Question 1

Betterments are a type of capital expenditure.

Accepted Answer

A) True 
 B)False

Question 2

The depreciation method that charges a varying amount to expense for each period of an asset's useful life depending on its usage is ________.

Accepted Answer

The answer of The depreciation method that charges a varying...

Question 3

An accelerated depreciation method yields larger depreciation expense in the early years of an asset's life and less depreciation expense in later years.

Accepted Answer

A) True 
 B)False

Question 4

The insufficient capacity of a company's plant asset to meet the company's productive demands is called ________.

Accepted Answer

The answer of The insufficient capacity of a company's plant...

Question 5

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 6

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Accepted Answer

A) True 
 B)False

Question 7

On April 1 of the current year,a company purchased and placed in service a machine with a cost of $240,000.The company estimated the machine's useful life to be four years or 60,000 units of output with an estimated salvage value of $60,000.During the current year,12,000 units were produced.
Prepare the necessary December 31 adjusting journal entry to record depreciation for the current year assuming the company uses:
a.The straight-line method of depreciation
b.The units-of-production method of depreciation
c.The double-declining balance method of depreciation

Accepted Answer

a.
   *Depreciation

Question 8

Merchant Company purchased property for a building site.The costs associated with the property were:
$$\begin{array} { l c } 
\text { Purchase price } & \$ 185,000 \
\text { Real estate commissions } & 15,000 \
\text { Legal fees } & 700 \
\text { Expenses of clearing the land } & 2,000 \
\text { Expenses to remove old building } & 4,000
\end{array}$$
What portion of these costs should be allocated to the cost of the land and what portion should be allocated to the cost of the new building?

Accepted Answer

A)  $187,700 to Land; $19,000 to Building. 
B)  $200,700 to Land; $6,000 to Building. 
C)  $200,000 to Land; $6,700 to Building. 
D)  $185,000 to Land; $21,700 to Building. 
E)  $206,700 to Land; $0 to Building. 
A)  $187,700 to Land; $19,000 to Building. 
B)  $200,700 to Land; $6,000 to Building. 
C)  $200,000 to Land; $6,700 to Building. 
D)  $185,000 to Land; $21,700 to Building. 
E)  $206,700 to Land; $0 to Building.

Question 9

Marks Consulting purchased equipment costing $45,000 on January 1,Year 1.The equipment is estimated to have a salvage value of $5,000 and an estimated useful life of 8 years.Straight-line depreciation is used.If the equipment is sold on July 1,Year 5 for $20,000,the journal entry to record the sale will include a:

Accepted Answer

A)  Credit to cash for $20,000. 
B)  Debit to accumulated depreciation for $22,500. 
C)  Debit to loss on sale for $10,000. 
D)  Credit to loss on sale for $10,000. 
E)  Debit to gain on sale for $2,500. 
A)  Credit to cash for $20,000. 
B)  Debit to accumulated depreciation for $22,500. 
C)  Debit to loss on sale for $10,000. 
D)  Credit to loss on sale for $10,000. 
E)  Debit to gain on sale for $2,500.

Question 10

A company purchased land on which to construct a new building for a cost of $350,000.Additional costs incurred were:
 $$\begin{array} { l l } 
\text { Real estate broker's commissions } & \$ 24,500 \
\text { Legal fees incurred in purchase of the real estate } & 1,500 \
\text { Landscaping } & 8,000 \
\text { Cost to remove old house located on land } & 3,000 \
\text { Proceeds from selling materials salvaged from old house } & 1,000
\end{array}$$ 
What total dollar amount should be charged to Land and what amount should be charged to Building or other accounts?

Accepted Answer

All costs except landscaping,which is a

Question 11

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 12

Land improvements are:

Accepted Answer

A)  Assets that increase the usefulness of land, and like land, are not depreciated. 
B)  Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation. 
C)  Included in the cost of the land account. 
D)  Expensed in the period incurred. 
E)  Also called basket purchases. 
A)  Assets that increase the usefulness of land, and like land, are not depreciated. 
B)  Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation. 
C)  Included in the cost of the land account. 
D)  Expensed in the period incurred. 
E)  Also called basket purchases.

Question 13

Match each of the following terms with the appropriate definitions.
-An estimate of an asset's value at the end its benefit period.

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

A company purchased a weaving machine for $190,000.The machine has a useful life of 8 years and a residual value of $10,000.It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life.In the first year,15,000 bolts were produced.In the second year,production increased to 19,000 units.
-Using the units-of-production method,what is the book value of the machine at the end of the second year?

Accepted Answer

A)  $108,400. 
B)  $144,400. 
C)  $81,600. 
D)  $190,000. 
E)  $180,000. 
A)  $108,400. 
B)  $144,400. 
C)  $81,600. 
D)  $190,000. 
E)  $180,000.

Question 15

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 16

The depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate to the asset's beginning-of-period book value is called:

Accepted Answer

A)  Book value depreciation. 
B)  Declining-balance depreciation. 
C)  Straight-line depreciation. 
D)  Units-of-production depreciation. 
E)  Modified accelerated cost recovery system (MACRS) depreciation. 
A)  Book value depreciation. 
B)  Declining-balance depreciation. 
C)  Straight-line depreciation. 
D)  Units-of-production depreciation. 
E)  Modified accelerated cost recovery system (MACRS) depreciation.

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.
-What journal entry would be needed to record the machines' first year depreciation under the units-of-production method?

Accepted Answer

A)  Debit Depletion Expense $25,800; credit Accumulated Depletion $25,800. 
B)  Debit Depletion Expense $29,025; credit Accumulated Depletion $29,025. 
C)  Debit Depreciation Expense $29,025; credit Accumulated Depreciation $29,025. 
D)  Debit Depreciation Expense $25,800; credit Accumulated Depreciation $25,800. 
E)  Debit Amortization Expense $24,000; credit Accumulated Amortization $24,000. 
A)  Debit Depletion Expense $25,800; credit Accumulated Depletion $25,800. 
B)  Debit Depletion Expense $29,025; credit Accumulated Depletion $29,025. 
C)  Debit Depreciation Expense $29,025; credit Accumulated Depreciation $29,025. 
D)  Debit Depreciation Expense $25,800; credit Accumulated Depreciation $25,800. 
E)  Debit Amortization Expense $24,000; credit Accumulated Amortization $24,000.

Question 18

A company's property records revealed the following information about one of its plant assets:
 $$\begin{array} { | c | c | c | c | c | } 
\hline \text { Cost } & \begin{array} { c } 
\text { Salvage } \
\text { Value }
\end{array} & \begin{array} { c } 
\text { Purchase } \
\text { Date }
\end{array} & \begin{array} { c } 
\text { Estimated } \
\text { Life }
\end{array} & \text { Depreciation Method } \
\hline 154,000 & 15,000 & 01 / 01 & 10 \text { years } & \text { Double-declining balance } \
\hline
\end{array}$$ 
Calculate the depreciation expense in Year 1 and Year 2 for the year ended December 31.
 Year 1$\underline{\quad\quad\quad\quad}$ $\quad $ $\quad $Year 2$\underline{\quad\quad\quad\quad}$

Accepted Answer

Year 1: $154,000 x 20% = $30,8

Question 19

Explain the impact,if any,on depreciation when estimates that determine depreciation change.

Accepted Answer

Depreciation is revised when changes in

Question 20

Depreciation expense is calculated using its cost,estimates of an asset's salvage value,and an estimated useful life.

Accepted Answer

A) True 
 B)False

Betterments are a type of capital expenditure.

The depreciation method that charges a varying amount to expense for each period of an asset's useful life depending on its usage is ________.

An accelerated depreciation method yields larger depreciation expense in the early years of an asset's life and less depreciation expense in later years.

The insufficient capacity of a company's plant asset to meet the company's productive demands is called ________.

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:

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Owning a patent:

Land improvements are:

Match each of the following terms with the appropriate definitions. -An estimate of an asset's value at the end its benefit period.

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:

The depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate to the asset's beginning-of-period book value is called:

Explain the impact,if any,on depreciation when estimates that determine depreciation change.

Depreciation expense is calculated using its cost,estimates of an asset's salvage value,and an estimated useful life.

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

Betterments are a type of capital expenditure.

The depreciation method that charges a varying amount to expense for each period of an asset's useful life depending on its usage is ________.

An accelerated depreciation method yields larger depreciation expense in the early years of an asset's life and less depreciation expense in later years.

The insufficient capacity of a company's plant asset to meet the company's productive demands is called ________.

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:

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Owning a patent:

Land improvements are:

Match each of the following terms with the appropriate definitions. -An estimate of an asset's value at the end its benefit period.

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:

The depreciation method in which a plant asset's depreciation expense for a period is determined by applying a constant depreciation rate to the asset's beginning-of-period book value is called:

Explain the impact,if any,on depreciation when estimates that determine depreciation change.

Depreciation expense is calculated using its cost,estimates of an asset's salvage value,and an estimated useful life.

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