Question 1

When determining the rate of return on assets:

Accepted Answer

A) the DuPont model breaks return on assets down into three component ratios that drive it. 
B) the DuPont model calculates the rate of return on assets as the net profit margin ratio times total asset turnover. 
C) it is important for companies to develop strategies to decrease total asset turnover. 
D) total asset turnover measures how much every sales dollar generates in profit. 
A) the DuPont model breaks return on assets down into three component ratios that drive it. 
B) the DuPont model calculates the rate of return on assets as the net profit margin ratio times total asset turnover. 
C) it is important for companies to develop strategies to decrease total asset turnover. 
D) total asset turnover measures how much every sales dollar generates in profit.

Question 2

Capital expenditures are NOT immediately expensed because these items:

Accepted Answer

A) extend the useful life of a plant asset. 
B) return a plant asset to its prior condition. 
C) decrease the plant asset's capacity. 
D) maintain a plant asset in working condition. 
A) extend the useful life of a plant asset. 
B) return a plant asset to its prior condition. 
C) decrease the plant asset's capacity. 
D) maintain a plant asset in working condition.

Question 3

If a long-term an asset is impaired,estimated future cash flows will exceed the net book value.

Accepted Answer

A) True 
 B)False

Question 4

On January 1,2019,Williams Company,Inc.purchased machinery for $350,000 and depreciated it on a straight-line basis over 20 years.The estimated residual value was zero.On January 1,2022,the company realized the machine will remain useful for only 5 more years and also revised the residual value to $12,000.
Required:
1.What is the depreciation expense per year before the change in estimate?
2.What is the revised depreciation expense per year?
3.Prepare the adjusting journal entry for the year ending December 31,2022.Omit the explanation.

Accepted Answer

@#IMG-DLM& Original calculation:
($350,0

Question 5

Katie's Garden Company purchased a machine on July 1,2019.The machine cost $200,000 and has an estimated residual value of $20,000.The expected useful life is 8 years.The machine is to be used for 100,000 machine hours.
Required:
1.Calculate the depreciation expense for 2019 and 2020 using the straight-line method.
2.Calculate the depreciation expense for 2019 and 2020 using the units-of-production method.The machine was used for 8,000 machine hours in 2019 and 23,000 machine hours in 2020.
3.Calculate the depreciation expense for 2019 and 2020 using the double-declining-balance method.

Accepted Answer

1.Straight-line Depreciation Expe

Question 6

Goodwill is recorded only when the purchase price exceeds the market value of the net liabilities in the acquisition of another company.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is NOT included in the cost of a building that was constructed by the company?

Accepted Answer

A) interest on money borrowed to finance the construction 
B) cost of removing an unwanted building from the property 
C) architectural fees 
D) payments for material,labor and overhead for construction of new building 
A) interest on money borrowed to finance the construction 
B) cost of removing an unwanted building from the property 
C) architectural fees 
D) payments for material,labor and overhead for construction of new building

Question 8

Merck Pharmaceutical Company has many scientists working in their labs trying to develop a new drug to treat congestive heart failure.Following U.S.Generally Accepted Accounting Principles,the cost of this research and development must be:

Accepted Answer

A) recorded as an intangible asset and not amortized. 
B) recorded as an intangible asset and amortized over 20 years. 
C) recorded as an intangible asset and tested for impairment on a yearly basis. 
D) expensed as incurred. 
A) recorded as an intangible asset and not amortized. 
B) recorded as an intangible asset and amortized over 20 years. 
C) recorded as an intangible asset and tested for impairment on a yearly basis. 
D) expensed as incurred.

Question 9

Double-declining-balance depreciation:

Accepted Answer

A) is an accelerated depreciation method. 
B) ignores the residual value in computing depreciation,except during the last year. 
C) is based on the book value of the plant asset. 
D) is all of the above. 
A) is an accelerated depreciation method. 
B) ignores the residual value in computing depreciation,except during the last year. 
C) is based on the book value of the plant asset. 
D) is all of the above.

Question 10

For a plant asset that generates revenue evenly over time,which depreciation method best meets the expense recognition principle?

Accepted Answer

A) straight-line 
B) double-declining-balance 
C) modified accelerated 
D) units-of-production 
A) straight-line 
B) double-declining-balance 
C) modified accelerated 
D) units-of-production

Question 11

Equipment acquired on January 1,2020,is sold on June 30,2024,for $11,200.The equipment cost $46,200,had an estimated residual value of $6,300,and an estimated useful life of 5 years.The company prepares financial statements on December 31,and the equipment has been depreciated using the straight-line method.On June 30,2024,the company should record Depreciation Expense for the first six months of the year of:

Accepted Answer

A) $0. 
B) $1,995. 
C) $3,990. 
D) $7,980. 
A) $0. 
B) $1,995. 
C) $3,990. 
D) $7,980.

Question 12

Some trademarks have an indefinite life and should not be amortized.

Accepted Answer

A) True 
 B)False

Question 13

Each of the following transactions appear on the statement of cash flows,EXCEPT:

Accepted Answer

A) acquiring long-lived assets. 
B) depreciating long-lived assets. 
C) disposing of long-lived assets for no cash proceeds. 
D) selling long-lived assets. 
A) acquiring long-lived assets. 
B) depreciating long-lived assets. 
C) disposing of long-lived assets for no cash proceeds. 
D) selling long-lived assets.

Question 14

Which of the following is a CORRECT statement regarding intangible assets?

Accepted Answer

A) The useful life of a patent can be longer than its legal life. 
B) Copyrights do not protect computer software programs. 
C) Trademarks are rights to reproduce and sell a work of art. 
D) Intangible assets with indefinite lives must be checked annually for any loss in value. 
A) The useful life of a patent can be longer than its legal life. 
B) Copyrights do not protect computer software programs. 
C) Trademarks are rights to reproduce and sell a work of art. 
D) Intangible assets with indefinite lives must be checked annually for any loss in value.

Question 15

If a natural resource is extracted and not sold,which of the following accounts are debited and credited?

Accepted Answer

A) debit Depletion Expense and credit Accumulated Depletion 
B) debit Cost of Goods Sold and credit Inventory 
C) debit Accumulated Depletion and credit Natural Resource 
D) debit Inventory and credit Natural Resource 
A) debit Depletion Expense and credit Accumulated Depletion 
B) debit Cost of Goods Sold and credit Inventory 
C) debit Accumulated Depletion and credit Natural Resource 
D) debit Inventory and credit Natural Resource

Question 16

Before accounting for the disposal of a plant asset,the business should bring depreciation up to date in order to determine the asset's original cost.

Accepted Answer

A) True 
 B)False

Question 17

If a company buys a building and the surrounding land for cash,total assets increase.

Accepted Answer

A) True 
 B)False

Question 18

On January 2,2019,Saminski,Inc. ,acquired equipment for $200,000.The estimated life of the equipment is 5 years.The estimated residual value is $40,000.What is the Accumulated Depreciation of the equipment on December 31,2020,if Saminski uses the double-declining-balance method of depreciation? (Round intermediary calculations to two decimal places and your final answer to the nearest dollar. )

Accepted Answer

A) $64,000 
B) $80,000 
C) $48,000 
D) $128,000 
A) $64,000 
B) $80,000 
C) $48,000 
D) $128,000

Question 19

A company purchased a machine for $700,000.The accumulated depreciation on the machine is now $120,000.The machine is junked.Which journal entry is prepared to record the disposal?

Accepted Answer

A) debit Loss on Disposal of Machine for $580,000,debit Accumulated Depreciation - Machine $580,000 and credit Machine for $1,160,000 
B) debit Accumulated Depreciation - Machine for $120,000 and credit Machine for $120,000 
C) debit Accumulated Depreciation - Machine for $700,000,credit Machine for $120,000 and credit Gain on Disposal of Machine for $580,000 
D) debit Loss on Disposal of Machine for $580,000,debit Accumulated Depreciation - Machine for $120,000 and credit Machine for $700,000 
A) debit Loss on Disposal of Machine for $580,000,debit Accumulated Depreciation - Machine $580,000 and credit Machine for $1,160,000 
B) debit Accumulated Depreciation - Machine for $120,000 and credit Machine for $120,000 
C) debit Accumulated Depreciation - Machine for $700,000,credit Machine for $120,000 and credit Gain on Disposal of Machine for $580,000 
D) debit Loss on Disposal of Machine for $580,000,debit Accumulated Depreciation - Machine for $120,000 and credit Machine for $700,000

Question 20

Most intangible assets have a residual value.

Accepted Answer

A) True 
 B)False

When determining the rate of return on assets:

Capital expenditures are NOT immediately expensed because these items:

If a long-term an asset is impaired,estimated future cash flows will exceed the net book value.

Goodwill is recorded only when the purchase price exceeds the market value of the net liabilities in the acquisition of another company.

Which of the following is NOT included in the cost of a building that was constructed by the company?

Merck Pharmaceutical Company has many scientists working in their labs trying to develop a new drug to treat congestive heart failure.Following U.S.Generally Accepted Accounting Principles,the cost of this research and development must be:

Double-declining-balance depreciation:

For a plant asset that generates revenue evenly over time,which depreciation method best meets the expense recognition principle?

Some trademarks have an indefinite life and should not be amortized.

Each of the following transactions appear on the statement of cash flows,EXCEPT:

Which of the following is a CORRECT statement regarding intangible assets?

If a natural resource is extracted and not sold,which of the following accounts are debited and credited?

Before accounting for the disposal of a plant asset,the business should bring depreciation up to date in order to determine the asset's original cost.

If a company buys a building and the surrounding land for cash,total assets increase.

A company purchased a machine for $700,000.The accumulated depreciation on the machine is now $120,000.The machine is junked.Which journal entry is prepared to record the disposal?

Most intangible assets have a residual value.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Exam 7: Plant Assets, natural Resources, Intangibles

When determining the rate of return on assets:

Capital expenditures are NOT immediately expensed because these items:

If a long-term an asset is impaired,estimated future cash flows will exceed the net book value.

Goodwill is recorded only when the purchase price exceeds the market value of the net liabilities in the acquisition of another company.

Which of the following is NOT included in the cost of a building that was constructed by the company?

Merck Pharmaceutical Company has many scientists working in their labs trying to develop a new drug to treat congestive heart failure.Following U.S.Generally Accepted Accounting Principles,the cost of this research and development must be:

Double-declining-balance depreciation:

For a plant asset that generates revenue evenly over time,which depreciation method best meets the expense recognition principle?

Some trademarks have an indefinite life and should not be amortized.

Each of the following transactions appear on the statement of cash flows,EXCEPT:

Which of the following is a CORRECT statement regarding intangible assets?

If a natural resource is extracted and not sold,which of the following accounts are debited and credited?

Before accounting for the disposal of a plant asset,the business should bring depreciation up to date in order to determine the asset's original cost.

If a company buys a building and the surrounding land for cash,total assets increase.

A company purchased a machine for $700,000.The accumulated depreciation on the machine is now $120,000.The machine is junked.Which journal entry is prepared to record the disposal?

Most intangible assets have a residual value.

The Financial Statements

Transaction Analysis

Accrual Accounting Income

Internal Control Cash

Receivables and Revenue

Inventory Cost of Goods Sold

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters