Question 1

Intangible assets include:

Accepted Answer

A)  Patents. 
B)  Copyrights. 
C)  Trademarks. 
D)  Goodwill. 
E)  All of these. 
A)  Patents. 
B)  Copyrights. 
C)  Trademarks. 
D)  Goodwill. 
E)  All of these.

Question 2

A machine was purchased for $37,000 and depreciated for five years on a straight-line basis under the assumption it would have a ten-year life and a $1,000 salvage value. At the beginning of the machine's sixth year it was recognized the machine had three years of remaining life instead of five and that at the end of the remaining three years its salvage value would be $1,600. What amount of depreciation should be recorded in each of the machine's remaining three years?

Accepted Answer

To calculate the depreciation for the ma

Question 3

Betterments are a type of capital expenditure.

Accepted Answer

A) True 
 B)False

Question 4

Goodwill:

Accepted Answer

A)  Is not amortized, but is tested annually for impairment. 
B)  Is amortized using the straight-line method. 
C)  Is amortized using the units-of-production method. 
D)  May be amortized using either the straight-line or units-of-production method. 
E)  Is never amortized or tested for impairment. 
A)  Is not amortized, but is tested annually for impairment. 
B)  Is amortized using the straight-line method. 
C)  Is amortized using the units-of-production method. 
D)  May be amortized using either the straight-line or units-of-production method. 
E)  Is never amortized or tested for impairment.

Question 5

_____________________ is an estimate of an asset's value at the end of its benefit period.

Accepted Answer

Salvage va

Question 6

Amortization is the process of allocating the cost of natural resources to periods when they are consumed.

Accepted Answer

A) True 
 B)False

Question 7

The going concern assumption supports the reporting of plant assets at book value rather than market value.

Accepted Answer

A) True 
 B)False

Question 8

Carmel Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. Compute the depletion expense for the first year assuming 418,000 tons were mined.

Accepted Answer

A)  $1,233,100. 
B)  $1,358,500. 
C)  $1,300,000. 
D)  $1,180,000. 
E)  $1,280,000. 
A)  $1,233,100. 
B)  $1,358,500. 
C)  $1,300,000. 
D)  $1,180,000. 
E)  $1,280,000.

Question 9

The cost of an intangible asset is systematically allocated to depreciation expense over its estimated useful life.

Accepted Answer

A) True 
 B)False

Question 10

Salta Company installs a manufacturing machine in its factory at the beginning of the year at a cost of $87,000. The machine's useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machines' second year depreciation under the units-of-production method.

Accepted Answer

A)  $16,900. 
B)  $16,000. 
C)  $17,400. 
D)  $18,379. 
E)  $20,880. 
A)  $16,900. 
B)  $16,000. 
C)  $17,400. 
D)  $18,379. 
E)  $20,880.

Question 11

_______________________ are expenditures that extend an asset's useful life beyond its original estimate.

Accepted Answer

Extraordin

Question 12

The relevant factor(s) in computing depreciation include:

Accepted Answer

A)  Cost. 
B)  Salvage value. 
C)  Useful life. 
D)  Depreciation method. 
E)  All of these. 
A)  Cost. 
B)  Salvage value. 
C)  Useful life. 
D)  Depreciation method. 
E)  All of these.

Question 13

Salvage value is an estimate of an asset's value at the end of its benefit period.

Accepted Answer

A) True 
 B)False

Question 14

Monte Ray leases office space for $7,000 per month. On January 3, Monte Ray incurs $75,000 to improve his leased office space. These improvements are expected to yield benefits for 8 years. Ray has 6 years remaining on his 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 $12,500; credit Accumulated Amortization $12,500. 
B)  Debit Depletion Expense $12,500; credit Accumulated Depletion $12,500. 
C)  Debit Depreciation Expense $12,500; credit Accumulated Depreciation $12,500. 
D)  Debit Depletion Expense $9,375; credit Accumulated Depletion $9,375. 
E)  Debit Amortization Expense $9,375; credit Accumulated Amortization $9,375. 
A)  Debit Amortization Expense $12,500; credit Accumulated Amortization $12,500. 
B)  Debit Depletion Expense $12,500; credit Accumulated Depletion $12,500. 
C)  Debit Depreciation Expense $12,500; credit Accumulated Depreciation $12,500. 
D)  Debit Depletion Expense $9,375; credit Accumulated Depletion $9,375. 
E)  Debit Amortization Expense $9,375; credit Accumulated Amortization $9,375.

Question 15

_____________ are the federal income tax rules for depreciating assets.

Accepted Answer

MACRS (Mod

Question 16

Depreciation expense is calculated using estimates of an asset's salvage value and useful life.

Accepted Answer

A) True 
 B)False

Question 17

Accounting for the exchange of assets depends on whether the transaction has commercial substance; commercial substance implies that it alters the company's future cash flows.

Accepted Answer

A) True 
 B)False

Question 18

Extraordinary repairs:

Accepted Answer

A)  Are revenue expenditures. 
B)  Extend an asset's useful life beyond its original estimate. 
C)  Are credited to accumulated depreciation. 
D)  Are additional costs of plants assets that do not materially increase the asset's life. 
E)  Are expensed as incurred. 
A)  Are revenue expenditures. 
B)  Extend an asset's useful life beyond its original estimate. 
C)  Are credited to accumulated depreciation. 
D)  Are additional costs of plants assets that do not materially increase the asset's life. 
E)  Are expensed as incurred.

Question 19

A company purchased a machine on January 1 of the current year for $750,000. Calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 20,000 hours, with a salvage value of $75,000). During the machine's 5-year life its hourly usage was: 3,000; 4,000; 5,000; 5,000; and 3,000 hours.

Accepted Answer

The answer of A company purchased a machine on January...

Question 20

A leasehold refers to the rights the lessor grants to the lessee under the terms of the lease.

Accepted Answer

A) True 
 B)False

Exam 10: Plant Assets, Natural Resources, and Intangibles

Intangible assets include:

Betterments are a type of capital expenditure.

Goodwill:

_____________________ is an estimate of an asset's value at the end of its benefit period.

Amortization is the process of allocating the cost of natural resources to periods when they are consumed.

The going concern assumption supports the reporting of plant assets at book value rather than market value.

The cost of an intangible asset is systematically allocated to depreciation expense over its estimated useful life.

_______________________ are expenditures that extend an asset's useful life beyond its original estimate.

The relevant factor(s) in computing depreciation include:

Salvage value is an estimate of an asset's value at the end of its benefit period.

_____________ are the federal income tax rules for depreciating assets.

Depreciation expense is calculated using estimates of an asset's salvage value and useful life.

Accounting for the exchange of assets depends on whether the transaction has commercial substance; commercial substance implies that it alters the company's future cash flows.

Extraordinary repairs:

A leasehold refers to the rights the lessor grants to the lessee under the terms of the lease.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Managerial Accounting Concepts and Principles

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

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