Question 1

Some of the past depreciation is canceled in recording an extraordinary repair.

Accepted Answer

A) True 
 B)False

Question 2

The depreciation method(s)in which an even amount of depreciation expense is taken each year is (are)called:

Accepted Answer

A) straight-line method. 
B) double declining-balance method. 
C) units-of-production method. 
D) All of the above. 
A) straight-line method. 
B) double declining-balance method. 
C) units-of-production method. 
D) All of the above.

Question 3

The amortization method and double-declining-balance method are both accelerated depreciation methods.

Accepted Answer

A) True 
 B)False

Question 4

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 5

Which of the following is an example of a land improvement?

Accepted Answer

A) Shrubbery 
B) Fences 
C) Driveway 
D) All of these answers are correct. 
A) Shrubbery 
B) Fences 
C) Driveway 
D) All of these answers are correct.

Question 6

A truck that cost $26,000 has been owned for 3 years and is traded for another truck for the same purpose. Total accumulated depreciation at the time of trade is $15,600. The trade-in value of the old truck is $12,000 and the new truck has a fair market value of $30,000, the new truck would be recorded at:

Accepted Answer

A) $10,400. 
B) $12,000. 
C) $29,400. 
D) $28,400. 
A) $10,400. 
B) $12,000. 
C) $29,400. 
D) $28,400.

Question 7

A task station that originally cost $2,500 has no estimated salvage value and was depreciated at the rate of 20% per year (straight-line depreciation). At the end of the third year, it was sold for $1,500 cash. The transaction would result in a:

Accepted Answer

A) loss of $250. 
B) gain of $250. 
C) loss of $500. 
D) gain of $500. 
A) loss of $250. 
B) gain of $250. 
C) loss of $500. 
D) gain of $500.

Question 8

Yamara Company purchased a $75,000 machine at the beginning of the year. The machine is expected to have a useful life of 5 years or 40,000 operating hours and a residual value of $15,000. The machine was used for 6,000 hours in the first year and 4,400 hours in the second year. Compute the amount of depreciation expense for the first and second years under each of the methods below.

Accepted Answer

The answer of Yamara Company purchased a $75,000 machine at...

Question 9

The units-of-production method does not take into account the passage of time.

Accepted Answer

A) True 
 B)False

Question 10

A company purchased a new delivery van on January 1, 2012 for $25,000. The company expects to use the van for 5 years and then sell it for $5,000. Complete the following depreciation table assuming straight-line depreciation:

Accepted Answer

The answer of A company purchased a new delivery van...

Question 11

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 12

What would the accumulated depreciation 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) $1,000 
B) $1,250 
C) $3,000 
D) $3,750 
A) $1,000 
B) $1,250 
C) $3,000 
D) $3,750

Question 13

The entry to record the disposal of a laptop computer with a cost of $2,500 and an accumulated depreciation of $1,500 would be:

Accepted Answer

A) debit Depreciation Expense, $2,500; credit Equipment $2,500. 
B) debit Accumulated Depreciation $1,500; debit Loss on Disposal of an Asset $1,000; credit Equipment $2,500. 
C) debit Equipment $2,500; credit Accumulated Depreciation $2,500. 
D) debit Cash $2,500; credit Equipment $2,500. 
A) debit Depreciation Expense, $2,500; credit Equipment $2,500. 
B) debit Accumulated Depreciation $1,500; debit Loss on Disposal of an Asset $1,000; credit Equipment $2,500. 
C) debit Equipment $2,500; credit Accumulated Depreciation $2,500. 
D) debit Cash $2,500; credit Equipment $2,500.

Question 14

Which of the following assets would not be classified as property, plant, and equipment?

Accepted Answer

A) Delivery truck 
B) Copyright 
C) Land 
D) Furniture 
A) Delivery truck 
B) Copyright 
C) Land 
D) Furniture

Question 15

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 16

R.J. Berkshire incurred the following expenditures to buy new equipment:
   Discount taken
The amount the Equipment account will be debited for is ________.

Accepted Answer

$27,550 (2

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

When calculating declining balance depreciation, the straight-line rate was used instead of double the straight-line rate. In the first year of ownership, this error would cause:

Accepted Answer

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

Question 19

What would be the depreciation expense using double-declining-balance to compute the expense for year 2 of a machine costing $15,000, when residual value is $5,000, and useful life is 5 years?

Accepted Answer

A) $3,600 
B) $6,000 
C) $5,000 
D) $3,000 
A) $3,600 
B) $6,000 
C) $5,000 
D) $3,000

Question 20

A piece of equipment is purchased for $78,000 on January 1. It has a 5-year life and a salvage value of $8,000. Compute the annual depreciation expense using the double-declining-balance method for all 5 years.

Accepted Answer

Year 1: $31,200 (78000 × .4)
Y

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

Some of the past depreciation is canceled in recording an extraordinary repair.

The depreciation method(s)in which an even amount of depreciation expense is taken each year is (are)called:

The amortization method and double-declining-balance method are both accelerated depreciation methods.

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). -

Which of the following is an example of a land improvement?

A task station that originally cost $2,500 has no estimated salvage value and was depreciated at the rate of 20% per year (straight-line depreciation). At the end of the third year, it was sold for $1,500 cash. The transaction would result in a:

The units-of-production method does not take into account the passage of time.

A company purchased a new delivery van on January 1, 2012 for $25,000. The company expects to use the van for 5 years and then sell it for $5,000. Complete the following depreciation table assuming straight-line depreciation:

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). -

What would the accumulated depreciation 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?

The entry to record the disposal of a laptop computer with a cost of $2,500 and an accumulated depreciation of $1,500 would be:

Which of the following assets would not be classified as property, plant, and equipment?

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). -

R.J. Berkshire incurred the following expenditures to buy new equipment: Discount taken The amount the Equipment account will be debited for is ________.

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). -

When calculating declining balance depreciation, the straight-line rate was used instead of double the straight-line rate. In the first year of ownership, this error would cause:

What would be the depreciation expense using double-declining-balance to compute the expense for year 2 of a machine costing $15,000, when residual value is $5,000, and useful life is 5 years?

A piece of equipment is purchased for $78,000 on January 1. It has a 5-year life and a salvage value of $8,000. Compute the annual depreciation expense using the double-declining-balance method for all 5 years.

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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