Question 1

On the balance sheet,the cumulative amount of plant and equipment already expensed is reported in an account called

Accepted Answer

A) Accumulated Amortization. 
B) Accumulated Depreciation. 
C) Amortization Expense. 
D) Depreciation Expense. 
A) Accumulated Amortization. 
B) Accumulated Depreciation. 
C) Amortization Expense. 
D) Depreciation Expense.

Question 2

How does goodwill arise? How is it accounted for and reported on the financial statements?

Accepted Answer

Goodwill arises when a company purchases

Question 3

McLaren Corp.incurred the following costs to acquire and prepare land during 2017 for a new parking lot: purchase price for land,$800,000;cost of paving,$40,000;and lighting for the parking lot,$20,000.How much should McLaren record in the Land Improvements account?

Accepted Answer

A) $30,000 
B) $40,000 
C) $60,000 
D) $90,000 
A) $30,000 
B) $40,000 
C) $60,000 
D) $90,000

Question 4

If a company's asset turnover ratio decreased from 2017 to 2018,which of the following conclusions can be made?

Accepted Answer

A) The company was more efficient during 2018 in using its assets to produce profits. 
B) The company produced less sales in 2018 for each dollar invested in assets. 
C) The company was less profitable in 2017. 
D) The company's average total assets decreased for relatively stable sales in 2017 and 2018. 
A) The company was more efficient during 2018 in using its assets to produce profits. 
B) The company produced less sales in 2018 for each dollar invested in assets. 
C) The company was less profitable in 2017. 
D) The company's average total assets decreased for relatively stable sales in 2017 and 2018.

Question 5

Explain the meaning or significance of the following ratios:
 A. Average life of property, plant, and equipment

B. Average age of property, plant, and equipment

Accepted Answer

A. The average life indicates

Question 6

The income statement of Hope Market,Inc.reported a gain from the sale of land.How are the cash flow effects of this transaction reported on the statement of cash flows if the direct method is used to prepare the Operating Activities category?

Accepted Answer

A) The entire proceeds from the sale of the land are reported as an investing activity. 
B) The gain on the sale of land is reported in the Investing Activities category as a cash flow from the sale of land. 
C) The entire proceeds from the sale of the land are reported as an operating activity. 
D) The cash received from the sale of land is reported in the Financing Activity category as a cash flow from the sale of land. 
A) The entire proceeds from the sale of the land are reported as an investing activity. 
B) The gain on the sale of land is reported in the Investing Activities category as a cash flow from the sale of land. 
C) The entire proceeds from the sale of the land are reported as an operating activity. 
D) The cash received from the sale of land is reported in the Financing Activity category as a cash flow from the sale of land.

Question 7

Birken Co.purchased a building for $500,000 in 2012.At the end of 2017,when it had a book value of $450,000,it was appraised for $1,000,000.A potential buyer offered $900,000.Birken rejected the offer.What amount is in Birken's records at the end of 2017 in the Building account?

Accepted Answer

A) $2,000,000 
B) $800,000 
C) $500,000 
D) $350,000 
A) $2,000,000 
B) $800,000 
C) $500,000 
D) $350,000

Question 8

A building with an appraisal value of $250,000 is made available at an offer price of $180,000.The purchaser acquires the property for $35,000 in cash,a 90-day note payable for $65,000,and a mortgage amounting to $63,000.The cost basis recorded in the buyer's accounting records to recognize this purchase is

Accepted Answer

A) $250,000. 
B) $180,000. 
C) $163,000. 
D) $100,000. 
A) $250,000. 
B) $180,000. 
C) $163,000. 
D) $100,000.

Question 9

Norwood, Inc.

Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life of eight years, or 12,500 hours of operation. The crane was purchased on January 1, 2017, and was used 2,700 hours in 2017 and 2,600 hours in 2018.

-Refer to the information for Norwood,Inc.  
If Norwood uses the double-declining-balance depreciation method,what amount is the depreciation expense for 2018?

Accepted Answer

A) $14,063 
B) $15,000 
C) $18,750 
D) $20,000 
A) $14,063 
B) $15,000 
C) $18,750 
D) $20,000

Question 10

Norwood, Inc.

Norwood, Inc. purchased a crane at a cost of $80,000. The crane has an estimated residual value of $5,000 and an estimated life of eight years, or 12,500 hours of operation. The crane was purchased on January 1, 2017, and was used 2,700 hours in 2017 and 2,600 hours in 2018.

-Refer to the information for Norwood,Inc.  
If Norwood uses the units-of-production method,what is the depreciation rate per hour for the equipment?

Accepted Answer

A) $4.00 
B) $5.00 
C) $6.00 
D) $7.50 
A) $4.00 
B) $5.00 
C) $6.00 
D) $7.50

Question 11

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

Accepted Answer

A) Reduces working capital 
B) Increases working capital 
C) Has no effect on working capital 
D) The increases offset the decrease. 
A) Reduces working capital 
B) Increases working capital 
C) Has no effect on working capital 
D) The increases offset the decrease.

Question 12

Explain what costs are included in the acquisition cost of operating assets.

Accepted Answer

Acquisition costs should include all of

Question 13

Recently,companies have been ordered by governmental agencies to clean up environmental damages caused by business operations.How should costs incurred in these situations be treated?

Accepted Answer

A) If a legal obligation exists,the cost of restoring the property must be added to the asset account. 
B) They should be treated as an expense entirely in one accounting period. 
C) They should be treated as an amortized expense in the period the cost is incurred. 
D) They should be added to the asset and then depreciated over 15 years. 
A) If a legal obligation exists,the cost of restoring the property must be added to the asset account. 
B) They should be treated as an expense entirely in one accounting period. 
C) They should be treated as an amortized expense in the period the cost is incurred. 
D) They should be added to the asset and then depreciated over 15 years.

Question 14

Explain by what processes the costs of operating assets are allocated to expense.

Accepted Answer

There are two categories of operating as

Question 15

The FASB standards do not have a specific rule that requires residual value and asset life to be reviewed annually for property,plant,and equipment.

Accepted Answer

A) True 
 B)False

Question 16

When constructing assets,capitalized interest is based on

Accepted Answer

A) the amount allowed by the company's auditors. 
B) the expenditures at the end of the of the period. 
C) the expenditures at the beginning of the period. 
D) the average accumulated expenditures. 
A) the amount allowed by the company's auditors. 
B) the expenditures at the end of the of the period. 
C) the expenditures at the beginning of the period. 
D) the average accumulated expenditures.

Question 17

Moore,Inc.purchased slot machines at the beginning of 2017 for $20,000.The machines have an estimated residual value of $2,000 and an estimated life of five years or 20,000 hours of operation.Moore is looking at alternative depreciation methods for the equipment.Calculate the following:
 A. Accumulated depreciation at December 31,2018 , using the straight-line depreciation method.

B. Depreciation expense for 2017 using the units-of-production depreciation method. Assume that the machines are operated for 5,000 hours in 2017 .

C. Book value of the equipment at December 31,2018, using the double-declining-bal ance depreciation method.

D. What are the advantages of using straight-line depreciation for financial reporting purposes?

Accepted Answer

?
 A. Depreciation per year: @#LAT-DLM&
Total at @#LAT-DLM&

Question 18

Given below are costs incurred by Bunker Company during 2017 and 2018.Bunker follows the policy of decreasing the Intangible Asset account directly as amortized.
Research was conducted to discover a new product and costs of $200,000 in 2017 and $80,000 in 2018 were incurred.After several months,a product was created and a patent secured for a cost of $150,000,effective as of July 1,2018.The company expects to have increased revenues of $500,000 over the next several years.The patent is expected to be useful for the next ten years.
 A. Prepare a partial income statement for the year ended December $ 31,2018 $.

B. How should the $ \$ 80,000 $ cost incurred in 2018 be reported on the financial statements?

Accepted Answer

A.Income Statement:

Operating expenses

Question 19

Creighton,Inc.determined that it had incorrectly estimated both the useful life and the estimated residual value of equipment that it purchased two years ago.When accounting for the change in its accounting estimates,Creighton must

Accepted Answer

A) correct the financial statements of prior years affected by the errors in the estimates. 
B) determine the book value at the point of change and depreciate that amount over the remaining useful life. 
C) add the amount of the error to the amount of the current year's depreciation expense. 
D) determine the effect of the error and report it as a loss on the income statement in Other Revenues and Expenses. 
A) correct the financial statements of prior years affected by the errors in the estimates. 
B) determine the book value at the point of change and depreciate that amount over the remaining useful life. 
C) add the amount of the error to the amount of the current year's depreciation expense. 
D) determine the effect of the error and report it as a loss on the income statement in Other Revenues and Expenses.

Question 20

Darrin Brown bought a pub.The purchase price was $695,000.An appraiser provided the following appraisal values: land,$320,000;building,$370,000;and equipment,$60,000.What cost should be allocated to the building?

Accepted Answer

A) $370,000 
B) $695,000 
C) $342,867 
D) $399,281 
A) $370,000 
B) $695,000 
C) $342,867 
D) $399,281

On the balance sheet,the cumulative amount of plant and equipment already expensed is reported in an account called

How does goodwill arise? How is it accounted for and reported on the financial statements?

McLaren Corp.incurred the following costs to acquire and prepare land during 2017 for a new parking lot: purchase price for land,$800,000;cost of paving,$40,000;and lighting for the parking lot,$20,000.How much should McLaren record in the Land Improvements account?

If a company's asset turnover ratio decreased from 2017 to 2018,which of the following conclusions can be made?

Explain the meaning or significance of the following ratios: A. Average life of property, plant, and equipment B. Average age of property, plant, and equipment

The income statement of Hope Market,Inc.reported a gain from the sale of land.How are the cash flow effects of this transaction reported on the statement of cash flows if the direct method is used to prepare the Operating Activities category?

Birken Co.purchased a building for $500,000 in 2012.At the end of 2017,when it had a book value of $450,000,it was appraised for $1,000,000.A potential buyer offered $900,000.Birken rejected the offer.What amount is in Birken's records at the end of 2017 in the Building account?

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

Explain what costs are included in the acquisition cost of operating assets.

Recently,companies have been ordered by governmental agencies to clean up environmental damages caused by business operations.How should costs incurred in these situations be treated?

Explain by what processes the costs of operating assets are allocated to expense.

The FASB standards do not have a specific rule that requires residual value and asset life to be reviewed annually for property,plant,and equipment.

When constructing assets,capitalized interest is based on

Creighton,Inc.determined that it had incorrectly estimated both the useful life and the estimated residual value of equipment that it purchased two years ago.When accounting for the change in its accounting estimates,Creighton must

Darrin Brown bought a pub.The purchase price was $695,000.An appraiser provided the following appraisal values: land,$320,000;building,$370,000;and equipment,$60,000.What cost should be allocated to the building?

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

On the balance sheet,the cumulative amount of plant and equipment already expensed is reported in an account called

How does goodwill arise? How is it accounted for and reported on the financial statements?

McLaren Corp.incurred the following costs to acquire and prepare land during 2017 for a new parking lot: purchase price for land,$800,000;cost of paving,$40,000;and lighting for the parking lot,$20,000.How much should McLaren record in the Land Improvements account?

If a company's asset turnover ratio decreased from 2017 to 2018,which of the following conclusions can be made?

Explain the meaning or significance of the following ratios: A. Average life of property, plant, and equipment B. Average age of property, plant, and equipment

The income statement of Hope Market,Inc.reported a gain from the sale of land.How are the cash flow effects of this transaction reported on the statement of cash flows if the direct method is used to prepare the Operating Activities category?

Birken Co.purchased a building for $500,000 in 2012.At the end of 2017,when it had a book value of $450,000,it was appraised for $1,000,000.A potential buyer offered $900,000.Birken rejected the offer.What amount is in Birken's records at the end of 2017 in the Building account?

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

Explain what costs are included in the acquisition cost of operating assets.

Recently,companies have been ordered by governmental agencies to clean up environmental damages caused by business operations.How should costs incurred in these situations be treated?

Explain by what processes the costs of operating assets are allocated to expense.

The FASB standards do not have a specific rule that requires residual value and asset life to be reviewed annually for property,plant,and equipment.

When constructing assets,capitalized interest is based on

Creighton,Inc.determined that it had incorrectly estimated both the useful life and the estimated residual value of equipment that it purchased two years ago.When accounting for the change in its accounting estimates,Creighton must

Darrin Brown bought a pub.The purchase price was $695,000.An appraiser provided the following appraisal values: land,$320,000;building,$370,000;and equipment,$60,000.What cost should be allocated to the building?

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