Question 1

Franchises are privileges granted by a business to sell goods and services under specified conditions.

Accepted Answer

A) True 
 B)False

Question 2

Dodgers Company's beginning and ending total assets in the year 2019 were $19,700,000 and $22,300,000,respectively.Its asset turnover ratio for the year was calculated to be 1.9 times.Calculate the amount of net sales for the year 2019.

Accepted Answer

A)  $25,940,000 
B)  $43,300,000 
C)  $39,900,000 
D)  $57,500,000 
A)  $25,940,000 
B)  $43,300,000 
C)  $39,900,000 
D)  $57,500,000

Question 3

Goodwill is only recorded by an acquiring company when it purchases another company and pays more for that company than the market value of its net assets.

Accepted Answer

A) True 
 B)False

Question 4

According to Generally Accepted Accounting Principles,goodwill must be amortized.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an expense that results from the usage of a natural resource?

Accepted Answer

A)  depletion 
B)  amortization 
C)  depreciation 
D)  obsolescence 
A)  depletion 
B)  amortization 
C)  depreciation 
D)  obsolescence

Question 6

Which of the following statements,regarding the reporting of intangible assets,is correct?

Accepted Answer

A)  If a company uses the contra account, Accumulated Amortization, this account is typically shown on the balance sheet. 
B)  Amortization expense is reported on the balance sheet. 
C)  Intangible assets are shown only at their net book value. 
D)  All intangible assets are shown on the balance sheet at fair market value on balance sheet date. 
A)  If a company uses the contra account, Accumulated Amortization, this account is typically shown on the balance sheet. 
B)  Amortization expense is reported on the balance sheet. 
C)  Intangible assets are shown only at their net book value. 
D)  All intangible assets are shown on the balance sheet at fair market value on balance sheet date.

Question 7

Laramie Company has acquired a property that included both land and a building for $500,000.The company hired an appraiser who has determined that the market value of the land is $300,000 and that of the building is $480,000.At what amount should the company record the cost of the building? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

A)  $297,600 
B)  $310,000 
C)  $250,000 
D)  $320,000 
A)  $297,600 
B)  $310,000 
C)  $250,000 
D)  $320,000

Question 8

Carpenters Company,a manufacturing company,acquired equipment on January 1,2017 for $510,000.Estimated useful life of the equipment was seven years and the estimated residual value was $12,000.On January 1,2020,after using the equipment for three years,the total estimated useful life has been revised to nine total years.Residual value remains unchanged.The company uses the straight-line method of depreciation.Calculate depreciation expense for 2020.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

A)  $48,571 
B)  $47,429 
C)  $56,667 
D)  $55,333 
A)  $48,571 
B)  $47,429 
C)  $56,667 
D)  $55,333

Question 9

On January 1,2018,Dalton Manufacturing Company purchased a machine for $40,000,000.The company expects to use the machine for 24,000 hours over the next six years.The estimated residual value of the machine at the end of the sixth year is $40,000.The company used the machine for 3,600 hours in 2018 and 5,000 hours in 2019.Calculate depreciation expense for 2019 if the company uses the units-of-production method of depreciation.

Accepted Answer

Depreciation per unit = (Cost

Question 10

A business that has a vacant building that is not currently being used would classify the building as a plant asset.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following depreciation methods allocate a varying amount of depreciation to expense each year based on an asset's usage?

Accepted Answer

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

Question 12

On October 1,2018,Northern Company purchased a patent for $211,000 cash.Although the patent gives legal protection for 20 years,the patent is expected to be used for only 10 years.The patent has no residual value.What will be the balance in the patent account on September 30,2019?

Accepted Answer

A)  $189,900 
B)  $211,000 
C)  $200,450 
D)  $105,500 
A)  $189,900 
B)  $211,000 
C)  $200,450 
D)  $105,500

Question 13

On October 1,2018,Mobile Company purchased a patent for $100,000 cash.Although the patent gives legal protection for 20 years,it is expected to be used for only eight years.The patent has no residual value.Journalize the amortization expense for 2018.Assume straight-line amortization.Omit explanation.

Accepted Answer

\[\begin{array} { | l | r | r | } 
\hlin

Question 14

Regarding impairment of intangible assets,which of the following statements is incorrect?

Accepted Answer

A)  Impairment occurs when the fair value of an intangible asset is less than the book value. 
B)  Intangible assets are impaired when there has been a permanent decline in the value of the asset. 
C)  Intangible assets with an indefinite life are tested for impairment annually. 
D)  If any impairment occurs, the company records a loss in the period in which the intangible asset was acquired. 
A)  Impairment occurs when the fair value of an intangible asset is less than the book value. 
B)  Intangible assets are impaired when there has been a permanent decline in the value of the asset. 
C)  Intangible assets with an indefinite life are tested for impairment annually. 
D)  If any impairment occurs, the company records a loss in the period in which the intangible asset was acquired.

Question 15

The useful life of a plant asset is the length of the service period expected from the asset.

Accepted Answer

A) True 
 B)False

Question 16

Long Island Company discards a truck that was originally purchased for $50,000 and had accumulated depreciation of $30,000.Prepare the journal entry for the disposal.Omit explanation.

Accepted Answer

\[\begin{array} { | c | r | r | } 
\hlin

Question 17

The double-declining-balance method is an accelerated method of depreciation.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is an intangible asset?

Accepted Answer

A)  plant and machinery 
B)  goodwill 
C)  building 
D)  land 
A)  plant and machinery 
B)  goodwill 
C)  building 
D)  land

Question 19

Companies are required to report plant assets as a single amount,with a note to the financial statements that provides detailed information.

Accepted Answer

A) True 
 B)False

Question 20

Danube Company purchased a used machine for $12,000.The machine required installation costs of $3000 and insurance while in transit of $1500.At which of the following amounts would the machine be recorded?

Accepted Answer

A)  $12,000 
B)  $15,000 
C)  $13,500 
D)  $16,500 
A)  $12,000 
B)  $15,000 
C)  $13,500 
D)  $16,500

Exam 10: Plant Assets,natural Resources,and Intangibles

Franchises are privileges granted by a business to sell goods and services under specified conditions.

Dodgers Company's beginning and ending total assets in the year 2019 were $19,700,000 and $22,300,000,respectively.Its asset turnover ratio for the year was calculated to be 1.9 times.Calculate the amount of net sales for the year 2019.

Goodwill is only recorded by an acquiring company when it purchases another company and pays more for that company than the market value of its net assets.

According to Generally Accepted Accounting Principles,goodwill must be amortized.

Which of the following is an expense that results from the usage of a natural resource?

Which of the following statements,regarding the reporting of intangible assets,is correct?

A business that has a vacant building that is not currently being used would classify the building as a plant asset.

Which of the following depreciation methods allocate a varying amount of depreciation to expense each year based on an asset's usage?

On October 1,2018,Northern Company purchased a patent for $211,000 cash.Although the patent gives legal protection for 20 years,the patent is expected to be used for only 10 years.The patent has no residual value.What will be the balance in the patent account on September 30,2019?

Regarding impairment of intangible assets,which of the following statements is incorrect?

The useful life of a plant asset is the length of the service period expected from the asset.

Long Island Company discards a truck that was originally purchased for $50,000 and had accumulated depreciation of $30,000.Prepare the journal entry for the disposal.Omit explanation.

The double-declining-balance method is an accelerated method of depreciation.

Which of the following is an intangible asset?

Companies are required to report plant assets as a single amount,with a note to the financial statements that provides detailed information.

Danube Company purchased a used machine for $12,000.The machine required installation costs of $3000 and insurance while in transit of $1500.At which of the following amounts would the machine be recorded?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Introduction to Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters