Question 1

Gain or loss on the disposal of assets is determined by comparing the disposed asset's book value to the market value of any assets received.

Accepted Answer

A) True 
 B)False

Question 2

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a salvage value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the amount of depreciation expense that should be recorded for the second year?

Accepted Answer

A) $48,133. 
B) $45,600. 
C) $22,500. 
D) $23,750. 
E) $81,600. 
A) $48,133. 
B) $45,600. 
C) $22,500. 
D) $23,750. 
E) $81,600.

Question 3

Equipment with a cost of $103,000 and accumulated depreciation of $82,000 was sold for $20,000. The journal entry to record the sale would include:

Accepted Answer

A) A debit to Cash for $21,000. 
B) A credit to Accumulated Depreciation for $82,000. 
C) A credit to Equipment for $103,000. 
D) A credit to Cash for $20,000. 
E) A debit to Loss on Disposal of Equipment for $21,000. 
A) A debit to Cash for $21,000. 
B) A credit to Accumulated Depreciation for $82,000. 
C) A credit to Equipment for $103,000. 
D) A credit to Cash for $20,000. 
E) A debit to Loss on Disposal of Equipment for $21,000.

Question 4

Crestfield leases office space for $7,000 per month. On January 3, the company incurs $12,000 to improve the leased office space. These improvements are expected to yield benefits for 10 years. Crestfield has 4 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the improvements?

Accepted Answer

A) Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200. 
B) Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000. 
C) Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200. 
D) Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000. 
E) Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000. 
A) Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200. 
B) Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000. 
C) Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200. 
D) Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000. 
E) Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000.

Question 5

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method?

Accepted Answer

A) $680. 
B) $2,320. 
C) $2,720. 
D) $600. 
E) $300. 
A) $680. 
B) $2,320. 
C) $2,720. 
D) $600. 
E) $300.

Question 6

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the double-declining-balance method.

Accepted Answer

A) $66,000. 
B) $54,000. 
C) $24,000. 
D) $25,800. 
E) $48,000. 
A) $66,000. 
B) $54,000. 
C) $24,000. 
D) $25,800. 
E) $48,000.

Question 7

A machine originally had an estimated useful life of 6 years, but after 4 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:

Accepted Answer

A) 2 years. 
B) 4 years. 
C) 6 years. 
D) 16 years. 
E) 10 years. 
A) 2 years. 
B) 4 years. 
C) 6 years. 
D) 16 years. 
E) 10 years.

Question 8

Depreciation:

Accepted Answer

A) Measures the decline in market value of an asset. 
B) Measures physical deterioration of an asset. 
C) Is the process of allocating the cost of a plant asset to expense. 
D) Is an outflow of cash from the use of a plant asset. 
E) Is applied to land. 
A) Measures the decline in market value of an asset. 
B) Measures physical deterioration of an asset. 
C) Is the process of allocating the cost of a plant asset to expense. 
D) Is an outflow of cash from the use of a plant asset. 
E) Is applied to land.

Question 9

Spears Co. had net sales of $35,400 million. Its average total assets for the period were $14,700 million. Spears' total asset turnover equals:

Accepted Answer

A) 0.42. 
B) 0.35. 
C) 1.48. 
D) 2.41. 
E) 3.54. 
A) 0.42. 
B) 0.35. 
C) 1.48. 
D) 2.41. 
E) 3.54.

Question 10

A company purchased a cooling system on January 2 for $225,000. The system had an estimated useful life of 15 years. On January 3 of the thirteenth year, the company completed a renovation of the system at a cost of $33,000 and now expects the system to be more efficient and last 8 years beyond the original estimate. The company uses the straight-line method of depreciation.
(a) Prepare the journal entry at January 3, to record the renovation of the cooling system.
(b) Prepare the journal entry at December 31, to record the revised depreciation for the thirteenth year.

Accepted Answer

@#IMG-DLM& $225,000 - ($225,00

Question 11

What is depreciation of plant assets? What are the factors necessary in computing depreciation?

Accepted Answer

Depreciation is the process of allocatin

Question 12

A company sold a machine that originally cost $90,000 for $28,000 cash. The accumulated depreciation on this machine was $47,000 at the time of the sale. What was the company's gain or loss on this sale?

Accepted Answer

The answer of A company sold a machine that originally...

Question 13

Amortization is:

Accepted Answer

A) The systematic allocation of the cost of an intangible asset to expense over its estimated useful life. 
B) The process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its use. 
C) The process of allocating the cost of natural resources to periods when they are consumed. 
D) An accelerated form of expensing an asset's cost. 
E) Also called depletion. 
A) The systematic allocation of the cost of an intangible asset to expense over its estimated useful life. 
B) The process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its use. 
C) The process of allocating the cost of natural resources to periods when they are consumed. 
D) An accelerated form of expensing an asset's cost. 
E) Also called depletion.

Question 14

Define plant assets and identify the four primary issues in accounting for them.

Accepted Answer

Plant assets are tangible assets used in

Question 15

Total asset cost plus depreciation expense equals book value.

Accepted Answer

A) True 
 B)False

Question 16

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a salvage value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. In the second year, production increased to 19,000 units. Using the units-of-production method, what is the book value of the machine at the end of the second year?

Accepted Answer

A) $108,400. 
B) $144,400. 
C) $81,600. 
D) $190,000. 
E) $180,000. 
A) $108,400. 
B) $144,400. 
C) $81,600. 
D) $190,000. 
E) $180,000.

Question 17

On April 1 of the current year, a company disposed of a truck that had cost $20,000. The truck had a salvage value of $2,000, and a useful life of 5 years. The accounting records showed accumulated depreciation for this truck of $8,100 as of April 1 of the current year. The asset was discarded after an accident, and $10,500 cash was received from an insurance claim. Prepare the journal entry to record the disposal of the truck.

Accepted Answer

The answer of On April 1 of the current year,...

Question 18

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Accepted Answer

Revenue expenditures do not materially i

Question 19

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

Accepted Answer

A) True 
 B)False

Question 20

Natural resources are:

Accepted Answer

A) Consumable assets such standing timber, mineral deposits, and oil and gas fields. 
B) Tangible assets used in the operations of the business. 
C) Current assets because they are depleted. 
D) Not subject to allocation to expense over their useful lives. 
E) Depleted using a straight-line method. 
A) Consumable assets such standing timber, mineral deposits, and oil and gas fields. 
B) Tangible assets used in the operations of the business. 
C) Current assets because they are depleted. 
D) Not subject to allocation to expense over their useful lives. 
E) Depleted using a straight-line method.

Gain or loss on the disposal of assets is determined by comparing the disposed asset's book value to the market value of any assets received.

Equipment with a cost of $103,000 and accumulated depreciation of $82,000 was sold for $20,000. The journal entry to record the sale would include:

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method?

A machine originally had an estimated useful life of 6 years, but after 4 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:

Depreciation:

Spears Co. had net sales of $35,400 million. Its average total assets for the period were $14,700 million. Spears' total asset turnover equals:

What is depreciation of plant assets? What are the factors necessary in computing depreciation?

A company sold a machine that originally cost $90,000 for $28,000 cash. The accumulated depreciation on this machine was $47,000 at the time of the sale. What was the company's gain or loss on this sale?

Amortization is:

Define plant assets and identify the four primary issues in accounting for them.

Total asset cost plus depreciation expense equals book value.

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

Natural resources are:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 8: Reporting and Analyzing Long-Term Assets

Gain or loss on the disposal of assets is determined by comparing the disposed asset's book value to the market value of any assets received.

Equipment with a cost of $103,000 and accumulated depreciation of $82,000 was sold for $20,000. The journal entry to record the sale would include:

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method?

A machine originally had an estimated useful life of 6 years, but after 4 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:

Depreciation:

Spears Co. had net sales of $35,400 million. Its average total assets for the period were $14,700 million. Spears' total asset turnover equals:

What is depreciation of plant assets? What are the factors necessary in computing depreciation?

A company sold a machine that originally cost $90,000 for $28,000 cash. The accumulated depreciation on this machine was $47,000 at the time of the sale. What was the company's gain or loss on this sale?

Amortization is:

Define plant assets and identify the four primary issues in accounting for them.

Total asset cost plus depreciation expense equals book value.

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

Natural resources are:

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters