Question 1

Plant assets can be disposed of by discarding,selling,or exchanging them.

Accepted Answer

A) True 
 B)False

Question 2

Match each of the following terms with the appropriate definitions.
-A measure of a company's effectiveness in using its assets to generate sales.

Accepted Answer

A) Revenue expenditure 
B) Units-of production method 
C) Accelerated depreciation 
D) Goodwill 
E) Ordinary repairs
F)Total asset turnover
G)Intangible assets
H)Betterment
I)Depletion 
A) Revenue expenditure 
B) Units-of production method 
C) Accelerated depreciation 
D) Goodwill 
E) Ordinary repairs
F)Total asset turnover
G)Intangible assets
H)Betterment
I)Depletion

Question 3

Record the following events and transactions for Leonard Company for the current year.
1.On January 2,Leonard purchased a patent for $35,000 with a remaining useful life of 10 years.Prepare the journal entry to amortize the patent at the end of the first year.
2.On January 3,Leonard made an advance payment on a leasehold of $840,000.The leasehold expires in 15 years.Prepare the journal entry to amortize the leasehold at the end of the first year.
3.On January 4,Leonard purchased a music distributor's collection of lyrics and songs for $1,425,000.The copyrights have a remaining life of another 30 years.Prepare the journal entry to amortize the copyright at the end of the first year.

Accepted Answer

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

Question 4

A company paid $595,000 for property that included land appraised at $384,000; land improvements appraised at $128,000; and a building appraised at $288,000.The plan is to use the building as a manufacturing plant.Determine the amounts that should be recorded as:
 a) Land$\quad $$\quad $$\quad $$\quad $$\quad $$\quad $$\$$$\underline{\quad\quad\quad\quad\quad\quad}$
b) Land Improvements$\quad $$\$$$\underline{\quad\quad\quad\quad\quad\quad}$
c) Building$\quad $$\quad $$\quad $$\quad $$\quad $$\$$$\underline{\quad\quad\quad\quad\quad\quad}$

Accepted Answer

None

Question 5

Accounting for the exchange of assets depends on whether the transaction has commercial substance; commercial substance implies that it alters the company's future cash flows.

Accepted Answer

A) True 
 B)False

Question 6

During the current year,Beldon Co.acquired a new computer with a cash price of $12,800 by exchanging an old one on which the company received a $1,500 trade-in allowance (with the balance of $11,300 paid in cash).The old computer cost $9,000 and its accumulated depreciation was $5,500 as of the exchange date.Assuming the exchange transaction had commercial substance,prepare the journal entry to record the exchange.

Accepted Answer

None

Question 7

An asset can be disposed of by all of the following except:

Accepted Answer

A)  Discarding it. 
B)  Selling it. 
C)  Exchanging it for another asset. 
D)  Donating it to charity. 
E)  Continuing to use it after it is fully depreciated. 
A)  Discarding it. 
B)  Selling it. 
C)  Exchanging it for another asset. 
D)  Donating it to charity. 
E)  Continuing to use it after it is fully depreciated.

Question 8

A company purchased a delivery van on October 1 of the current year at a cost of $40,000.The van is expected to last six years and has a salvage value of $2,200.The company's annual accounting period ends on December 31.
1.What is the depreciation expense for the current year,assuming the straight-line method is used?
2.What is the book value of the van at the end of the first year?

Accepted Answer

1.[($40,000 - $2,200)/6] * 3/1

Question 9

Revenue expenditures:

Accepted Answer

A)  Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities. 
B)  Are known as balance sheet expenditures because they relate to plant assets. 
C)  Extend the asset's useful life. 
D)  Substantially benefit future periods. 
E)  Are debited to asset accounts when incurred. 
A)  Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities. 
B)  Are known as balance sheet expenditures because they relate to plant assets. 
C)  Extend the asset's useful life. 
D)  Substantially benefit future periods. 
E)  Are debited to asset accounts when incurred.

Question 10

Plant assets are reported on a balance sheet at their undepreciated costs (book value),not at fair (market)values.

Accepted Answer

A) True 
 B)False

Question 11

A building was purchased for $370,000 and depreciated for ten years on a straight-line basis under the assumption it would have a twenty-year life and a $10,000 salvage value.At the beginning of the building's eleventh year it was recognized the building had eight years of remaining life instead of ten and that at the end of the remaining eight years its salvage value would be $16,000.What amount of depreciation should be recorded in each of the building's remaining eight years?

Accepted Answer

@#LAT-DLM& Original annulal depreciation

Question 12

Granite Company purchased a machine costing $120,000,terms 1/10,n/30.The machine was shipped FOB shipping point and freight charges were $2,000.The machine requires special mounting and wiring connections costing $10,000.When installing the machine,$1,300 in damages occurred.Compute the cost recorded for this machine assuming Granite paid within the discount period.

Accepted Answer

A)  $129,800. 
B)  $132,100. 
C)  $130,800. 
D)  $118,800. 
E)  $120,100. 
A)  $129,800. 
B)  $132,100. 
C)  $130,800. 
D)  $118,800. 
E)  $120,100.

Question 13

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 building.

Accepted Answer

A)  $97,500. 
B)  $105,000. 
C)  $89,178. 
D)  $140,000. 
E)  $93,000. 
A)  $97,500. 
B)  $105,000. 
C)  $89,178. 
D)  $140,000. 
E)  $93,000.

Question 14

On April 1,Year 1,Astor Corp.purchased and placed a plant asset in service.The following information is available regarding the plant asset:
 $$\begin{array} { l l } 
\text { Acquisition cost } & \$ 130,000 \
\text { Estirnated salvage value } & \$ 15,000 \
\text { Estimated useful life } & 5 \text { years }
\end{array}$$ 
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

None

Question 15

On January 1,Year 1,Naples purchased a computer system that cost $1,480,000.The estimated useful life of the computer is 3 years and salvage value is $40,000.Straight-line depreciation is to be used.On January 1,Year 2,Naples determined that the estimated useful life of the computer would be 4 years instead of 3 years.The estimated salvage value will only be $10,000.
Prepare the journal entry to record depreciation expense for Year 1.
Prepare the journal entry to record depreciation expense for Year 2.

Accepted Answer

@#IMG-DLM& Book valu

Question 16

A company purchased a special purpose machine on September 15 of the past year,and it was installed and ready to run on January 1 of this year.The following costs were incurred in the purchase and installation of the machine.Determine the total cost of the machine.
 $$\begin{array} { l l } 
\text { Invoice price plus sales tax } & \$ 1,270,500 \
\text { Freight costs } & 9,000 \
\text { Setup costs } & 51,000 \
\text { Costs to adjust machine to appropriate specifications } & 36,000 \
\text { Electrical connections } & 32,000 \
\text { Maintenance supplies for future use } & 108,000 \
\text { Traffic fine incurred during transport of machine } & 300 \
\text { Cost of special foundation for machine } & 18,500
\end{array}$$

Accepted Answer

\[\begin{array}{l}
\text { Total machine

Question 17

A company purchased land with a building for a lump-sum cost of $2,570,000 ($500,000 paid in cash and the balance on a long-term note).It was estimated that the land and building had market values of $600,000 and $2,400,000,respectively.
Determine the cost to be apportioned to the land and to the building and prepare the journal entry to record the acquisition.

Accepted Answer

None

Question 18

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 19

On April 1,2015,due to obsolescence resulting from a new technology,a company discarded a computer that cost $5,000,had a useful life of 4 years,and a salvage value of $400.Based on straight-line depreciation,the accumulated depreciation as of December 31,2014 was $3,450.
a.Prepare the journal entry to record depreciation up to the date of disposal of the computer.
b.Prepare the journal entry to record the disposal of the computer.

Accepted Answer

None

Question 20

On January 1,a machine costing $260,000 with a 6-year life and an estimated $5,000 salvage value was purchased.It was also estimated that the machine would produce 500,000 units during its life.The actual units produced during its first year of operation were 110,000.Determine the amount of depreciation expense for the first year under each of the following assumptions:
1.The company uses the straight-line method of depreciation.
2.The company uses the units-of-production method of depreciation.
3.The company uses the double-declining-balance method of depreciation.

Accepted Answer

1.($260,000 - $5,000)/6 = $42,

Plant assets can be disposed of by discarding,selling,or exchanging them.

Match each of the following terms with the appropriate definitions. -A measure of a company's effectiveness in using its assets to generate sales.

Accounting for the exchange of assets depends on whether the transaction has commercial substance; commercial substance implies that it alters the company's future cash flows.

An asset can be disposed of by all of the following except:

Revenue expenditures:

Plant assets are reported on a balance sheet at their undepreciated costs (book value),not at fair (market)values.

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 building.

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.

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

Plant assets can be disposed of by discarding,selling,or exchanging them.

Match each of the following terms with the appropriate definitions. -A measure of a company's effectiveness in using its assets to generate sales.

Accounting for the exchange of assets depends on whether the transaction has commercial substance; commercial substance implies that it alters the company's future cash flows.

An asset can be disposed of by all of the following except:

Revenue expenditures:

Plant assets are reported on a balance sheet at their undepreciated costs (book value),not at fair (market)values.

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 building.

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.

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