Question 1

An exchange of plant assets has commercial substance if the future cash flows change as a result of the transaction.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following should be included in the cost of land?

Accepted Answer

A) cost to build sidewalks on the land 
B) cost to clear the land of old buildings 
C) cost of installing signage 
D) cost of installing fences 
A) cost to build sidewalks on the land 
B) cost to clear the land of old buildings 
C) cost of installing signage 
D) cost of installing fences

Question 3

The cost of land does not include the cost of fencing and paving.

Accepted Answer

A) True 
 B)False

Question 4

When a business uses the straight-line method of depreciation,the amount of depreciation is reduced from year to year.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is an intangible asset?

Accepted Answer

A) copyright 
B) building 
C) land 
D) equipment 
A) copyright 
B) building 
C) land 
D) equipment

Question 6

Westland,Inc.owns a delivery truck.Which of the following costs,associated with the truck,will be treated as a revenue expenditure?

Accepted Answer

A) oil change and lubrication 
B) major engine overhaul 
C) modification for new use 
D) addition to storage capacity 
A) oil change and lubrication 
B) major engine overhaul 
C) modification for new use 
D) addition to storage capacity

Question 7

Arthur,Inc.plans to develop a shopping center.In the first quarter,the following amounts were spent:
 
What amount should be recorded as the land improvement cost?

Accepted Answer

A) $7,200 
B) $8,200 
C) $15,060 
D) $1,200 
A) $7,200 
B) $8,200 
C) $15,060 
D) $1,200

Question 8

If a company uses the contra account,Accumulated Amortization,this account is typically shown on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 9

On January 1,2017,Henry Manufacturing Corporation purchased a machine for $40,600,000.Henry's management expects to use the machine for 33,000 hours over the next six years.The estimated residual value of the machine at the end of the sixth year is $45,000.The machine was used for 3,600 hours in 2017 and 5,000 hours in 2018.Calculate the book value of the machine at the end of 2018 if the company uses the units-of-production method of depreciation.(Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Accepted Answer

A) $30,031,116 
B) $40,600,000 
C) $30,019,420 
D) $36,175,816 
A) $30,031,116 
B) $40,600,000 
C) $30,019,420 
D) $36,175,816

Question 10

Under U.S.GAAP,which of the following is not an acceptable way to report plant assets?

Accepted Answer

A) at fair market value 
B) at book value 
C) as a single amount,with a note to the financial statements that provides detailed information 
D) with detailed information on the face of the balance sheet 
A) at fair market value 
B) at book value 
C) as a single amount,with a note to the financial statements that provides detailed information 
D) with detailed information on the face of the balance sheet

Question 11

Five O'Clock,Inc.purchased a van on January 1,2017,for $800,000.Estimated life of the van was five years,and its estimated residual value was $90,000.Five O'Clock uses the straight-line method of depreciation.Prepare the depreciation schedule.

Accepted Answer

The answer of Five O'Clock,Inc.purchased a van on January 1,2017,for...

Question 12

Companies may choose to report plant assets as a single amount,with a note to the financial statements that provides detailed information,or companies may provide detailed information on the face of the statement.

Accepted Answer

A) True 
 B)False

Question 13

The units-of-production method allocates a varying amount of depreciation each year based on an asset's usage.

Accepted Answer

A) True 
 B)False

Question 14

The cost principle requires a business to record the assets acquired,or services received,at their actual cost.

Accepted Answer

A) True 
 B)False

Question 15

On January 1,2017 Hillop,Inc.had total assets of $370,000.During the year,the company purchased new machinery worth $88,000 and promised to pay the amount due after two years.Throughout the year,it earned revenue of $60,000 every month.Calculate the asset turnover ratio.

Accepted Answer

A) 1.03 times 
B) 1.81 times 
C) 1.74 times 
D) 1.57 times 
A) 1.03 times 
B) 1.81 times 
C) 1.74 times 
D) 1.57 times

Question 16

Which of the following is included in the cost of land?

Accepted Answer

A) cost of fencing 
B) cost of paving 
C) brokerage commission 
D) cost of outdoor lighting 
A) cost of fencing 
B) cost of paving 
C) brokerage commission 
D) cost of outdoor lighting

Question 17

In 2017,a corporation purchased a small business for $250,000.The market value of the small business's assets was $400,000,and the market value of the liabilities was $200,000.The corporation recorded goodwill of $50,000 at the time of acquisition.At the end of 2018,it measured goodwill and found it had a remaining fair value of only $20,000.At year-end 2018,the corporation will ________.

Accepted Answer

A) record a loss on sale of assets 
B) record an impairment loss 
C) record accumulated depletion 
D) record a gain in goodwill 
A) record a loss on sale of assets 
B) record an impairment loss 
C) record accumulated depletion 
D) record a gain in goodwill

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

The double-declining-balance method ignores the residual value until the depreciation expense takes the book value below the residual value.

Accepted Answer

A) True 
 B)False

Question 20

A patent is an exclusive right to reproduce and sell a book,musical composition,film,other work of art,or intellectual property.

Accepted Answer

A) True 
 B)False

Exam 10: Plant Assets, natural Resources, and Intangibles

An exchange of plant assets has commercial substance if the future cash flows change as a result of the transaction.

Which of the following should be included in the cost of land?

The cost of land does not include the cost of fencing and paving.

When a business uses the straight-line method of depreciation,the amount of depreciation is reduced from year to year.

Which of the following is an intangible asset?

Westland,Inc.owns a delivery truck.Which of the following costs,associated with the truck,will be treated as a revenue expenditure?

Arthur,Inc.plans to develop a shopping center.In the first quarter,the following amounts were spent: What amount should be recorded as the land improvement cost?

If a company uses the contra account,Accumulated Amortization,this account is typically shown on the balance sheet.

Under U.S.GAAP,which of the following is not an acceptable way to report plant assets?

Five O'Clock,Inc.purchased a van on January 1,2017,for $800,000.Estimated life of the van was five years,and its estimated residual value was $90,000.Five O'Clock uses the straight-line method of depreciation.Prepare the depreciation schedule.

Companies may choose to report plant assets as a single amount,with a note to the financial statements that provides detailed information,or companies may provide detailed information on the face of the statement.

The units-of-production method allocates a varying amount of depreciation each year based on an asset's usage.

The cost principle requires a business to record the assets acquired,or services received,at their actual cost.

On January 1,2017 Hillop,Inc.had total assets of $370,000.During the year,the company purchased new machinery worth $88,000 and promised to pay the amount due after two years.Throughout the year,it earned revenue of $60,000 every month.Calculate the asset turnover ratio.

Which of the following is included in the cost of land?

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

The double-declining-balance method ignores the residual value until the depreciation expense takes the book value below the residual value.

A patent is an exclusive right to reproduce and sell a book,musical composition,film,other work of art,or intellectual property.

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

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