Question 1

When a company discards machinery that is fully depreciated,how would this transaction affect the company's accounts?

Accepted Answer

A) Decrease Accumulated Depreciation;decrease Machinery 
B) Increase Machinery;increase Accumulated Depreciation 
C) Increase Cash;increase Accumulated Depreciation 
D) Increase Depreciation Expense;increase Accumulated Depreciation 
A) Decrease Accumulated Depreciation;decrease Machinery 
B) Increase Machinery;increase Accumulated Depreciation 
C) Increase Cash;increase Accumulated Depreciation 
D) Increase Depreciation Expense;increase Accumulated Depreciation

Question 2

Plant assets are depreciated because

Accepted Answer

A) the accrual basis of accounting requires matching of costs to revenues. 
B) some plant assets last longer than others. 
C) useful lives cannot be reasonably estimated. 
D) the replacement cost of plant assets may fluctuate over time. 
A) the accrual basis of accounting requires matching of costs to revenues. 
B) some plant assets last longer than others. 
C) useful lives cannot be reasonably estimated. 
D) the replacement cost of plant assets may fluctuate over time.

Question 3

What is the relationship between the book value of a plant asset,the market value of the plant asset,and the salvage value of a plant asset? Explain.

Accepted Answer

The book value of a plant asset is the a

Question 4

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

Accepted Answer

A) True 
 B)False

Question 5

When Carson Real Estate Company sells equipment for a loss,the Loss on Sale of Asset is treated as accumulated depreciation.

Accepted Answer

A) True 
 B)False

Question 6

If a company chooses to treat small plant asset expenditures as expenses,GAAP are being violated.

Accepted Answer

A) True 
 B)False

Question 7

Wexford Co.

Wexford Co. purchased a new delivery truck at the beginning of 2017. The truck has a cost of $37,000, an estimated life of five years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2017. The truck was driven 20,000 miles during 2017 and 24,000 miles during 2018. The number of expected miles over five years is 100,000.

-Refer to the information for Wexford Co.  
By what amount would double-declining-balance depreciation exceed straight-line depreciation over the five-year life of the truck?

Accepted Answer

A) $0 
B) $7,000 
C) $37,000 
D) $6,000 
A) $0 
B) $7,000 
C) $37,000 
D) $6,000

Question 8

Using the straight-line depreciation method will cause a company to incur __________ in the early years of an asset's life than it would experience using an accelerated method of depreciation.

Accepted Answer

A) more tax expense 
B) less tax expense 
C) an equal tax expense 
D) This cannot be determined from the information given. 
A) more tax expense 
B) less tax expense 
C) an equal tax expense 
D) This cannot be determined from the information given.

Question 9

Wexford Co.

Wexford Co. purchased a new delivery truck at the beginning of 2017. The truck has a cost of $37,000, an estimated life of five years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2017. The truck was driven 20,000 miles during 2017 and 24,000 miles during 2018. The number of expected miles over five years is 100,000.

-Refer to the information for Wexford Co.  
Wexford is comparing the straight-line and double-declining-balance depreciation methods.Of these two methods,which method creates the larger expense and larger tax savings in 2017?

Accepted Answer

A) Straight-line depreciation creates the larger expense,while double-declining-balance depreciation creates the larger tax savings. 
B) Straight-line depreciation creates both the larger expense and the larger tax savings. 
C) Double-declining-balance depreciation creates both the larger expense and the larger tax savings. 
D) Double-declining-balance depreciation creates the larger expense,while straight-line depreciation creates the larger tax savings. 
A) Straight-line depreciation creates the larger expense,while double-declining-balance depreciation creates the larger tax savings. 
B) Straight-line depreciation creates both the larger expense and the larger tax savings. 
C) Double-declining-balance depreciation creates both the larger expense and the larger tax savings. 
D) Double-declining-balance depreciation creates the larger expense,while straight-line depreciation creates the larger tax savings.

Question 10

Central National Bank recently acquired a new computer system.Which of the following costs associated with the computer should not be recorded in the Equipment account? ​

Accepted Answer

A) Installation of a backup power source required for the computer 
B) Replacement of several circuit boards damaged during installation 
C) System programmer wages for personnel hired to install the system 
D) Insurance coverage covering the transport period from the manufacturer 
A) Installation of a backup power source required for the computer 
B) Replacement of several circuit boards damaged during installation 
C) System programmer wages for personnel hired to install the system 
D) Insurance coverage covering the transport period from the manufacturer

Question 11

For each of the following sentences ,select the word or group of words that best completes the statement.
 $$\begin{array} { l l } 
\text { Patent } & \text { Copyright } \
\text { Goodwill } & \text { Revenue expenditure } \
\text { Natural resources } & \text { Research and development costs } \
\text { Trademark } & \text { Capital expenditure }
\end{array}$$
-_____________ is(are)the right to produce or sell a published work.

Accepted Answer

The answer of For each of the following sentences ,select...

Question 12

Current accounting standards indicate that the costs of intangible assets with an indefinite life,such as goodwill,should

Accepted Answer

A) not be amortized. 
B) be reported on the statement of retained earnings in the year in which acquired. 
C) be amortized over a reasonable period of time not to exceed 40 years. 
D) increase an expense account entirely in the year in which acquired. 
A) not be amortized. 
B) be reported on the statement of retained earnings in the year in which acquired. 
C) be amortized over a reasonable period of time not to exceed 40 years. 
D) increase an expense account entirely in the year in which acquired.

Question 13

Interest is never a part of the cost of property,plant,and equipment or intangible assets.

Accepted Answer

A) True 
 B)False

Question 14

River Company wants to minimize the amount of time and effort its bookkeepers spend on calculating depreciation.Since River has not been profitable,taxes are not an issue,but maximizing the profit and minimizing reported losses are major concerns.Recommend a course of action for River.Support your recommendation.

Accepted Answer

River should use the straight-line metho

Question 15

Wang Fitness Co. purchased a patent at the beginning of 2017 for $120,000. Economic benefits were expected for only 12 years, but the patent's legal life is 17 years. Also, during 2017, the company incurred research and development costs of $50,000.

A. Determine the following amounts:
 
1.	Research and development expense for 2017
2.	Patent amortization expense for 2017

B. Prepare the Intangible Assets section of the balance sheet at December 31, 2017.

Accepted Answer

A.Expense

Question 16

Blanket Airlines acquires a new aircraft.It has an estimated life of 15 years and should be used for 15,000 hours of flight.What is the most appropriate method of depreciation to properly match revenues and expenses?

Accepted Answer

A) Double-declining-balance 
B) Revenue expenditure method 
C) Straight-line 
D) Units-of-production 
A) Double-declining-balance 
B) Revenue expenditure method 
C) Straight-line 
D) Units-of-production

Question 17

Plant assets,current assets,property,plant,and equipment,and fixed assets are all intangible assets.

Accepted Answer

A) True 
 B)False

Question 18

On January 1,2017,Petersen Corp.sold a piece of equipment for $3,000 which it had used for several years.The equipment had cost $13,000,and its accumulated depreciation amounted to $9,000 at the time of the sale.What are the net effects on the accounting equation of selling the equipment?

Accepted Answer

A) Assets and Stockholders' Equity increases $1,000. 
B) Assets decrease and Stockholders' Equity increases $3,000. 
C) Assets and Stockholders' Equity decrease $1,000. 
D) Assets and Stockholders' Equity decrease $3,000. 
A) Assets and Stockholders' Equity increases $1,000. 
B) Assets decrease and Stockholders' Equity increases $3,000. 
C) Assets and Stockholders' Equity decrease $1,000. 
D) Assets and Stockholders' Equity decrease $3,000.

Question 19

Garner,Inc.determined that it had incorrectly estimated both the estimated life and the estimated residual value of equipment that it purchased two years ago.When Garner accounts for the change in accounting estimates,it must depreciate the remaining book value of the asset over the current and future accounting periods.

Accepted Answer

A) True 
 B)False

Question 20

Assume that Rocket Company purchased an asset on January 1, 2015, for $62,400. The asset had an estimated life of eight years and an estimated residual value of $8,000. The company used the straight-line method to depreciate the asset. On July 1, 2017, the asset was sold for $52,000.

Required
1. Analyze the impact of the transaction to record depreciation for 2017 and for all transactions necessary for the sale of the asset.
2.How should the gain or loss on the sale of the asset be presented on the income statement?

Accepted Answer

1. 
2. The gain or loss should appear in

When a company discards machinery that is fully depreciated,how would this transaction affect the company's accounts?

Plant assets are depreciated because

What is the relationship between the book value of a plant asset,the market value of the plant asset,and the salvage value of a plant asset? Explain.

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

When Carson Real Estate Company sells equipment for a loss,the Loss on Sale of Asset is treated as accumulated depreciation.

If a company chooses to treat small plant asset expenditures as expenses,GAAP are being violated.

Using the straight-line depreciation method will cause a company to incur __________ in the early years of an asset's life than it would experience using an accelerated method of depreciation.

Central National Bank recently acquired a new computer system.Which of the following costs associated with the computer should not be recorded in the Equipment account?

For each of the following sentences ,select the word or group of words that best completes the statement. Patent Copyright Goodwill Revenue expenditure Natural resources Research and development costs Trademark Capital expenditure -_____________ is(are)the right to produce or sell a published work.

Current accounting standards indicate that the costs of intangible assets with an indefinite life,such as goodwill,should

Interest is never a part of the cost of property,plant,and equipment or intangible assets.

Blanket Airlines acquires a new aircraft.It has an estimated life of 15 years and should be used for 15,000 hours of flight.What is the most appropriate method of depreciation to properly match revenues and expenses?

Plant assets,current assets,property,plant,and equipment,and fixed assets are all intangible assets.

On January 1,2017,Petersen Corp.sold a piece of equipment for $3,000 which it had used for several years.The equipment had cost $13,000,and its accumulated depreciation amounted to $9,000 at the time of the sale.What are the net effects on the accounting equation of selling the equipment?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Exam 8: Operating Assets: Property, Plant, and Equipment, and Intangibles

When a company discards machinery that is fully depreciated,how would this transaction affect the company's accounts?

Plant assets are depreciated because

What is the relationship between the book value of a plant asset,the market value of the plant asset,and the salvage value of a plant asset? Explain.

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

When Carson Real Estate Company sells equipment for a loss,the Loss on Sale of Asset is treated as accumulated depreciation.

If a company chooses to treat small plant asset expenditures as expenses,GAAP are being violated.

Using the straight-line depreciation method will cause a company to incur __________ in the early years of an asset's life than it would experience using an accelerated method of depreciation.

Central National Bank recently acquired a new computer system.Which of the following costs associated with the computer should not be recorded in the Equipment account? ​

For each of the following sentences ,select the word or group of words that best completes the statement. Patent Copyright Goodwill Revenue expenditure Natural resources Research and development costs Trademark Capital expenditure -_____________ is(are)the right to produce or sell a published work.

Current accounting standards indicate that the costs of intangible assets with an indefinite life,such as goodwill,should

Interest is never a part of the cost of property,plant,and equipment or intangible assets.

Blanket Airlines acquires a new aircraft.It has an estimated life of 15 years and should be used for 15,000 hours of flight.What is the most appropriate method of depreciation to properly match revenues and expenses?

Plant assets,current assets,property,plant,and equipment,and fixed assets are all intangible assets.

On January 1,2017,Petersen Corp.sold a piece of equipment for $3,000 which it had used for several years.The equipment had cost $13,000,and its accumulated depreciation amounted to $9,000 at the time of the sale.What are the net effects on the accounting equation of selling the equipment?

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters

Central National Bank recently acquired a new computer system.Which of the following costs associated with the computer should not be recorded in the Equipment account?