine is depreciated using the straight-line method.The machine's useful life is estimated to be 7 years with a $1,000 salvage value.The book value at the end of 7 years is:

Revenue expenditures to keep an asset in good operating condition; they are necessary if an asset is to perform to expectations over its useful life are called ________.

A company had average total assets of $887,000.Its gross sales were $1,090,000 and its net sales were $1,000,000.The company's total asset turnover equals:

Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor.The real estate consists of land appraised at $35,000,a building appraised at $105,000,and paddleboats appraised at $210,000.Compute the cost that should be allocated to the land.

A company purchased property for $100,000.The property included a building,a parking lot,and land.The building was appraised at $62,000; the land at $35,000,and the parking lot at $18,000.Land should be recorded in the accounting records with an allocated cost of:

What is depreciation of plant assets? What are the factors necessary in computing depreciation?

Plant assets are reported on a balance sheet at their book value (acquisition costs less accumulated depreciation),and not necessarily at fair (market)value.

Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems.

Bering Rock acquires a granite quarry at a cost of $590,000,which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove.Compute the depletion expense for the first year assuming 38,000 tons were removed and sold.

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 in detail how to compute each of the following depreciation methods: straight-line,units-of-production,and double-declining-balance.

Extraordinary repairs are expenditures extending the asset's useful life beyond its original estimate,and are capital expenditures because they benefit future periods.

Marlow Company purchased a point of sale system on January 1 for $3,400.This system has a useful life of 10 years and a salvage value of $400. -What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Accounting in Business

Accounting for Business Transactions

Adjusting Accounts for Financial Statements

Accounting for Merchandising Operations

Inventories and Cost of Sales

Cash,fraud,and Internal Controls

Accounting for Receivables

Accounting for Current Liabilities

Accounting for Long-Term Liabilities

Corporate Reporting and Analysis

Reporting Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Costing and Analysis

Process Costing and Analysis

Activity-Based Costing and Analysis

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing and Analysis

Master Budgets and Performance Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Relevant Costing for Managerial Decisions

Capital Budgeting and Investment Analysis

Time Value of Money

Investments

Lean Principles and Accounting

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