Question 1

What are the general accounting procedures for recording asset disposals?

Accepted Answer

The first step in the accounting process

Question 2

Match each of the following terms with the appropriate definitions.
-Alternations or improvements to leased property made by the lessee.

Accepted Answer

A) Salvage value 
B) Book value 
C) Depletion 
D) Leasehold improvements 
E) Extraordinary repairs
F)Inadequacy
G)Land improvements
H)Patent
I)Obsolescence
J)Copyright 
A) Salvage value 
B) Book value 
C) Depletion 
D) Leasehold improvements 
E) Extraordinary repairs
F)Inadequacy
G)Land improvements
H)Patent
I)Obsolescence
J)Copyright

Question 3

Once an asset's book value equals its salvage value,depreciation stops.

Accepted Answer

A) True 
 B)False

Question 4

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.
-Depreciation expense in year 4 is:

Accepted Answer

A)  $13,750. 
B)  $3,750. 
C)  $30,000. 
D)  $2,500. 
E)  $5,000. 
A)  $13,750. 
B)  $3,750. 
C)  $30,000. 
D)  $2,500. 
E)  $5,000.

Question 5

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 6

The formula to compute annual straight-line depreciation is:

Accepted Answer

A)  Depreciable cost divided by useful life in units. 
B)  (Cost plus salvage value) divided by the useful life in years. 
C)  (Cost minus salvage value) divided by the useful life in years. 
D)  Cost multiplied by useful life in years. 
E)  Cost divided by useful life in units. 
A)  Depreciable cost divided by useful life in units. 
B)  (Cost plus salvage value) divided by the useful life in years. 
C)  (Cost minus salvage value) divided by the useful life in years. 
D)  Cost multiplied by useful life in years. 
E)  Cost divided by useful life in units.

Question 7

A company had net sales of $230,000 for 2015 and $288,000 for 2016.The company's average total assets for 2015 were $150,000 and $180,000 for 2016.Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

Accepted Answer

2015: $230,000/$150,000 = 1.53
2016: $28

Question 8

A company purchased mining property for $1,560,000.The property was estimated to contain 13,000,000 tons of ore.In the current year,the company removed and sold 263,000 tons of ore.Calculate the depletion expense for the current year.

Accepted Answer

$1,560,000/13,000,00

Question 9

A company's old machine that cost $40,000 and had accumulated depreciation of $22,000 was traded in on a new machine having an estimated 20-year life with an invoice price of $45,000.The company also paid $33,000 cash,along with its old machine to acquire the new machine.If this transaction has commercial substance,the new machine should be recorded at:

Accepted Answer

A)  $40,000. 
B)  $33,000. 
C)  $45,000. 
D)  $18,000. 
E)  $51,000. 
A)  $40,000. 
B)  $33,000. 
C)  $45,000. 
D)  $18,000. 
E)  $51,000.

Question 10

Natural resources are:

Accepted Answer

A)  Consumable assets such standing timber, mineral deposits, and oil and gas fields. 
B)  Tangible assets used in the operations of the business. 
C)  Current assets because they are depleted. 
D)  Not subject to allocation to expense over their useful lives. 
E)  Depleted using a straight-line method. 
A)  Consumable assets such standing timber, mineral deposits, and oil and gas fields. 
B)  Tangible assets used in the operations of the business. 
C)  Current assets because they are depleted. 
D)  Not subject to allocation to expense over their useful lives. 
E)  Depleted using a straight-line method.

Question 11

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

Accepted Answer

Intangible assets are recorded at acquis

Question 12

The depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a(an):

Accepted Answer

A)  Accelerated depreciation method. 
B)  Book value depreciation method. 
C)  Straight-line depreciation method. 
D)  Units-of-production depreciation method. 
E)  Unrealized depreciation method. 
A)  Accelerated depreciation method. 
B)  Book value depreciation method. 
C)  Straight-line depreciation method. 
D)  Units-of-production depreciation method. 
E)  Unrealized depreciation method.

Question 13

Match each of the following terms with the appropriate definitions.
-A condition where a plant asset is no longer useful in producing goods or services with a competitive advantage.

Accepted Answer

A) Salvage value 
B) Book value 
C) Depletion 
D) Leasehold improvements 
E) Extraordinary repairs
F)Inadequacy
G)Land improvements
H)Patent
I)Obsolescence
J)Copyright 
A) Salvage value 
B) Book value 
C) Depletion 
D) Leasehold improvements 
E) Extraordinary repairs
F)Inadequacy
G)Land improvements
H)Patent
I)Obsolescence
J)Copyright

Question 14

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 15

Plant assets are defined as:

Accepted Answer

A)  Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business. 
B)  Current assets. 
C)  Held for sale. 
D)  Intangible assets used in the operations of a business that have a useful life of more than one accounting period. 
E)  Tangible assets used in the operation of business that have a useful life of less than one accounting period. 
A)  Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business. 
B)  Current assets. 
C)  Held for sale. 
D)  Intangible assets used in the operations of a business that have a useful life of more than one accounting period. 
E)  Tangible assets used in the operation of business that have a useful life of less than one accounting period.

Question 16

During the current year,a company exchanged an old truck costing $58,000 with accumulated depreciation of $52,000 for a new truck.The new truck had a cash price of $80,000 and the company received a $16,000 trade-in allowance on the old truck with the balance of $64,000 paid in cash.Prepare the journal entry to record the exchange,assuming the transaction has commercial substance.

Accepted Answer

None

Question 17

Schwartz Co.paid $780,000 cash to buy the plant assets of Kimberly Co.that went out of business.An independent appraiser assigned the following values to the assets acquired:
 $$\begin{array} { l l } 
\text { Land } & \$ 522,000 \
\text { Building } & 243,000 \
\text { Equipment } & 135,000 \
\text { Total } & \$ 900,000
\end{array}$$ 
Prepare Schwartz' journal entry to record the acquisition of these assets.

Accepted Answer

\[\begin{array} { l c } 
\text { Land }

Question 18

The following information is available on a depreciable asset owned by Mutual Savings Bank:
$$\begin{array} { | l | l | } 
\hline \text { Purchase date } & \text { July } 1 , \text { Year } 1 \
\hline \text { Purchase price } & \$ 85,000 \
\hline \text { Salvage value } & \$ 10,000 \
\hline \text { Useful life } & 10 \text { years } \
\hline \text { Depreciation method } & \text { straight-line } \
\hline
\end{array}$$
The asset's book value is $70,000 on July 1,Year 3.On that date,management determines that the asset's salvage value should be $5,000 rather than the original estimate of $10,000.Based on this information,the amount of depreciation expense the company should recognize during the last six months of Year 3 would be:

Accepted Answer

A)  $8,125.00 
B)  $7,375.00 
C)  $4,062.50 
D)  $3,750.00 
E)  $7,812.50 
A)  $8,125.00 
B)  $7,375.00 
C)  $4,062.50 
D)  $3,750.00 
E)  $7,812.50

Question 19

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,as long as the assets will not be moved to and used at another site when extraction of the natural resources is complete.

Accepted Answer

A) True 
 B)False

Question 20

Total asset cost plus depreciation expense equals book value.

Accepted Answer

A) True 
 B)False

What are the general accounting procedures for recording asset disposals?

Match each of the following terms with the appropriate definitions. -Alternations or improvements to leased property made by the lessee.

Once an asset's book value equals its salvage value,depreciation stops.

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value. -Depreciation expense in year 4 is:

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

The formula to compute annual straight-line depreciation is:

A company had net sales of $230,000 for 2015 and $288,000 for 2016.The company's average total assets for 2015 were $150,000 and $180,000 for 2016.Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

A company purchased mining property for $1,560,000.The property was estimated to contain 13,000,000 tons of ore.In the current year,the company removed and sold 263,000 tons of ore.Calculate the depletion expense for the current year.

Natural resources are:

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

The depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a(an):

Match each of the following terms with the appropriate definitions. -A condition where a plant asset is no longer useful in producing goods or services with a competitive advantage.

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

Plant assets are defined as:

Total asset cost plus depreciation expense equals book value.

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters

Exam 8: Accounting for Long-Term Assets

What are the general accounting procedures for recording asset disposals?

Match each of the following terms with the appropriate definitions. -Alternations or improvements to leased property made by the lessee.

Once an asset's book value equals its salvage value,depreciation stops.

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value. -Depreciation expense in year 4 is:

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

The formula to compute annual straight-line depreciation is:

A company had net sales of $230,000 for 2015 and $288,000 for 2016.The company's average total assets for 2015 were $150,000 and $180,000 for 2016.Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

A company purchased mining property for $1,560,000.The property was estimated to contain 13,000,000 tons of ore.In the current year,the company removed and sold 263,000 tons of ore.Calculate the depletion expense for the current year.

Natural resources are:

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

The depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a(an):

Match each of the following terms with the appropriate definitions. -A condition where a plant asset is no longer useful in producing goods or services with a competitive advantage.

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

Plant assets are defined as:

Total asset cost plus depreciation expense equals book value.

Accounting in Business

Analyzing 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

Time Value of Money

Investments

Partnership Accounting

Filters