Question 1

If an asset is exchanged for a similar asset, a loss results:

Accepted Answer

A) when the book value of the old asset is greater than what is received for the trade-in allowance. 
B) when the book value of the old asset is less than what is received for the trade-in allowance. 
C) when the accumulated depreciation equals the cost of the old asset. 
D) None of these answers are correct. 
A) when the book value of the old asset is greater than what is received for the trade-in allowance. 
B) when the book value of the old asset is less than what is received for the trade-in allowance. 
C) when the accumulated depreciation equals the cost of the old asset. 
D) None of these answers are correct. A

Question 2

The depreciation method that does not base the expense on the passage of time but on the level of use is:

Accepted Answer

A) units-of-production. 
B) straight-line. 
C) modified accelerated cost recovery. 
D) double-declining-balance. 
A) units-of-production. 
B) straight-line. 
C) modified accelerated cost recovery. 
D) double-declining-balance. A

Question 3

Josh Kindel purchased equipment for $60,000 on January 1. Its residual value is $4,000 with a useful life of 8 years. The amount of depreciation expense in the first year under the double-declining-balance method is:

Accepted Answer

A) $14,000. 
B) $ 7,500. 
C) $ 7,000. 
D) $15,000. 
A) $14,000. 
B) $ 7,500. 
C) $ 7,000. 
D) $15,000. D

Question 4

What would be the depreciation expense in year 1, using units-of-production, for a molding machine that cost $18,000, had a useful life of 3 years, and an estimated total machine hours of 36,000? The salvage value is $3,000 and production in year 1 was 10,000 hours.

Accepted Answer

A) $5,000 
B) $4,167 
C) $6,000 
D) $2,167 
A) $5,000 
B) $4,167 
C) $6,000 
D) $2,167

Question 5

Greetings Online disposed of a van that cost $22,000 with accumulated depreciation of $15,000. The journal entry would be to:

Accepted Answer

A) debit Accumulated Depreciation $15,000; credit Van $15,000. 
B) debit Accumulated Depreciation $15,000; debit Depreciation Expense $7,000; credit Van $22,000. 
C) debit Loss Disposal of Plant Asset $7,000; debit Accumulated Depreciation $15,000; credit Van $22,000. 
D) None of these answers are correct. 
A) debit Accumulated Depreciation $15,000; credit Van $15,000. 
B) debit Accumulated Depreciation $15,000; debit Depreciation Expense $7,000; credit Van $22,000. 
C) debit Loss Disposal of Plant Asset $7,000; debit Accumulated Depreciation $15,000; credit Van $22,000. 
D) None of these answers are correct.

Question 6

Expenditures for changing oil in a machine or repainting a car would be:

Accepted Answer

A) added to the cost of the asset. 
B) added as a capital expenditure. 
C) charged to an expense account. 
D) added as a betterment. 
A) added to the cost of the asset. 
B) added as a capital expenditure. 
C) charged to an expense account. 
D) added as a betterment.

Question 7

Salvage value was ignored when originally calculating the units-of-production depreciation. This error would cause:

Accepted Answer

A) the period's net income to be overstated. 
B) the period's net income to be understated. 
C) the period end assets to be overstated. 
D) None of these are correct. 
A) the period's net income to be overstated. 
B) the period's net income to be understated. 
C) the period end assets to be overstated. 
D) None of these are correct.

Question 8

Under MACRS, the salvage value is:

Accepted Answer

A) added to the straight-line depreciation. 
B) subtracted from the cost of the asset. 
C) ignored. 
D) added to the cost of the asset. 
A) added to the straight-line depreciation. 
B) subtracted from the cost of the asset. 
C) ignored. 
D) added to the cost of the asset.

Question 9

A tractor costing $80,000 is depreciated using MACRS. The tractor qualifies as a 3-year property, and has a scrap value of $20,000. The depreciation rates are:   What is the depreciation expense for year 2?

Accepted Answer

A) $44,450 
B) $35,560 
C) $26,670 
D) $20,000 
A) $44,450 
B) $35,560 
C) $26,670 
D) $20,000

Question 10

What would the book value be at the end of year 3 for a computer system using the straight-line method when cost is $5,000, residual value is $1,000, and the expected life is 4 years?

Accepted Answer

A) $2,000 
B) $1,500 
C) $1,250 
D) $1,000 
A) $2,000 
B) $1,500 
C) $1,250 
D) $1,000

Question 11

A gain on the sale of a plant asset is listed as:

Accepted Answer

A) a liability on the balance sheet. 
B) an asset on the balance sheet. 
C) other expense on the income statement. 
D) other income on the income statement. 
A) a liability on the balance sheet. 
B) an asset on the balance sheet. 
C) other expense on the income statement. 
D) other income on the income statement.

Question 12

Costs and assessments that should be charged to the land account include:

Accepted Answer

A) streets. 
B) parks. 
C) flood prevention. 
D) All should be included. 
A) streets. 
B) parks. 
C) flood prevention. 
D) All should be included.

Question 13

Lacy purchased equipment for $77,000 on January 1. Its residual value is $5,000 with a useful life of 9 years. The amount of depreciation expense in the first year under the straight-line method is:

Accepted Answer

A) $8,556. 
B) $8,000. 
C) $16,940. 
D) $15,840. 
A) $8,556. 
B) $8,000. 
C) $16,940. 
D) $15,840.

Question 14

The Gain on Disposal account is classified as another revenue account.

Accepted Answer

A) True 
 B)False

Question 15

To record the depletion of natural resources, the most common method is to use units-of -production in determining the amount of depletion.

Accepted Answer

A) True 
 B)False

Question 16

A computer server system, which had cost $210,000 and had accumulated depreciation of $147,000, was traded for a new system with a fair market value of $235,000. The old system and cash of $180,000 were given for the new system. Prepare the journal entry for the exchange of these similar assets.

Accepted Answer

The answer of A computer server system, which had cost...

Question 17

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature (permanent/temporary).
-

Accepted Answer

The answer of For each of the following, identify in...

Question 18

The amount to include in the entry to record the cost of a property, plant, and equipment asset would include:

Accepted Answer

A) acquisition cost. 
B) freight. 
C) installation. 
D) All of these answers are correct. 
A) acquisition cost. 
B) freight. 
C) installation. 
D) All of these answers are correct.

Question 19

Assuming a useful life of five years, which of the following methods would most likely result in the least depreciation in the first year?

Accepted Answer

A) Straight-line 
B) MACRS 
C) Double-declining-balance 
D) None of these answers are correct. 
A) Straight-line 
B) MACRS 
C) Double-declining-balance 
D) None of these answers are correct.

Question 20

When an asset is exchanged for a similar asset and a gain results, under accounting rules the gain is:

Accepted Answer

A) credited to Gain on Exchange of an Asset. 
B) recorded in the other income section of the income statement. 
C) absorbed into the cost of the new asset. 
D) subtracted from the cost of the new asset. 
A) credited to Gain on Exchange of an Asset. 
B) recorded in the other income section of the income statement. 
C) absorbed into the cost of the new asset. 
D) subtracted from the cost of the new asset.

Exam 16: Accounting for Property, Plant, Equipment, and Intangible Assets

If an asset is exchanged for a similar asset, a loss results:

The depreciation method that does not base the expense on the passage of time but on the level of use is:

Josh Kindel purchased equipment for $60,000 on January 1. Its residual value is $4,000 with a useful life of 8 years. The amount of depreciation expense in the first year under the double-declining-balance method is:

What would be the depreciation expense in year 1, using units-of-production, for a molding machine that cost $18,000, had a useful life of 3 years, and an estimated total machine hours of 36,000? The salvage value is $3,000 and production in year 1 was 10,000 hours.

Greetings Online disposed of a van that cost $22,000 with accumulated depreciation of $15,000. The journal entry would be to:

Expenditures for changing oil in a machine or repainting a car would be:

Salvage value was ignored when originally calculating the units-of-production depreciation. This error would cause:

Under MACRS, the salvage value is:

A tractor costing $80,000 is depreciated using MACRS. The tractor qualifies as a 3-year property, and has a scrap value of $20,000. The depreciation rates are: What is the depreciation expense for year 2?

What would the book value be at the end of year 3 for a computer system using the straight-line method when cost is $5,000, residual value is $1,000, and the expected life is 4 years?

A gain on the sale of a plant asset is listed as:

Costs and assessments that should be charged to the land account include:

Lacy purchased equipment for $77,000 on January 1. Its residual value is $5,000 with a useful life of 9 years. The amount of depreciation expense in the first year under the straight-line method is:

The Gain on Disposal account is classified as another revenue account.

To record the depletion of natural resources, the most common method is to use units-of -production in determining the amount of depletion.

A computer server system, which had cost $210,000 and had accumulated depreciation of $147,000, was traded for a new system with a fair market value of $235,000. The old system and cash of $180,000 were given for the new system. Prepare the journal entry for the exchange of these similar assets.

For each of the following, identify in column 1 the category to which the account belongs, in column 2 the normal balance for the account, in column 3 the financial statement that the account in which the account balance is reported, and in column 4 the account's nature (permanent/temporary). -

The amount to include in the entry to record the cost of a property, plant, and equipment asset would include:

Assuming a useful life of five years, which of the following methods would most likely result in the least depreciation in the first year?

When an asset is exchanged for a similar asset and a gain results, under accounting rules the gain is:

Accounting Concepts and Procedures

Debits and Credits: Analyzing and Recording Business Transactions

Beginning the Accounting Cycle

The Accounting Cycle Continued

The Accounting Cycle Completed

Banking Procedure and Control of Cash

Calculating Pay and Payroll Taxes: The Beginning of the Payroll Process

Paying, Recording, and Reporting Payroll and Payroll Taxes: the Conclusion of the Payroll Process

Sales and Cash Receipts

Purchases and Cash Payments

Preparing a Worksheet for a Merchandise Company

Completion of the Accounting Cycle for a Merchandise Company

Accounting for Bad Debts

Notes Receivable and Notes Payable

Accounting for Merchandise Inventory

Partnership

Corporations: Organizations and Stock

Corporations: Stock Values, Dividends, Treasury Stocks, and Retained Earnings

Corporations and Bonds Payable

Statement of Cash Flows

Analyzing Financial Statements

The Voucher System

Departmental Accounting

Manufacturing Accounting

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