Question 1

If a company has goodwill on its books,the goodwill:

Accepted Answer

A) is amortized over 40 years or useful life,whichever is less. 
B) is tested for impairment annually. 
C) may have been internally created. 
D) may be written up to fair value. 
A) is amortized over 40 years or useful life,whichever is less. 
B) is tested for impairment annually. 
C) may have been internally created. 
D) may be written up to fair value.

Question 2

The Manson Company purchased assets for a lump-sum price of $1,000,000.An appraisal indicates the following market prices:
    Prepare the appropriate journal entry if Manson Company paid cash for this transaction.

Accepted Answer

($560,000 + $210,000 + $630,000)= $1,400

Question 3

As a plant asset is used in operations:

Accepted Answer

A) accumulated depreciation increases and the book value of the asset increases. 
B) accumulated depreciation increases and the book value of the asset decreases. 
C) accumulated depreciation remains the same and the book value of the asset decreases. 
D) accumulated depreciation increases and the book value of the asset remains the same. 
A) accumulated depreciation increases and the book value of the asset increases. 
B) accumulated depreciation increases and the book value of the asset decreases. 
C) accumulated depreciation remains the same and the book value of the asset decreases. 
D) accumulated depreciation increases and the book value of the asset remains the same.

Question 4

Which intangible asset is NOT amortized?

Accepted Answer

A) patents 
B) trademarks 
C) copyrights 
D) goodwill 
A) patents 
B) trademarks 
C) copyrights 
D) goodwill

Question 5

Income before depreciation and taxes amounts to $200,000.Using straight-line depreciation,the current year's depreciation expense will be $13,500.Using double-declining-balance depreciation,the current year's depreciation expense will be $19,500.Assuming a tax rate of 30%,what is the net cash saved in income taxes by using double-declining-balance depreciation over straight-line depreciation?

Accepted Answer

A) $1,800 
B) $4,050 
C) $6,000 
D) $5,850 
A) $1,800 
B) $4,050 
C) $6,000 
D) $5,850

Question 6

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

Accepted Answer

A) fencing 
B) sprinkler system for the landscaping 
C) driveways 
D) all of the above 
A) fencing 
B) sprinkler system for the landscaping 
C) driveways 
D) all of the above

Question 7

ABC Company purchased land with an old building.ABC plans to demolish the old building and then construct a new,modern building.The cost of demolishing the building will be part of the cost of the:

Accepted Answer

A) new building. 
B) old building. 
C) land. 
D) land improvements. 
A) new building. 
B) old building. 
C) land. 
D) land improvements.

Question 8

Land improvements include expenditures for:

Accepted Answer

A) paving the parking lot. 
B) grading and clearing the land. 
C) removing an unwanted building. 
D) all of the above. 
A) paving the parking lot. 
B) grading and clearing the land. 
C) removing an unwanted building. 
D) all of the above.

Question 9

Kolonas,Inc. ,sold equipment for $5,400 cash.The equipment cost $73,900 and had accumulated depreciation through the date of sale of $70,000.At the date of sale,the journal entry to record the sale will have:

Accepted Answer

A) a Gain on Sale of Equipment for $3,900. 
B) a Loss on Sale of Equipment for $3,900. 
C) a Loss on Sale of Equipment for $1,500. 
D) a Gain on Sale of Equipment for $1,500. 
A) a Gain on Sale of Equipment for $3,900. 
B) a Loss on Sale of Equipment for $3,900. 
C) a Loss on Sale of Equipment for $1,500. 
D) a Gain on Sale of Equipment for $1,500.

Question 10

The cost of a new building includes the cost to demolish and remove an old building on the same site as the new building.

Accepted Answer

A) True 
 B)False

Question 11

A Loss on Sale of Equipment will result when the book value of the equipment exceeds the cash received from the sale of the equipment.

Accepted Answer

A) True 
 B)False

Question 12

A machine costing $40,000 was purchased on January 1,2019.It has an estimated useful life of 5 years and a salvage value of $5,000.
Required:
1.Calculate depreciation expense for 2019 and 2020 using (a)straight-line rate,and (b)double-declining-balance method.
2.Determine the book value of the machine at December 31,2020 under the (a)straight-line method and (b)double-declining-balance method.

Accepted Answer

1.
(a)Straight-line:
Depreciation Expens

Question 13

Acquisitions and sales of long-term assets are reported as investing activities on the statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 14

On January 2,2019,Kellogg Corporation acquired equipment for $700,000.The estimated life of the equipment is 5 years or 90,000 hours.The estimated residual value is $40,000.What is the book value of the asset on December 31,2020,if Kellogg Corporation uses the straight-line method of depreciation? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar. )

Accepted Answer

A) $568,000 
B) $436,000 
C) $700,000 
D) $660,000 
A) $568,000 
B) $436,000 
C) $700,000 
D) $660,000

Question 15

At the end of its useful life,the book value of a plant asset must be zero.

Accepted Answer

A) True 
 B)False

Question 16

Dorman Company purchased a new machine for its production process.The following costs were incurred for the new machine:   Which costs should be added to the cost of the machine?

Accepted Answer

A) $18,000 
B) $38,000 
C) $53,000 
D) $161,000 
A) $18,000 
B) $38,000 
C) $53,000 
D) $161,000

Question 17

Cost minus residual value divided by useful life,in years,is the formula for the:

Accepted Answer

A) straight-line depreciation method. 
B) units-of-production depreciation method. 
C) double-declining-balance depreciation method. 
D) modified accelerated cost recovery method. 
A) straight-line depreciation method. 
B) units-of-production depreciation method. 
C) double-declining-balance depreciation method. 
D) modified accelerated cost recovery method.

Question 18

Miscellaneous costs associated with the purchase of new equipment include:   What is the amount assigned to the new equipment?

Accepted Answer

A) $2,300 
B) $2,500 
C) $2,900 
D) $4,400 
A) $2,300 
B) $2,500 
C) $2,900 
D) $4,400

Question 19

Tony Company sells equipment for $20,000 cash.The equipment has a historical cost of $60,000 and accumulated depreciation of $52,000.What is the gain or loss on sale of the equipment?

Accepted Answer

A) $12,000 loss 
B) $12,000 gain 
C) $20,000 loss 
D) $20,000 gain 
A) $12,000 loss 
B) $12,000 gain 
C) $20,000 loss 
D) $20,000 gain

Question 20

Adoption of IFRS by U.S.companies is expected to result in the recognition of less intangible assets on their balance sheets than presently exist.

Accepted Answer

A) True 
 B)False

If a company has goodwill on its books,the goodwill:

The Manson Company purchased assets for a lump-sum price of $1,000,000.An appraisal indicates the following market prices: Prepare the appropriate journal entry if Manson Company paid cash for this transaction.

As a plant asset is used in operations:

Which intangible asset is NOT amortized?

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

ABC Company purchased land with an old building.ABC plans to demolish the old building and then construct a new,modern building.The cost of demolishing the building will be part of the cost of the:

Land improvements include expenditures for:

Kolonas,Inc. ,sold equipment for $5,400 cash.The equipment cost $73,900 and had accumulated depreciation through the date of sale of $70,000.At the date of sale,the journal entry to record the sale will have:

The cost of a new building includes the cost to demolish and remove an old building on the same site as the new building.

A Loss on Sale of Equipment will result when the book value of the equipment exceeds the cash received from the sale of the equipment.

Acquisitions and sales of long-term assets are reported as investing activities on the statement of cash flows.

At the end of its useful life,the book value of a plant asset must be zero.

Dorman Company purchased a new machine for its production process.The following costs were incurred for the new machine: Which costs should be added to the cost of the machine?

Cost minus residual value divided by useful life,in years,is the formula for the:

Miscellaneous costs associated with the purchase of new equipment include: What is the amount assigned to the new equipment?

Tony Company sells equipment for $20,000 cash.The equipment has a historical cost of $60,000 and accumulated depreciation of $52,000.What is the gain or loss on sale of the equipment?

Adoption of IFRS by U.S.companies is expected to result in the recognition of less intangible assets on their balance sheets than presently exist.

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

If a company has goodwill on its books,the goodwill:

The Manson Company purchased assets for a lump-sum price of $1,000,000.An appraisal indicates the following market prices: Prepare the appropriate journal entry if Manson Company paid cash for this transaction.

As a plant asset is used in operations:

Which intangible asset is NOT amortized?

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

ABC Company purchased land with an old building.ABC plans to demolish the old building and then construct a new,modern building.The cost of demolishing the building will be part of the cost of the:

Land improvements include expenditures for:

Kolonas,Inc. ,sold equipment for $5,400 cash.The equipment cost $73,900 and had accumulated depreciation through the date of sale of $70,000.At the date of sale,the journal entry to record the sale will have:

The cost of a new building includes the cost to demolish and remove an old building on the same site as the new building.

A Loss on Sale of Equipment will result when the book value of the equipment exceeds the cash received from the sale of the equipment.

Acquisitions and sales of long-term assets are reported as investing activities on the statement of cash flows.

At the end of its useful life,the book value of a plant asset must be zero.

Dorman Company purchased a new machine for its production process.The following costs were incurred for the new machine: Which costs should be added to the cost of the machine?

Cost minus residual value divided by useful life,in years,is the formula for the:

Miscellaneous costs associated with the purchase of new equipment include: What is the amount assigned to the new equipment?

Tony Company sells equipment for $20,000 cash.The equipment has a historical cost of $60,000 and accumulated depreciation of $52,000.What is the gain or loss on sale of the equipment?

Adoption of IFRS by U.S.companies is expected to result in the recognition of less intangible assets on their balance sheets than presently exist.

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