Question 1

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. E

Question 2

Natural resources:

Accepted Answer

A)  Include standing timber, mineral deposits, and oil and gas fields. 
B)  Are also called wasting assets. 
C)  Are long-term assets. 
D)  Are depleted. 
E)  All of these. 
A)  Include standing timber, mineral deposits, and oil and gas fields. 
B)  Are also called wasting assets. 
C)  Are long-term assets. 
D)  Are depleted. 
E)  All of these. E

Question 3

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  False

Question 4

Depreciation is higher and income is lower in the short run when using accelerated versus straight-line methods.

Accepted Answer

A) True 
 B)False

Question 5

The owner of 2am Dessert Bar understands that managing property, plant and equipment is important to her business' success. What are some of the issues that she identify as important?

Accepted Answer

One issue is making wise investments in

Question 6

Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000. Cambria asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale. The journal entry to record the disposal of the asset would involve all of the following except:

Accepted Answer

A)  Debit Accumulated Depreciation $64,000. 
B)  Credit Equipment $93,500. 
C)  Debit Loss on Disposal of Equipment $3,500. 
D)  Credit Gain on Disposal of Equipment $3,500. 
E)  Debit Cash $33,000. 
A)  Debit Accumulated Depreciation $64,000. 
B)  Credit Equipment $93,500. 
C)  Debit Loss on Disposal of Equipment $3,500. 
D)  Credit Gain on Disposal of Equipment $3,500. 
E)  Debit Cash $33,000.

Question 7

Ordinary repairs are expenditures that keep assets in normal, good operating condition.

Accepted Answer

A) True 
 B)False

Question 8

What are the general accounting procedures for recording asset disposals?

Accepted Answer

The first step in the accounting process

Question 9

Depletion:

Accepted Answer

A)  Is the process of allocating the cost of natural resources to periods in which they are consumed. 
B)  Is also called depreciation. 
C)  Is also called amortization. 
D)  Is an unrealized expense reported in equity. 
E)  Is the process of allocating the cost of intangibles to periods in which they are used. 
A)  Is the process of allocating the cost of natural resources to periods in which they are consumed. 
B)  Is also called depreciation. 
C)  Is also called amortization. 
D)  Is an unrealized expense reported in equity. 
E)  Is the process of allocating the cost of intangibles to periods in which they are used.

Question 10

___________________ are additional costs of property, plant and equipment that do not materially increase the asset's life or productive capabilities.

Accepted Answer

Revenue ex

Question 11

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

Accepted Answer

A) True 
 B)False

Question 12

A company needed a new building. It found a suitable location with an existing old building on the land. The company reached an agreement to buy the land and the building for $960,000 cash. The old building was demolished to make way for the needed new building. Following is information regarding the demolition of the old building and construction of the new one:
Prepare a single journal entry to record the above costs assuming all transactions are paid in cash.

Accepted Answer

The answer of A company needed a new building. It...

Question 13

Property, plant and equipment can be disposed of by discarding, selling, or exchanging them.

Accepted Answer

A) True 
 B)False

Question 14

A company paid $314,000 for a machine that was expected to last five years and to have a residual value of $40,000. During the third year of the machine's life, $37,000 cash was paid for replacement parts that were expected to increase the machine's productivity by 10% each year. Prepare the journal entry to record the $37,000 cost incurred in the third year.

Accepted Answer

The answer of A company paid $314,000 for a machine...

Question 15

Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000. Cambria asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale.

Accepted Answer

A)  $3,500 loss. 
B)  $5,500 gain. 
C)  $5,500 loss. 
D)  $3,000 gain. 
E)  $3,500 gain. 
A)  $3,500 loss. 
B)  $5,500 gain. 
C)  $5,500 loss. 
D)  $3,000 gain. 
E)  $3,500 gain.

Question 16

A company purchased a rope braiding machine for $190,000. The machine has a useful life of 8 years and a residual value of $10,000. It is estimated that the machine could produce 750,000 units of climbing rope over its useful life. In the first year, 105,000 units were produced. In the second year, production increased to 109,000 units. Using the units-of-production method, what is the amount of depreciation that should be recorded for the second year?

Accepted Answer

A)  $25,200. 
B)  $26,160. 
C)  $26,660. 
D)  $27,613. 
E)  $53,160. 
A)  $25,200. 
B)  $26,160. 
C)  $26,660. 
D)  $27,613. 
E)  $53,160.

Question 17

The following information is available on a depreciable asset owned by First Bank & Trust: The asset's carrying amount is $70,000 on October 1, Year 3. On that date, management determines that the asset's residual value should be $5,000 rather than the original estimate of $10,000. Based on this information, the amount of depreciation expense the company should recognize during the last three months of Year 3 would be:

Accepted Answer

A)  $2,187.50 
B)  $1,718.75 
C)  $2,031.25 
D)  $2,321.43 
E)  $1,964.29 
A)  $2,187.50 
B)  $1,718.75 
C)  $2,031.25 
D)  $2,321.43 
E)  $1,964.29

Question 18

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 19

A company purchased land with a building for a total cost of $2,570,000 ($500,000 paid in cash and the balance on a long-term note). It was estimated that the land and building had market values of $900,000 and $2,100,000, respectively.
Determine the cost to be apportioned to the land and to the building and prepare the journal entry to record the acquisition.

Accepted Answer

The answer of A company purchased land with a building...

Question 20

A company purchased a truck on October 1 of the current year at a cost of $40,000. The truck is expected to last six years and has a residual value of $2,200. The company's annual accounting period ends on December 31.
1. What is the depreciation expense for the current year, assuming the straight-line method is used?
2. What is the depreciation expense for the current year, assuming the double-declining-balance method is used?

Accepted Answer

1. [($40,000 - $2,200)/6] F1F1

Ordinary repairs:

Natural resources:

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.

Depreciation is higher and income is lower in the short run when using accelerated versus straight-line methods.

The owner of 2am Dessert Bar understands that managing property, plant and equipment is important to her business' success. What are some of the issues that she identify as important?

Ordinary repairs are expenditures that keep assets in normal, good operating condition.

What are the general accounting procedures for recording asset disposals?

Depletion:

___________________ are additional costs of property, plant and equipment that do not materially increase the asset's life or productive capabilities.

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

Property, plant and equipment can be disposed of by discarding, selling, or exchanging them.

Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000. Cambria asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale.

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:

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

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

Filters

Exam 10: Long-Term Assets

Ordinary repairs:

Natural resources:

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.

Depreciation is higher and income is lower in the short run when using accelerated versus straight-line methods.

The owner of 2am Dessert Bar understands that managing property, plant and equipment is important to her business' success. What are some of the issues that she identify as important?

Ordinary repairs are expenditures that keep assets in normal, good operating condition.

What are the general accounting procedures for recording asset disposals?

Depletion:

___________________ are additional costs of property, plant and equipment that do not materially increase the asset's life or productive capabilities.

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

Property, plant and equipment can be disposed of by discarding, selling, or exchanging them.

Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000. Cambria asks $35,000 for the equipment but sells the equipment for $33,000. Compute the amount of gain or loss on the sale.

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:

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

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

Filters