Question 1

A copyright:

Accepted Answer

A)  Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years. 
B)  Gives its owner an exclusive right to manufacture and sell a patented item or to use a process for 20 years. 
C)  Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years. 
D)  Is the amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately. 
E)  Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years. 
A)  Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years. 
B)  Gives its owner an exclusive right to manufacture and sell a patented item or to use a process for 20 years. 
C)  Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years. 
D)  Is the amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately. 
E)  Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years.

Question 2

Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems.

Accepted Answer

A) True 
 B)False

Question 3

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 4

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

Accepted Answer

A) True 
 B)False

Question 5

All of the following statements regarding increases in the value of plant assets under U.S. GAAP and IFRS are True except:

Accepted Answer

A)  U.S. GAAP prohibits companies to record increases in the value of plant assets. 
B)  IFRS permits upward asset revaluations. 
C)  Under IFRS, a company can reverse an impairment and record that increase in income. 
D)  Under U.S. GAAP, a company can reverse an impairment and can include it in comprehensive income. 
E)  Under IFRS, an impairment increase beyond as asset's original cost can be recorded in comprehensive income. 
A)  U.S. GAAP prohibits companies to record increases in the value of plant assets. 
B)  IFRS permits upward asset revaluations. 
C)  Under IFRS, a company can reverse an impairment and record that increase in income. 
D)  Under U.S. GAAP, a company can reverse an impairment and can include it in comprehensive income. 
E)  Under IFRS, an impairment increase beyond as asset's original cost can be recorded in comprehensive income.

Question 6

Total asset cost plus depreciation expense equals book value.

Accepted Answer

A) True 
 B)False

Question 7

An asset's book value is $18,000 on June 30, Year 6. The asset is being depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 7 for $15,000, the company should record:

Accepted Answer

A)  A loss on sale of $1,500. 
B)  A gain on sale of $1,500. 
C)  Neither a gain nor a loss is recognized on this type of transaction. 
D)  A gain on sale of $3,000. 
E)  A loss on sale of $3,000. 
A)  A loss on sale of $1,500. 
B)  A gain on sale of $1,500. 
C)  Neither a gain nor a loss is recognized on this type of transaction. 
D)  A gain on sale of $3,000. 
E)  A loss on sale of $3,000.

Question 8

A depreciable asset costing $75,000 is purchased on September 1, Year 1. The asset is estimated to have a salvage value of $10,000 and an estimated useful life of 4 years. Double-declining-balance depreciation is used. If the asset is sold on December 31, Year 3 for $13,000, the journal entry to record the sale will include:

Accepted Answer

A)  A credit to gain on sale for $8,000. 
B)  A debit to loss on sale for $2,625. 
C)  A credit to accumulated depreciation for $59,375. 
D)  A debit to loss on sale for $3,042. 
E)  A credit to gain on sale for $4,979. 
A)  A credit to gain on sale for $8,000. 
B)  A debit to loss on sale for $2,625. 
C)  A credit to accumulated depreciation for $59,375. 
D)  A debit to loss on sale for $3,042. 
E)  A credit to gain on sale for $4,979.

Question 9

A company purchased mining property containing 15,000,000 tons of ore for $4,875,000. In Year 1, it mined 789,000 tons of ore and in Year 2, it mined 1,235,000 tons. Calculate the depletion expense for Year 1 and Year 2.

Accepted Answer

The answer of A company purchased mining property containing 15,000,000...

Question 10

Land is not subject to depreciation because it has an unlimited life. This means that items which increase the usefulness of the land such as parking lots are not depreciated.

Accepted Answer

A) True 
 B)False

Question 11

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 double-declining-balance 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 12

A company purchased a computer system on January 1, Year 1, for $1,600,000. Prepare the journal entries to record depreciation for the first 6 months of Year 3 and the sale of the computer assuming it is sold on July 1, Year 3, for $1,000,000 cash. The straight-line method of depreciation was used based on an expected life of six years and a salvage value of $130,000.

Accepted Answer

To record depreciation for the first 6 m

Question 13

Marble Company purchased a machine costing $120,000, terms 1/10, n/30. The machine was shipped FOB shipping point and freight charges were $2,000. The machine requires special mounting and wiring connections costing $10,000. When installing the machine, $1,300 in damages occurred. Materials costing $1,500 are used in testing and adjusting the machine to produce a satisfactory product. Compute the cost recorded for this machine assuming Marble paid within the discount period.

Accepted Answer

A)  $131,100. 
B)  $134,800. 
C)  $132,300. 
D)  $133,600. 
E)  $130,300. 
A)  $131,100. 
B)  $134,800. 
C)  $132,300. 
D)  $133,600. 
E)  $130,300.

Question 14

Lomax Enterprises purchased a depreciable asset for $22,000 on March 1, Year 1. The asset will be depreciated using the straight-line method over its four-year useful life. Assuming the asset's salvage value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, Year 4?

Accepted Answer

A)  $5,000.00 
B)  $4,166.67 
C)  $16,666.68 
D)  $20,000.00 
E)  $19,166.67 
A)  $5,000.00 
B)  $4,166.67 
C)  $16,666.68 
D)  $20,000.00 
E)  $19,166.67

Question 15

The three main factors in computing depreciation are: ___________________, ___________________, __________________.

Accepted Answer

1 Cost; 2

Question 16

Obsolescence:

Accepted Answer

A)  Occurs when an asset is at the end of its useful life. 
B)  Refers to a plant asset that is no longer useful in producing goods and services with a competitive advantage. 
C)  Refers to the insufficient capacity of a company's plant assets to meet the company's productive demands. 
D)  Occurs when an asset's salvage value is less than its replacement cost. 
E)  Does not affect plant assets. 
A)  Occurs when an asset is at the end of its useful life. 
B)  Refers to a plant asset that is no longer useful in producing goods and services with a competitive advantage. 
C)  Refers to the insufficient capacity of a company's plant assets to meet the company's productive demands. 
D)  Occurs when an asset's salvage value is less than its replacement cost. 
E)  Does not affect plant assets.

Question 17

On July 1 of the current year, Botox Mining Co. pays $5,400,000 for land estimated to contain 7,200,000 tons of recoverable ore. It installs machinery on July 3 costing $864,000 that has an 8 year life and no salvage value and is capable of mining the ore deposit in six years. The company removes and sells 745,000 tons of ore during its first six months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined.
Prepare entries to record (a) the purchase of the ore deposit, (b) the costs and installation of the machinery, (c) the depletion assuming the land has a zero salvage value, and (d) the depreciation on the machinery.

Accepted Answer

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

Question 18

A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

Accepted Answer

A)  0.82. 
B)  0.90. 
C)  1.09. 
D)  1.11. 
E)  1.26. 
A)  0.82. 
B)  0.90. 
C)  1.09. 
D)  1.11. 
E)  1.26.

Question 19

A total asset turnover ratio of 3.5 indicates that:

Accepted Answer

A)  For every $1 in sales, the firm acquired $3.50 in assets during the period. 
B)  For every $1 in assets, the firm produced $3.50 in net sales during the period. 
C)  For every $1 in assets, the firm earned gross profit of $3.50 during the period. 
D)  For every $1 in assets, the firm earned $3.50 in net income. 
E)  For every $1 in assets, the firm paid $3.50 in expenses during the period. 
A)  For every $1 in sales, the firm acquired $3.50 in assets during the period. 
B)  For every $1 in assets, the firm produced $3.50 in net sales during the period. 
C)  For every $1 in assets, the firm earned gross profit of $3.50 during the period. 
D)  For every $1 in assets, the firm earned $3.50 in net income. 
E)  For every $1 in assets, the firm paid $3.50 in expenses during the period.

Question 20

Plant assets are:

Accepted Answer

A)  Tangible assets used in the operation of a business that have a useful life of more than one accounting period. 
B)  Current assets. 
C)  Held for sale. 
D)  Intangible assets used in the operations of a business that have a useful life of more than one accounting period. 
E)  Tangible assets used in the operation of business that have a useful life of less than one accounting period. 
A)  Tangible assets used in the operation of a business that have a useful life of more than one accounting period. 
B)  Current assets. 
C)  Held for sale. 
D)  Intangible assets used in the operations of a business that have a useful life of more than one accounting period. 
E)  Tangible assets used in the operation of business that have a useful life of less than one accounting period.

A copyright:

Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems.

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.

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

All of the following statements regarding increases in the value of plant assets under U.S. GAAP and IFRS are True except:

Total asset cost plus depreciation expense equals book value.

An asset's book value is $18,000 on June 30, Year 6. The asset is being depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 7 for $15,000, the company should record:

A company purchased mining property containing 15,000,000 tons of ore for $4,875,000. In Year 1, it mined 789,000 tons of ore and in Year 2, it mined 1,235,000 tons. Calculate the depletion expense for Year 1 and Year 2.

Land is not subject to depreciation because it has an unlimited life. This means that items which increase the usefulness of the land such as parking lots are not depreciated.

The three main factors in computing depreciation are: _________, _, __________.

Obsolescence:

A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

A total asset turnover ratio of 3.5 indicates that:

Plant assets 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

Exam 10: Plant Assets, Natural Resources, and Intangibles

A copyright:

Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems.

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.

The units-of-production method of depreciation charges a varying amount of expense for each period of an asset's useful life depending on its usage.

All of the following statements regarding increases in the value of plant assets under U.S. GAAP and IFRS are True except:

Total asset cost plus depreciation expense equals book value.

An asset's book value is $18,000 on June 30, Year 6. The asset is being depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 7 for $15,000, the company should record:

A company purchased mining property containing 15,000,000 tons of ore for $4,875,000. In Year 1, it mined 789,000 tons of ore and in Year 2, it mined 1,235,000 tons. Calculate the depletion expense for Year 1 and Year 2.

Land is not subject to depreciation because it has an unlimited life. This means that items which increase the usefulness of the land such as parking lots are not depreciated.

The three main factors in computing depreciation are: ___________________, ___________________, __________________.

Obsolescence:

A company had average total assets of $897,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

A total asset turnover ratio of 3.5 indicates that:

Plant assets 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

The three main factors in computing depreciation are: _________, _, __________.