Question 1

Revenue expenditures:

Accepted Answer

A)  Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities. 
B)  Are known as balance sheet expenditures. 
C)  Extend the asset's useful life. 
D)  Substantially benefit future periods. 
E)  Are debited to asset accounts. 
A)  Are additional costs of plant assets that do not materially increase the asset's life or its productive capabilities. 
B)  Are known as balance sheet expenditures. 
C)  Extend the asset's useful life. 
D)  Substantially benefit future periods. 
E)  Are debited to asset accounts.

Question 2

Total depreciation expense over an asset's useful life will be identical under all methods of depreciation.

Accepted Answer

A) True 
 B)False

Question 3

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Accepted Answer

A) True 
 B)False

Question 4

Plant assets include:

Accepted Answer

A)  Land. 
B)  Land improvements. 
C)  Buildings. 
D)  Machinery and equipment. 
E)  All of these. 
A)  Land. 
B)  Land improvements. 
C)  Buildings. 
D)  Machinery and equipment. 
E)  All of these.

Question 5

Amortization:

Accepted Answer

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

Question 6

The straight-line depreciation method and the double-declining-balance depreciation method:

Accepted Answer

A)  Produce the same total depreciation over an asset's useful life. 
B)  Produce the same depreciation expense each year. 
C)  Produce the same book value each year. 
D)  Are acceptable for tax purposes only. 
E)  Are the only acceptable methods of depreciation for financial reporting. 
A)  Produce the same total depreciation over an asset's useful life. 
B)  Produce the same depreciation expense each year. 
C)  Produce the same book value each year. 
D)  Are acceptable for tax purposes only. 
E)  Are the only acceptable methods of depreciation for financial reporting.

Question 7

Inadequacy refers to:

Accepted Answer

A)  The insufficient capacity of a company's plant assets to meet the company's growing production demands. 
B)  An asset that is worn out. 
C)  An asset that is no longer useful in producing goods and services. 
D)  The condition where the salvage value is too small to replace the asset. 
E)  The condition where the asset's salvage value is less than its cost. 
A)  The insufficient capacity of a company's plant assets to meet the company's growing production demands. 
B)  An asset that is worn out. 
C)  An asset that is no longer useful in producing goods and services. 
D)  The condition where the salvage value is too small to replace the asset. 
E)  The condition where the asset's salvage value is less than its cost.

Question 8

Mason Company sold a piece of equipment for $25,000 cash on December 31 after recording the annual depreciation on the asset. The equipment had an original cost of $92,500 and accumulated depreciation of $60,000. Prepare the general journal entry to record the sale of this asset.

Accepted Answer

The answer of Mason Company sold a piece of equipment...

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

A company discarded a display case originally purchased for $8,000. The accumulated depreciation was $7,200. The company should recognize a(an):

Accepted Answer

A)  $0 gain or loss. 
B)  $800 loss. 
C)  $800 gain. 
D)  $8,000 loss. 
E)  $7,200 loss. 
A)  $0 gain or loss. 
B)  $800 loss. 
C)  $800 gain. 
D)  $8,000 loss. 
E)  $7,200 loss.

Question 11

A company purchased a heating 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 heating system.
(b) Prepare the journal entry at December 31, to record the revised depreciation for the thirteenth year.

Accepted Answer

The answer of A company purchased a heating system on...

Question 12

Four main accounting issues for plant assets are: ________________________, ____________________________, ________________________, ____________________________.

Accepted Answer

1 Computing of the costs of plant assets

Question 13

Ordinary repairs:

Accepted Answer

A)  Are expenditures to keep an asset in normal operating condition. 
B)  Are necessary if an asset is to perform to expectations over its useful life. 
C)  Are treated as expenses. 
D)  Include cleaning, lubricating, and normal adjusting. 
E)  All of these. 
A)  Are expenditures to keep an asset in normal operating condition. 
B)  Are necessary if an asset is to perform to expectations over its useful life. 
C)  Are treated as expenses. 
D)  Include cleaning, lubricating, and normal adjusting. 
E)  All of these.

Question 14

The total cost of an asset less its accumulated depreciation is called:

Accepted Answer

A)  Historical cost. 
B)  Book value. 
C)  Present value. 
D)  Current (market) value. 
E)  Replacement cost. 
A)  Historical cost. 
B)  Book value. 
C)  Present value. 
D)  Current (market) value. 
E)  Replacement cost.

Question 15

_________________________ are capital expenditures that make a plant asset more productive; they often involve adding a component to an asset or replacing one of its old components with a better one, and do not always increase an asset's life.

Accepted Answer

The answer of _________________________ are capital expenditures that make a...

Question 16

Dart had net sales of $35,404 million. Its average total assets for the period were $14,502 million. Dart's total asset turnover equals:

Accepted Answer

A)  0.40. 
B)  0.35. 
C)  1.45. 
D)  2.44. 
E)  3.50. 
A)  0.40. 
B)  0.35. 
C)  1.45. 
D)  2.44. 
E)  3.50.

Question 17

Extraordinary repairs are expenditures extending the asset's useful life beyond its original estimate, and are capital expenditures because they benefit future periods.

Accepted Answer

A) True 
 B)False

Question 18

A company had a building destroyed by fire. The building originally cost $650,000, and its accumulated depreciation as of the date of the fire was $300,000. The company received $400,000 cash from an insurance policy that covered the building and will use that money to help rebuild. Prepare the single journal entry to record the destruction of the building and the receipt of cash from the insurance company.

Accepted Answer

The answer of A company had a building destroyed by...

Question 19

The purchase of a property that included land, building, and improvements is called a lump-sum purchase.

Accepted Answer

A) True 
 B)False

Question 20

Land improvements are:

Accepted Answer

A)  Assets that increase the usefulness of land, and like land, are not depreciated. 
B)  Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation. 
C)  Included in the cost of the land account. 
D)  Expensed in the period incurred. 
E)  Also called basket purchases. 
A)  Assets that increase the usefulness of land, and like land, are not depreciated. 
B)  Assets that increase the usefulness of land, but that have a limited useful life and are subject to depreciation. 
C)  Included in the cost of the land account. 
D)  Expensed in the period incurred. 
E)  Also called basket purchases.

Exam 10: Plant Assets, Natural Resources, and Intangibles

Revenue expenditures:

Total depreciation expense over an asset's useful life will be identical under all methods of depreciation.

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Plant assets include:

Amortization:

The straight-line depreciation method and the double-declining-balance depreciation method:

Inadequacy refers to:

Mason Company sold a piece of equipment for $25,000 cash on December 31 after recording the annual depreciation on the asset. The equipment had an original cost of $92,500 and accumulated depreciation of $60,000. Prepare the general journal entry to record the sale of this asset.

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

A company discarded a display case originally purchased for $8,000. The accumulated depreciation was $7,200. The company should recognize a(an):

Four main accounting issues for plant assets are: ________________________, ____________________________, ________________________, ____________________________.

Ordinary repairs:

The total cost of an asset less its accumulated depreciation is called:

_________________________ are capital expenditures that make a plant asset more productive; they often involve adding a component to an asset or replacing one of its old components with a better one, and do not always increase an asset's life.

Dart had net sales of $35,404 million. Its average total assets for the period were $14,502 million. Dart's total asset turnover equals:

Extraordinary repairs are expenditures extending the asset's useful life beyond its original estimate, and are capital expenditures because they benefit future periods.

The purchase of a property that included land, building, and improvements is called a lump-sum purchase.

Land improvements are:

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

Filters

Four main accounting issues for plant assets are: , , , ____.