Question 1

Research and development costs should be presented as intangible assets.

Accepted Answer

A) True 
 B)False

Question 2

If technology changes rapidly,a firm should

Accepted Answer

A) expense plant assets immediately because of the uncertainty of future benefits. 
B) depreciate plant assets over long periods of time. 
C) consider an accelerated rate of depreciation. 
D) use the straight-line method of depreciation as it is the easiest. 
A) expense plant assets immediately because of the uncertainty of future benefits. 
B) depreciate plant assets over long periods of time. 
C) consider an accelerated rate of depreciation. 
D) use the straight-line method of depreciation as it is the easiest.

Question 3

Using different depreciation methods for book purposes versus tax purposes for the same asset is

Accepted Answer

A) not allowed since the amount can only be calculated one way or the other,not both. 
B) the direct result of the differing goals of financial and tax accounting. 
C) contrary to GAAP. 
D) against the Internal Revenue Code,and as such,against the law. 
A) not allowed since the amount can only be calculated one way or the other,not both. 
B) the direct result of the differing goals of financial and tax accounting. 
C) contrary to GAAP. 
D) against the Internal Revenue Code,and as such,against the law.

Question 4

Chambersburg Corp.
The following information is for Chambersburg Corp.for 2018 and 2017.Chambersburg uses the straight-line depreciation method.
 $$\begin{array} { l r r } 
& \underline { \mathbf { 2 0 1 8 } } & \underline { \mathbf { 2 0 1 7 } } \
\text { Property, plant, and equipment } & \$ 250,000 & \$ 190,000 \
\text { Accumulated depreciation } & 100,000 & 85,000 \
 \text { Depreciation expense } & 62,500 & 47,500 \
\text { Net sales } & 1,000,000 & 900,000 \
\text { Average total assets }& 625,000 & 475,000
\end{array}$$
-Refer to the information for Chambersburg Corp. ?
What is the asset turnover ratio for Chambersburg for 2018?

Accepted Answer

A) 1.60 times 
B) 1.82 times 
C) 4.00 times 
D) 4.55 times 
A) 1.60 times 
B) 1.82 times 
C) 4.00 times 
D) 4.55 times

Question 5

Craig Inc.purchased a truck on January 1,2017 for $40,000.The truck had an estimated life of six years and an estimated salvage value of $4,000.Craig uses the straight-line method to depreciate the asset.On July 1,2019,the truck was sold for $14,000 cash.
 A. Determine the effect on the accounting equation up on recording the depreciation for 2017 .

B. Show how the gain or loss on the sale of the asset would be reported on Craig Inc.'s income statement.

Accepted Answer

11ea857b_5

Question 6

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 straight-line method,what is the book value at December 31,2019?

Accepted Answer

A) $46,875 
B) $51,875 
C) $62,500 
D) $67,500 
A) $46,875 
B) $51,875 
C) $62,500 
D) $67,500

Question 7

A company purchased an asset on January 1,2015,for $10,000.The asset was expected to have a ten-year life and a $1,000 salvage value.The company uses the straight-line method of depreciation.On January 1,2017,the company made a major repair to the asset of $5,000,extending its life.The asset is expected to last ten years from January 1,2017.
?
Calculate the amount of depreciation for 2017.

Accepted Answer

?
 \[\begin{array} { l r } 
\text { Orig

Question 8

On January 1, 2017, Grove City Corp. purchased a ship for $2,000,000. It has a ten-year useful life and a residual value of $50,000. The company uses the double-declining-balance method.
-What was the book value of the ship for Grove City Corp.at the end of its useful life?

Accepted Answer

A) $0 
B) $50,000 
C) $214,400 
D) Need more information to determine this answer. 
A) $0 
B) $50,000 
C) $214,400 
D) Need more information to determine this answer.

Question 9

Acquisition costs are also known as replacement costs.

Accepted Answer

A) True 
 B)False

Question 10

Distinguish between tangible and intangible operating assets.

Accepted Answer

Tangible operating assets have physical

Question 11

Acquisition cost should not include expenditures unrelated to the acquisition,like repair costs for damages incurred during installation,or costs incurred after the asset was installed and use begun.

Accepted Answer

A) True 
 B)False

Question 12

A gain is recognized on the disposal of plant assets when the sale price is

Accepted Answer

A) greater than the book value and less than the residual value. 
B) greater than the book value. 
C) less than both the book value and the residual value. 
D) less than the book value. 
A) greater than the book value and less than the residual value. 
B) greater than the book value. 
C) less than both the book value and the residual value. 
D) less than the book value.

Question 13

On January 1,2017,Humansville Company purchased a piece of equipment with a list price of $80,000.The following amounts were related to the equipment purchase:
• Terms of the purchase were 2/10,net 30.Humansville paid for the purchase on January 8.
• Freight costs of $1,250 were incurred.
• A state agency required that a pollution control device be installed on the equipment at a cost of $3,300.
• During installation,the equipment was damaged and repair costs of $4,200 were incurred.
• Architect's fees of $6,100 were paid to redesign the work space to accommodate the new equipment.
• Humansville purchased liability insurance to cover possible damage to the asset.The three-year policy cost $8,700.
• Humansville financed the purchase with a bank loan.Interest of $4,600 was paid on the loan during 2017.
Required
Determine the acquisition cost of the equipment.

Accepted Answer

The acquisition cost of the asset should

Question 14

A company should choose a depreciation method that

Accepted Answer

A) best allocates the original cost of the asset to the periods benefited by the use of the asset. 
B) saves the most taxes. 
C) minimizes net income. 
D) shows the highest amount of net income. 
A) best allocates the original cost of the asset to the periods benefited by the use of the asset. 
B) saves the most taxes. 
C) minimizes net income. 
D) shows the highest amount of net income.

Question 15

Land is not depreciated because it

Accepted Answer

A) appreciates in value. 
B) does not have an established depreciable life. 
C) has a useful life that is limited to the period of time a company is in business. 
D) has an unlimited life. 
A) appreciates in value. 
B) does not have an established depreciable life. 
C) has a useful life that is limited to the period of time a company is in business. 
D) has an unlimited life.

Question 16

In 2013,Blanton Company bought equipment with a cost of $160,000,an estimated residual value of $40,000,and an estimated life of 15 years.It was depreciated by the straight-line method for four years.Due to obsolescence,it was determined at the beginning of 2017 that the useful life should be shortened by three years and the residual value changed to zero.The depreciation expense for 2017 is

Accepted Answer

A) $11,636. 
B) $16,000. 
C) $11,000. 
D) $8,000. 
A) $11,636. 
B) $16,000. 
C) $11,000. 
D) $8,000.

Question 17

Select the financial statement on which the user would most likely find the answer to the question given. (Select all that apply.)
-Did the company sell any property,plant,and equipment during the year at a gain or loss?

Accepted Answer

A) Income statement 
B) Balance sheet 
C) Statement of cash flows 
D) Statement of retained earnings 
A) Income statement 
B) Balance sheet 
C) Statement of cash flows 
D) Statement of retained earnings

Question 18

Which of the following factors is not related to the decline in the usefulness of plant and equipment assets,and therefore does not need to be considered in selecting an appropriate depreciation method?

Accepted Answer

A) Physical deterioration 
B) Obsolescence 
C) Repair and maintenance policies 
D) Current replacement cost 
A) Physical deterioration 
B) Obsolescence 
C) Repair and maintenance policies 
D) Current replacement cost

Question 19

Which of the following statements is not true?

Accepted Answer

A) International accounting standards are more flexible in allowing the use of fair market values for intangible assets. 
B) FASB standards require all research and development costs to be expensed. 
C) IFRS require all research and development costs to be expensed. 
D) Under IFRS,fair market values for intangibles require an active market. 
A) International accounting standards are more flexible in allowing the use of fair market values for intangible assets. 
B) FASB standards require all research and development costs to be expensed. 
C) IFRS require all research and development costs to be expensed. 
D) Under IFRS,fair market values for intangibles require an active market.

Question 20

What impact does materiality have on the determination of how a cost related to a plant asset is reported on the financial statements?

Accepted Answer

When an expenditure is incurred,a determ

Research and development costs should be presented as intangible assets.

If technology changes rapidly,a firm should

Using different depreciation methods for book purposes versus tax purposes for the same asset is

On January 1, 2017, Grove City Corp. purchased a ship for $2,000,000. It has a ten-year useful life and a residual value of $50,000. The company uses the double-declining-balance method. -What was the book value of the ship for Grove City Corp.at the end of its useful life?

Acquisition costs are also known as replacement costs.

Distinguish between tangible and intangible operating assets.

Acquisition cost should not include expenditures unrelated to the acquisition,like repair costs for damages incurred during installation,or costs incurred after the asset was installed and use begun.

A gain is recognized on the disposal of plant assets when the sale price is

A company should choose a depreciation method that

Land is not depreciated because it

Select the financial statement on which the user would most likely find the answer to the question given. (Select all that apply.) -Did the company sell any property,plant,and equipment during the year at a gain or loss?

Which of the following factors is not related to the decline in the usefulness of plant and equipment assets,and therefore does not need to be considered in selecting an appropriate depreciation method?

Which of the following statements is not true?

What impact does materiality have on the determination of how a cost related to a plant asset is reported on the financial statements?

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

Research and development costs should be presented as intangible assets.

If technology changes rapidly,a firm should

Using different depreciation methods for book purposes versus tax purposes for the same asset is

On January 1, 2017, Grove City Corp. purchased a ship for $2,000,000. It has a ten-year useful life and a residual value of $50,000. The company uses the double-declining-balance method. -What was the book value of the ship for Grove City Corp.at the end of its useful life?

Acquisition costs are also known as replacement costs.

Distinguish between tangible and intangible operating assets.

Acquisition cost should not include expenditures unrelated to the acquisition,like repair costs for damages incurred during installation,or costs incurred after the asset was installed and use begun.

A gain is recognized on the disposal of plant assets when the sale price is

A company should choose a depreciation method that

Land is not depreciated because it

Select the financial statement on which the user would most likely find the answer to the question given. (Select all that apply.) -Did the company sell any property,plant,and equipment during the year at a gain or loss?

Which of the following factors is not related to the decline in the usefulness of plant and equipment assets,and therefore does not need to be considered in selecting an appropriate depreciation method?

Which of the following statements is not true?

What impact does materiality have on the determination of how a cost related to a plant asset is reported on the financial statements?

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