Question 1

Companies that have a relatively large amount invested in assets to generate a given level of sales are considered capital-intensive.

Accepted Answer

A) True 
 B)False

Question 2

Additional costs of plant assets that do not materially increase the asset's life or productive capabilities are recorded as ________.

Accepted Answer

revenue ex

Question 3

Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate and is reflected in the current,and future financial statements.

Accepted Answer

A) True 
 B)False

Question 4

On January 1,2016,a company disposed of equipment for $16,200 cash that had cost $35,000,a salvage value of $5,000,and a useful life 10 years.The double-declining-balance depreciation method was used.On December 31,2015,accumulated depreciation was $20,664.Prepare a journal entry to record the disposal of the equipment.

Accepted Answer

The answer of On January 1,2016,a company disposed of equipment...

Question 5

Martinez owns an asset that cost $87,000 with accumulated depreciation of $40,000.The company sells the equipment for cash of $42,000.At the time of sale,the company should record:

Accepted Answer

A) A gain on sale of $2,000. 
B) A loss on sale of $2,000. 
C) A loss on sale of $5,000. 
D) A gain on sale of $5,000. 
E) A loss on sale of $45,000. 
A) A gain on sale of $2,000. 
B) A loss on sale of $2,000. 
C) A loss on sale of $5,000. 
D) A gain on sale of $5,000. 
E) A loss on sale of $45,000.

Question 6

If land is purchased as a building site,the cost of removing existing structures is not charged to the Land account.

Accepted Answer

A) True 
 B)False

Question 7

Owning a patent:

Accepted Answer

A) Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years. 
B) Gives the owner exclusive rights to manufacture and sell a patented item or to use a process for 20 years. 
C) Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years. 
D) Indicates that the value of a company exceeds the fair market value of a company's net assets if purchased separately. 
E) Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years. 
A) Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years. 
B) Gives the owner exclusive rights to manufacture and sell a patented item or to use a process for 20 years. 
C) Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years. 
D) Indicates that the value of a company exceeds the fair market value of a company's net assets if purchased separately. 
E) Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years.

Question 8

A company made the following expenditures in connection with the construction of a new building:
   Prepare a schedule showing the amounts to be recorded as Land,Buildings,and Machinery.

Accepted Answer

The answer of A company made the following expenditures in...

Question 9

Extraordinary repairs:

Accepted Answer

A) Are revenue expenditures. 
B) Extend the useful life of an asset beyond its original estimate. 
C) Are credited to accumulated depreciation. 
D) Are additional costs of plants assets that do not materially increase the asset's life. 
E) Are expensed when incurred. 
A) Are revenue expenditures. 
B) Extend the useful life of an asset beyond its original estimate. 
C) Are credited to accumulated depreciation. 
D) Are additional costs of plants assets that do not materially increase the asset's life. 
E) Are expensed when incurred.

Question 10

On April 1 of the current year,a company traded an old machine that originally cost $32,000 and that had accumulated depreciation of $24,000 for a similar new machine that had a cash price of $40,000.
1.Prepare the entry to record the exchange under the assumption that a $5,000 trade-in allowance was received and the balance of $35,000 was paid in cash.Assume the exchange transaction had commercial substance.
2.Prepare the entry to record the exchange under the assumption that instead of a $5,000 trade-in allowance,a $12,500 trade-in allowance was received and the balance of $27,500 was paid in cash.Assume the exchange transaction has commercial substance.

Accepted Answer

The answer of On April 1 of the current year,a...

Question 11

Cliff Company traded in an old truck for a new one.The old truck had a cost of $75,000 and accumulated depreciation of $60,000.The new truck had an invoice price of $125,000.Huffington was given a $12,000 trade-in allowance on the old truck,which meant they paid $113,000 in addition to the old truck to acquire the new truck.If this transaction has commercial substance,what is the recorded value of the new truck?

Accepted Answer

A) $15,000 
B) $75,000 
C) $113,000 
D) $125,000 
E) $128,000 
A) $15,000 
B) $75,000 
C) $113,000 
D) $125,000 
E) $128,000

Question 12

Describe the accounting for natural resources,including their acquisition,cost allocation,and account titles.

Accepted Answer

The costs of natural resources are recor

Question 13

A gain or loss is recorded for exchanges of plant assets with commercial substance.

Accepted Answer

A) True 
 B)False

Question 14

Match between columns
                        Premises: The process of allocating the cost of a natural resource to the period when it is consumed.
The amount by which the company's value exceeds the value of its individual assets and liabilities.
A cost reported as an expense on the current income statement because it does not provide a material benefit in future periods.
A measure of a company's effectiveness in using its assets to generate sales.
Nonphysical assets used in operations that give long-term rights or competitive advantages to their owners.
A depreciation method that charges a varying amount to expense for each period of an asset's useful life depending on its usage.
The process of systematically allocating the cost of an intangible asset to expense over its estimated useful life.
Expenditures to keep a plant asset in good operating condition.
An expenditure that makes a plant asset more efficient or productive.
A method of depreciation that yields larger expense during the early years of an asset's life and smaller expense in the later years.

Accepted Answer

The Answer of Units-of production method and Amortization and Intangible is...

Question 15

On January 2,2010,a company purchased a delivery truck for $45,000 cash.The truck had an estimated useful life of seven years and an estimated salvage value of $3,000.The straight-line method of depreciation was used.Prepare the journal entries to record depreciation expense and the disposition of the truck on September 1,2014,under each of the following assumptions:
a.The truck and $45,000 cash were given in exchange for a new delivery truck that had a cash price of $60,000.This transaction has commercial substance.
b.The truck and $40,000 cash were exchanged for a new delivery truck that had a cash price of $60,000.This transaction has commercial substance.

Accepted Answer

The answer of On January 2,2010,a company purchased a delivery...

Question 16

An asset's book value is $36,000 on January 1,Year 6.The asset is being depreciated $500 per month using the straight-line method.Assuming the asset is sold on July 1,Year 7 for $25,000,the company should record:

Accepted Answer

A) Neither a gain or loss is recognized on this type of transaction. 
B) A gain on sale of $2,000. 
C) A loss on sale of $1,000. 
D) A gain on sale of $1,000. 
E) A loss on sale of $2,000. 
A) Neither a gain or loss is recognized on this type of transaction. 
B) A gain on sale of $2,000. 
C) A loss on sale of $1,000. 
D) A gain on sale of $1,000. 
E) A loss on sale of $2,000.

Question 17

Describe the accounting for intangible assets,including their acquisition,cost allocation,and accounts involved.

Accepted Answer

Intangible assets are recorded at acquis

Question 18

On April 1,Year 5 a company discarded a machine that had cost $10,000 and had accumulated depreciation of $8,000 as of December 31,Year 4.The asset had a 5-year life and no salvage value.Prepare the journal entries to record the updating of the depreciation expense and discarding of this asset in Year 5.

Accepted Answer

The answer of On April 1,Year 5 a company discarded...

Question 19

Since goodwill is an intangible asset,it is amortized each year using the straight-line method.

Accepted Answer

A) True 
 B)False

Question 20

When the usefulness of plant assets used to extract natural resources is directly related to the depletion of a natural resource,their costs are depreciated using the units-of-production method of depreciation.

Accepted Answer

A) True 
 B)False

Exam 8: Accounting for Long-Term Assets

Companies that have a relatively large amount invested in assets to generate a given level of sales are considered capital-intensive.

Additional costs of plant assets that do not materially increase the asset's life or productive capabilities are recorded as ________.

Revising an estimate of the useful life or salvage value of a plant asset is referred to as a change in accounting estimate and is reflected in the current,and future financial statements.

Martinez owns an asset that cost $87,000 with accumulated depreciation of $40,000.The company sells the equipment for cash of $42,000.At the time of sale,the company should record:

If land is purchased as a building site,the cost of removing existing structures is not charged to the Land account.

Owning a patent:

A company made the following expenditures in connection with the construction of a new building: Prepare a schedule showing the amounts to be recorded as Land,Buildings,and Machinery.

Extraordinary repairs:

Describe the accounting for natural resources,including their acquisition,cost allocation,and account titles.

A gain or loss is recorded for exchanges of plant assets with commercial substance.

An asset's book value is $36,000 on January 1,Year 6.The asset is being depreciated $500 per month using the straight-line method.Assuming the asset is sold on July 1,Year 7 for $25,000,the company should record:

Describe the accounting for intangible assets,including their acquisition,cost allocation,and accounts involved.

Since goodwill is an intangible asset,it is amortized each year using the straight-line method.

When the usefulness of plant assets used to extract natural resources is directly related to the depletion of a natural resource,their costs are depreciated using the units-of-production method of depreciation.

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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