Question 1

The gain on the disposal of equipment is recognized when:

Accepted Answer

A) The book value of the equipment is greater than the value received. 
B) The book value of the equipment is less than the value received. 
C) A salvage value exists. 
D) A gain should not be recognized on the disposal of an asset. 
A) The book value of the equipment is greater than the value received. 
B) The book value of the equipment is less than the value received. 
C) A salvage value exists. 
D) A gain should not be recognized on the disposal of an asset.

Question 2

Estimating the useful life and residual value of an asset is the responsibility of the firm of independent accountants that audit the company.

Accepted Answer

A) True 
 B)False

Question 3

Land is purchased for $256,000.Additional costs include a $15,300 fee to a broker,a survey fee of $2,400,$1,750 to construct a fence,and a legal fee of $8,500.What is the cost of the land?

Accepted Answer

A) $256,000. 
B) $271,300. 
C) $283,950. 
D) $282,200. 
A) $256,000. 
B) $271,300. 
C) $283,950. 
D) $282,200.

Question 4

The inclusion of the intangible asset goodwill in the financial statements of a company indicates:

Accepted Answer

A) That the company has a favorable reputation with its customers. 
B) A monopoly position in the industry or superior management. 
C) An unbroken record of annual earnings and dividends. 
D) That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets. 
A) That the company has a favorable reputation with its customers. 
B) A monopoly position in the industry or superior management. 
C) An unbroken record of annual earnings and dividends. 
D) That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets.

Question 5

The basic purpose of the matching principle is to allocate the cost of an asset to expense over the years in which the asset contributes to revenue.Current accounting practice does not strictly apply this principle to expenditures for:

Accepted Answer

A) Natural resources. 
B) Research and development. 
C) Trademarks. 
D) Equipment. 
A) Natural resources. 
B) Research and development. 
C) Trademarks. 
D) Equipment.

Question 6

Once the estimated life is determined for a depreciable asset it can never be changed.

Accepted Answer

A) True 
 B)False

Question 7

Glouchester Associates sold office equipment for cash of $142,000.The accumulated depreciation at date of sale amounted to $138,000,and a gain of $18,000 was recognized on the sale.The original cost of the asset must have been:

Accepted Answer

A) $260,000. 
B) $262,000. 
C) $280,000. 
D) $156,000. 
A) $260,000. 
B) $262,000. 
C) $280,000. 
D) $156,000.

Question 8

Coca-Cola's famous name printed in distinctive typeface is an example of:

Accepted Answer

A) A trademark. 
B) A patent. 
C) A copyright. 
D) Goodwill. 
A) A trademark. 
B) A patent. 
C) A copyright. 
D) Goodwill.

Question 9

An accelerated depreciation method:

Accepted Answer

A) Results in reporting higher earnings every year. 
B) Depreciates an asset over a shorter life than does the straight-line method. 
C) Recognizes more depreciation expense in the early years of an asset's useful life and less in the later years. 
D) Is required for assets that become technologically obsolete before they physically wear out. 
A) Results in reporting higher earnings every year. 
B) Depreciates an asset over a shorter life than does the straight-line method. 
C) Recognizes more depreciation expense in the early years of an asset's useful life and less in the later years. 
D) Is required for assets that become technologically obsolete before they physically wear out.

Question 10

The legal life of most patents is:

Accepted Answer

A) 5 years. 
B) 20 years. 
C) 40 years. 
D) 50 years. 
A) 5 years. 
B) 20 years. 
C) 40 years. 
D) 50 years.

Question 11

When straight-line depreciation is in use,the depreciation rate of an asset is equal to:

Accepted Answer

A) 1 divided by the life of the asset. 
B) 1 divided by the cost of the asset. 
C) The cost of the asset divided by the life of the asset. 
D) The cost of the asset less its salvage value divided by the life of the asset. 
A) 1 divided by the life of the asset. 
B) 1 divided by the cost of the asset. 
C) The cost of the asset divided by the life of the asset. 
D) The cost of the asset less its salvage value divided by the life of the asset.

Question 12

On April 8,2015,Jupitor Corp.acquired equipment at a cost of $480,000.The equipment is to be depreciated by the straight-line method over six years with no provision for salvage value.Depreciation for fractional years is computed by rounding the ownership period to the nearest month.Depreciation expense recognized in 2015 will be:

Accepted Answer

A) $53,333. 
B) $66,667. 
C) $60,000. 
D) $80,000. 
A) $53,333. 
B) $66,667. 
C) $60,000. 
D) $80,000.

Question 13

The half-year convention permits a company to take six months depreciation during the first year of an asset's life even if the asset was purchased on January 25th.

Accepted Answer

A) True 
 B)False

Question 14

The cost of a new windshield wiper on a delivery vehicle would be classified as:

Accepted Answer

A) A capital expenditure. 
B) A revenue expenditure. 
C) Part of the cost of goods sold. 
D) An unusual and infrequent expense. 
A) A capital expenditure. 
B) A revenue expenditure. 
C) Part of the cost of goods sold. 
D) An unusual and infrequent expense.

Question 15

Accumulated depletion is a contra-equity account and is recorded in the stockholders' equity section of the balance sheet.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

Capital expenditures are recorded as ass

Question 17

Trade-ins
Dietz owned a delivery van with a book value of $2,000.It traded this old van in on a new one which cost $16,000.The dealer allowed Dietz a trade-in allowance of $3,500 on the old van,and Dietz paid the remainder in cash.
Compute the following:

Accepted Answer

The answer of Trade-ins
Dietz owned a delivery van with a...

Question 18

Natural resources such as oil or minerals are categorized as intangible assets.

Accepted Answer

A) True 
 B)False

Question 19

An oil reserve is depreciated because of physical deterioration or obsolescence.

Accepted Answer

A) True 
 B)False

Question 20

Land improvements are not subject to depreciation.

Accepted Answer

A) True 
 B)False

Exam 9: Plant and Intangible Assets

The gain on the disposal of equipment is recognized when:

Estimating the useful life and residual value of an asset is the responsibility of the firm of independent accountants that audit the company.

Land is purchased for $256,000.Additional costs include a $15,300 fee to a broker,a survey fee of $2,400,$1,750 to construct a fence,and a legal fee of $8,500.What is the cost of the land?

The inclusion of the intangible asset goodwill in the financial statements of a company indicates:

The basic purpose of the matching principle is to allocate the cost of an asset to expense over the years in which the asset contributes to revenue.Current accounting practice does not strictly apply this principle to expenditures for:

Once the estimated life is determined for a depreciable asset it can never be changed.

Glouchester Associates sold office equipment for cash of $142,000.The accumulated depreciation at date of sale amounted to $138,000,and a gain of $18,000 was recognized on the sale.The original cost of the asset must have been:

Coca-Cola's famous name printed in distinctive typeface is an example of:

An accelerated depreciation method:

The legal life of most patents is:

When straight-line depreciation is in use,the depreciation rate of an asset is equal to:

The half-year convention permits a company to take six months depreciation during the first year of an asset's life even if the asset was purchased on January 25th.

The cost of a new windshield wiper on a delivery vehicle would be classified as:

Accumulated depletion is a contra-equity account and is recorded in the stockholders' equity section of the balance sheet.

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

Trade-ins Dietz owned a delivery van with a book value of $2,000.It traded this old van in on a new one which cost $16,000.The dealer allowed Dietz a trade-in allowance of $3,500 on the old van,and Dietz paid the remainder in cash. Compute the following:

Natural resources such as oil or minerals are categorized as intangible assets.

An oil reserve is depreciated because of physical deterioration or obsolescence.

Land improvements are not subject to depreciation.

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

Filters

The half-year convention permits a company to take six months depreciation during the first year of an asset's life even if the asset was purchased on January 25^th.