Question 1

The federal government grants patents for

Accepted Answer

A) 10 years. 
B) 20 years. 
C) 40 years. 
D) the useful life of the patent. 
A) 10 years. 
B) 20 years. 
C) 40 years. 
D) the useful life of the patent.

Question 2

A capital expenditure is an expenditure that benefits only the current accounting period.

Accepted Answer

A) True 
 B)False

Question 3

Accelerated depreciation assumes all of the following except that

Accepted Answer

A) asset benefit increases with each year of use. 
B) the asset provides more benefit in the early years. 
C) obsolescence makes an asset less valuable in its later years. 
D) repair expense is less in the early years than in the later years. 
A) asset benefit increases with each year of use. 
B) the asset provides more benefit in the early years. 
C) obsolescence makes an asset less valuable in its later years. 
D) repair expense is less in the early years than in the later years.

Question 4

Land and a building on the land are purchased for $310,000.The appraised values of the land and building are $66,000 and $264,000,respectively.The cost allocated to the building should be

Accepted Answer

A) $25,200. 
B) $109,800. 
C) $135,000. 
D) $248,000. 
A) $25,200. 
B) $109,800. 
C) $135,000. 
D) $248,000.

Question 5

Federal tax law does not allow the rapid write-off of plant assets.

Accepted Answer

A) True 
 B)False

Question 6

When discarding equipment,depreciation need not by updated.

Accepted Answer

A) True 
 B)False

Question 7

According to generally accepted accounting principles,most expenditures for intangible assets acquired from others should be treated as revenue expenditures when incurred.

Accepted Answer

A) True 
 B)False

Question 8

When a company can prove it is worth more than its balance sheet indicates,it may record some goodwill.

Accepted Answer

A) True 
 B)False

Question 9

One argument in favor of accelerated depreciation is that the asset's benefit is greater in the earlier years.

Accepted Answer

A) True 
 B)False

Question 10

Research and development costs normally are capitalized and amortized over the estimated sales life of the product developed.

Accepted Answer

A) True 
 B)False

Question 11

The cost of assets acquired for a lump sum should be allocated equally among the acquired assets.

Accepted Answer

A) True 
 B)False

Question 12

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

Accepted Answer

A) $5,000. 
B) $12,500. 
C) $17,500. 
D) impossible to determine from the facts given. 
A) $5,000. 
B) $12,500. 
C) $17,500. 
D) impossible to determine from the facts given.

Question 13

A capital expenditure will result in an immediate increase in long-term assets.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would not be a basis for estimating the useful life of a piece of equipment?

Accepted Answer

A) Potential production in units 
B) Potential hours of service 
C) Historical cost 
D) Years of service 
A) Potential production in units 
B) Potential hours of service 
C) Historical cost 
D) Years of service

Question 15

When calculating a partial year's depreciation,the length of time an asset has been owned usually is rounded to the nearest month.This rounding practice is justified by the principle or rule of

Accepted Answer

A) matching. 
B) materiality. 
C) conservatism. 
D) full disclosure. 
A) matching. 
B) materiality. 
C) conservatism. 
D) full disclosure.

Question 16

Goodwill reflects all the factors that allow a company to earn a higher-than-market rate of return on its assets.

Accepted Answer

A) True 
 B)False

Question 17

Davida's Delivery Service purchased a delivery van for $30,000.The van had an estimated useful life of six years and an estimated residual value of $6,000.After four years of use,the total estimated useful life is revised to seven years.Assuming straight-line depreciation,depreciation expense in year 5 would be (amounts rounded)

Accepted Answer

A) $2,667. 
B) $4,667. 
C) $2,000. 
D) $1,143. 
A) $2,667. 
B) $4,667. 
C) $2,000. 
D) $1,143.

Question 18

Preston Corporation purchased a truck for $40,000.The company expected the truck to last four years or 100,000 miles,with an estimated residual value of $4,000 at the end of that time.During the second year,the truck was driven 27,500 miles.Compute the depreciation for the second year under each of the following methods: (a)straight-line, (b)production,and (c)double-declining-balance.(Show your work. )

Accepted Answer

a.$9,000 [($40,000 - $4,000)@#LAT-DLM& 4

Question 19

Leasehold improvements become the property of the lessor at the end of the lease.

Accepted Answer

A) True 
 B)False

Question 20

Dechter Company acquired a mine for $1,800,000 which has an estimated residual value of $300,000 and contains an estimated 1,500,000 tons of coal.If 230,000 tons of coal are mined and sold during the first year,the entry to record the depletion charge is:

Accepted Answer

A)   
B)   
C)   
D)   
A)   
B)   
C)   
D)

Exam 9: Long-Term Assets

The federal government grants patents for

A capital expenditure is an expenditure that benefits only the current accounting period.

Accelerated depreciation assumes all of the following except that

Land and a building on the land are purchased for $310,000.The appraised values of the land and building are $66,000 and $264,000,respectively.The cost allocated to the building should be

Federal tax law does not allow the rapid write-off of plant assets.

When discarding equipment,depreciation need not by updated.

According to generally accepted accounting principles,most expenditures for intangible assets acquired from others should be treated as revenue expenditures when incurred.

When a company can prove it is worth more than its balance sheet indicates,it may record some goodwill.

One argument in favor of accelerated depreciation is that the asset's benefit is greater in the earlier years.

Research and development costs normally are capitalized and amortized over the estimated sales life of the product developed.

The cost of assets acquired for a lump sum should be allocated equally among the acquired assets.

A machine was purchased for $50,000.It has a current carrying value of $32,500 and had a depreciable cost of $45,000.Its estimated residual value must have been

A capital expenditure will result in an immediate increase in long-term assets.

Which of the following would not be a basis for estimating the useful life of a piece of equipment?

When calculating a partial year's depreciation,the length of time an asset has been owned usually is rounded to the nearest month.This rounding practice is justified by the principle or rule of

Goodwill reflects all the factors that allow a company to earn a higher-than-market rate of return on its assets.

Leasehold improvements become the property of the lessor at the end of the lease.

Dechter Company acquired a mine for $1,800,000 which has an estimated residual value of $300,000 and contains an estimated 1,500,000 tons of coal.If 230,000 tons of coal are mined and sold during the first year,the entry to record the depletion charge is:

Uses of Accounting Information and the Financial Statements

Measurement Concepts: Recording Business Transactions

Measuring Business Income: Adjusting the Accounts

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Current Liabilities and Fair Value Accounting

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting and Cost Concepts

Costing Systems: Job Order Costing

Costing Systems: Process Costing

Value-Based Systems: Activity-Based Costing and Lean Accounting

Cost-Volume-Profit Analysis

The Budgeting Process

Flexible Budgets and Performance Analysis

Standard Costing and Variance Analysis

Short-Run Decision Analysis

Capital Investment Analysis

Pricing Decisions, including Target Costing and Transfer Pricing

Quality Management and Measurement

Accounting for Unincorporated Businesses

Accounting for Investments

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