Question 1

For depreciable property other than real estate, MACRS is based upon:

Accepted Answer

A)  Either the 150% or 200% declining-balance method. 
B)  The straight-line method. 
C)  A 10-year recovery period. 
D)  The depreciation method and recovery period used by the company in its financial statements. 
A)  Either the 150% or 200% declining-balance method. 
B)  The straight-line method. 
C)  A 10-year recovery period. 
D)  The depreciation method and recovery period used by the company in its financial statements.

Question 2

Cage Corporation purchases Presley Company's entire business for $2,700,000. The fair market value of Presley's net identifiable assets is $2,400,000.

Accepted Answer

A)  Presley should record goodwill of $300,000. 
B)  Cage paid $300,000 for goodwill generated by Presley. 
C)  Cage should charge the $300,000 excess paid for Presley Company directly to expense. 
D)  Presley should record amortization over a period not to exceed 40 years. 
A)  Presley should record goodwill of $300,000. 
B)  Cage paid $300,000 for goodwill generated by Presley. 
C)  Cage should charge the $300,000 excess paid for Presley Company directly to expense. 
D)  Presley should record amortization over a period not to exceed 40 years.

Question 3

Which of the following would not be amortized?

Accepted Answer

A)  Oil well. 
B)  Copyright. 
C)  Franchise fee. 
D)  Patent. 
A)  Oil well. 
B)  Copyright. 
C)  Franchise fee. 
D)  Patent.

Question 4

In the fixed-percentage-of-declining-balance depreciation method, the book value of the asset is multiplied by:

Accepted Answer

A)  An increasing depreciation rate. 
B)  A constant depreciation rate. 
C)  A decreasing depreciation rate. 
D)  A rate that changes each year but is determined from a table. 
A)  An increasing depreciation rate. 
B)  A constant depreciation rate. 
C)  A decreasing depreciation rate. 
D)  A rate that changes each year but is determined from a table.

Question 5

If an accelerated depreciation method is used for an asset with a useful life of five years, more depreciation expense would be recorded in the third year than in the fifth year.

Accepted Answer

A) True 
 B)False

Question 6

Compute the gain or loss on the sale of the stallion. $______________ (gain/loss)

Accepted Answer

The answer of Compute the gain or loss on the...

Question 7

Intangible assets are assets used in business operations but which:

Accepted Answer

A)  Lack physical substance. 
B)  Cannot be sold. 
C)  Have been depreciated below their estimated salvage values. 
D)  Cannot be specifically identified. 
A)  Lack physical substance. 
B)  Cannot be sold. 
C)  Have been depreciated below their estimated salvage values. 
D)  Cannot be specifically identified.

Question 8

Accelerated depreciation methods are used primarily in:

Accepted Answer

A)  Income tax returns. 
B)  The financial statements of small businesses. 
C)  The financial statements of publicly owned corporations. 
D)  Companies with computer-based accounting systems. 
A)  Income tax returns. 
B)  The financial statements of small businesses. 
C)  The financial statements of publicly owned corporations. 
D)  Companies with computer-based accounting systems.

Question 9

Research and development costs should be capitalized to match the period of benefit.

Accepted Answer

A) True 
 B)False

Question 10

Assume Lloyd uses straight-line depreciation with the half-year convention. Depreciation expense to be recognized in 2009 (the year of purchase) is:

Accepted Answer

A)  $7,400. 
B)  $8,400. 
C)  $3,700. 
D)  Some other amount. 
A)  $7,400. 
B)  $8,400. 
C)  $3,700. 
D)  Some other amount.

Question 11

Yale Company purchased equipment having an invoice price of $21,500. The terms of sale were 2/10, n/30, and Yale paid within the discount period. In addition, Yale paid a $320 delivery charge, $350 installation charge, and $1,183 sales tax. The amount recorded as the cost of this equipment is:

Accepted Answer

A)  $21,070. 
B)  $21,500. 
C)  $21,740. 
D)  $22,923 
A)  $21,070. 
B)  $21,500. 
C)  $21,740. 
D)  $22,923

Question 12

Throughout the current year, Calverton Company treated sales taxes paid on purchases of plant assets as revenue expenditures. As a result, the current year's:

Accepted Answer

A)  Net income is overstated. 
B)  Revenue is overstated. 
C)  Depreciation expense is understated. 
D)  None of the above; payments of sales taxes should be treated as revenue expenditures. 
A)  Net income is overstated. 
B)  Revenue is overstated. 
C)  Depreciation expense is understated. 
D)  None of the above; payments of sales taxes should be treated as revenue expenditures.

Question 13

Briefly explain the difference between a revenue expenditure and a capital expenditure.

Accepted Answer

Capital expenditures are recorded as ass

Question 14

The term plant assets refers to long-lived assets acquired for use in business operations, rather than for resale to customers.

Accepted Answer

A) True 
 B)False

Exam 9: Plant and Intangible Assets

For depreciable property other than real estate, MACRS is based upon:

Cage Corporation purchases Presley Company's entire business for $2,700,000. The fair market value of Presley's net identifiable assets is $2,400,000.

Which of the following would not be amortized?

In the fixed-percentage-of-declining-balance depreciation method, the book value of the asset is multiplied by:

If an accelerated depreciation method is used for an asset with a useful life of five years, more depreciation expense would be recorded in the third year than in the fifth year.

Compute the gain or loss on the sale of the stallion. $______________ (gain/loss)

Intangible assets are assets used in business operations but which:

Accelerated depreciation methods are used primarily in:

Research and development costs should be capitalized to match the period of benefit.

Assume Lloyd uses straight-line depreciation with the half-year convention. Depreciation expense to be recognized in 2009 (the year of purchase) is:

Yale Company purchased equipment having an invoice price of $21,500. The terms of sale were 2/10, n/30, and Yale paid within the discount period. In addition, Yale paid a $320 delivery charge, $350 installation charge, and $1,183 sales tax. The amount recorded as the cost of this equipment is:

Throughout the current year, Calverton Company treated sales taxes paid on purchases of plant assets as revenue expenditures. As a result, the current year's:

Briefly explain the difference between a revenue expenditure and a capital expenditure.

The term plant assets refers to long-lived assets acquired for use in business operations, rather than for resale to customers.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Management Accounting: a Business Partner

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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