Question 1

Which of the following is not a capital expenditure?

Accepted Answer

A) Advertising expenditures to introduce a new product line 
B) Sales tax paid in conjunction with the purchase of new machinery 
C) Installation of elevators to replace escalators 
D) An amount paid to acquire a patent with a remaining life of only three years 
A) Advertising expenditures to introduce a new product line 
B) Sales tax paid in conjunction with the purchase of new machinery 
C) Installation of elevators to replace escalators 
D) An amount paid to acquire a patent with a remaining life of only three years A

Question 2

Total stockholders' equity of Tucker Company is $4,000,000.The fair market value of Tucker 's net identifiable assets (assets less liabilities)is $5,000,000.Empire Corporation makes an offer to purchase Tucker 's entire business for $5,800,000.In this situation:

Accepted Answer

A) Tucker Company should report goodwill of $800,000 in its balance sheet. 
B) Tucker Company should report goodwill of $1,800,000 in its balance sheet. 
C) Empire Corporation is willing to pay $1,800,000 for goodwill generated by Tucker,and Empire will report this goodwill in its balance sheet if the purchase is finalized. 
D) Empire Corporation is willing to pay $800,000 for goodwill generated by Tucker,and Empire will report this goodwill in its balance sheet if the purchase is finalized. 
A) Tucker Company should report goodwill of $800,000 in its balance sheet. 
B) Tucker Company should report goodwill of $1,800,000 in its balance sheet. 
C) Empire Corporation is willing to pay $1,800,000 for goodwill generated by Tucker,and Empire will report this goodwill in its balance sheet if the purchase is finalized. 
D) Empire Corporation is willing to pay $800,000 for goodwill generated by Tucker,and Empire will report this goodwill in its balance sheet if the purchase is finalized. D

Question 3

International standards require that goodwill:

Accepted Answer

A) Be capitalized and amortized over 20 years or less. 
B) Be capitalized and amortized over 40 years or less. 
C) Be capitalized and reviewed annually and its value should be adjusted if impaired. 
D) Be expensed immediately. 
A) Be capitalized and amortized over 20 years or less. 
B) Be capitalized and amortized over 40 years or less. 
C) Be capitalized and reviewed annually and its value should be adjusted if impaired. 
D) Be expensed immediately. C

Question 4

Coca-Cola's famous name printed in distinctive typeface is an example of:

Accepted Answer

A) A trademark. 
B) A patent. 
C) A copyright. 
D) Goodwill. 
A) A trademark. 
B) A patent. 
C) A copyright. 
D) Goodwill.

Question 5

The fair market value of Lewis Company's net identifiable assets is $5,000,000.Martin Corporation purchases Lewis' entire business for $5,800,000.Which of the following statements is not correct?

Accepted Answer

A) Martin Corporation paid $800,000 for goodwill generated by Lewis Company. 
B) Martin feels that Lewis Company has the ability to generate earnings in excess of a normal return on net identifiable assets. 
C) Martin will record amortization expense over a period not to exceed 40 years. 
D) Martin Corporation will record $800,000 to goodwill,an intangible asset,which will be reported in its balance sheet. 
A) Martin Corporation paid $800,000 for goodwill generated by Lewis Company. 
B) Martin feels that Lewis Company has the ability to generate earnings in excess of a normal return on net identifiable assets. 
C) Martin will record amortization expense over a period not to exceed 40 years. 
D) Martin Corporation will record $800,000 to goodwill,an intangible asset,which will be reported in its balance sheet.

Question 6

Accelerated depreciation methods are used primarily in:

Accepted Answer

A) Income tax returns. 
B) The financial statements of small businesses. 
C) The financial statements of publicly owned corporations. 
D) Companies with computer-based accounting systems. 
A) Income tax returns. 
B) The financial statements of small businesses. 
C) The financial statements of publicly owned corporations. 
D) Companies with computer-based accounting systems.

Question 7

The term net identifiable assets means:

Accepted Answer

A) All assets minus all liabilities. 
B) All assets except goodwill,plus all liabilities. 
C) All assets except intangibles,minus all liabilities. 
D) All fixed assets less liabilities. 
A) All assets minus all liabilities. 
B) All assets except goodwill,plus all liabilities. 
C) All assets except intangibles,minus all liabilities. 
D) All fixed assets less liabilities.

Question 8

Depreciation;gains and losses in financial statements
In 2016,Amalfi,Inc.purchased equipment with an estimated 10-year life for $42,600.The residual value was estimated at $9,900.Amalfi uses straight-line depreciation and applies the half-year convention.
On April 18,2018,Amalfi closed one of its plants and sold this equipment for $33,600.Under these assumptions,compute the following for this equipment:

Accepted Answer

The answer of Depreciation;gains and losses in financial statements
In 2016,Amalfi,Inc.purchased...

Question 9

Intangible assets are assets used in business operations but which:

Accepted Answer

A) Lack physical substance. 
B) Cannot be sold. 
C) Have been depreciated below their estimated salvage values. 
D) Cannot be specifically identified. 
A) Lack physical substance. 
B) Cannot be sold. 
C) Have been depreciated below their estimated salvage values. 
D) Cannot be specifically identified.

Question 10

Wanda Company sold an asset for $10,000 on September 6,2018.The historical cost of the asset was $22,000,and the asset's accumulated depreciation at the date of sale was $14,500.Which of the following statements is correct?

Accepted Answer

A) Wanda will record a cash inflow from operating activities of $10,000 in its 2018 financial statements. 
B) Wanda will record a cash inflow from investing activities of $10,000 in its 2018 financial statements. 
C) Wanda will record a cash inflow from investing activities of $2,500 in its 2018 financial statements. 
D) Wanda will record no cash flows related to this asset on its 2018 statement of cash flows. 
A) Wanda will record a cash inflow from operating activities of $10,000 in its 2018 financial statements. 
B) Wanda will record a cash inflow from investing activities of $10,000 in its 2018 financial statements. 
C) Wanda will record a cash inflow from investing activities of $2,500 in its 2018 financial statements. 
D) Wanda will record no cash flows related to this asset on its 2018 statement of cash flows.

Question 11

Declining balance depreciation
On July 6,2017,Grayson purchased new machinery with an estimated useful life of 10 years.The cost of the equipment was $80,000,with a residual value of $8,000.
Compute the depreciation on this machinery in 2017 and 2018 using each of the following methods.

Accepted Answer

The answer of Declining balance depreciation
On July 6,2017,Grayson purchased new...

Question 12

The gain or loss on the disposal of a depreciable asset reported in financial statements often differs from that reported for income tax purposes.The principal reason for the difference is:

Accepted Answer

A) The cost of the asset is different for financial reporting and income tax purposes. 
B) The sales price of the asset is different for financial reporting and income tax purposes. 
C) Different depreciation methods have been used in financial statements and in income tax returns. 
D) The company has made an error because the same amount of gain or loss should appear in the income tax return as in the financial statements. 
A) The cost of the asset is different for financial reporting and income tax purposes. 
B) The sales price of the asset is different for financial reporting and income tax purposes. 
C) Different depreciation methods have been used in financial statements and in income tax returns. 
D) The company has made an error because the same amount of gain or loss should appear in the income tax return as in the financial statements.

Question 13

Estimating the useful life and residual value of an asset is the responsibility of the firm of independent accountants that audit the company.

Accepted Answer

A) True 
 B)False

Question 14

The rule of consistency is violated when a company uses one method of depreciation for financial statements and another method of depreciation for tax purposes.

Accepted Answer

A) True 
 B)False

Question 15

For depreciable property other than real estate,MACRS is based upon:

Accepted Answer

A) The declining-balance method. 
B) The straight-line method. 
C) A 10-year recovery period. 
D) The depreciation method and recovery period used by the company in its financial statements. 
A) The declining-balance method. 
B) The straight-line method. 
C) A 10-year recovery period. 
D) The depreciation method and recovery period used by the company in its financial statements.

Question 16

If an asset is determined to be impaired,it should be:

Accepted Answer

A) Depreciated only using the straight-line method. 
B) Written up to its historical cost. 
C) Reclassified as a liability. 
D) Written down to its fair market value. 
A) Depreciated only using the straight-line method. 
B) Written up to its historical cost. 
C) Reclassified as a liability. 
D) Written down to its fair market value.

Question 17

Various depreciation methods-two years
On September 6,2017,East River Tug Co.purchased a new tugboat for $400,000.The estimated life of the boat was 20 years,with an estimated residual value of $40,000.
Compute the depreciation on this tugboat in 2017 and 2018 using the following methods.Apply the half-year convention.(If necessary,round to the nearest dollar. )

Accepted Answer

The answer of Various depreciation methods-two years
On September 6,2017,East River...

Question 18

When a depreciable asset is sold at a price equal to its book value,a journal entry would include:

Accepted Answer

A) A credit to the asset account for its book value. 
B) A debit to accumulated depreciation. 
C) A credit to accumulated depreciation. 
D) A credit to cash. 
A) A credit to the asset account for its book value. 
B) A debit to accumulated depreciation. 
C) A credit to accumulated depreciation. 
D) A credit to cash.

Question 19

Land improvements are not subject to depreciation.

Accepted Answer

A) True 
 B)False

Question 20

[The following information applies to the questions displayed below.]
On April 30,2017,Tilton Products purchased machinery for $88,000.The useful life of this machinery is estimated at 8 years,with an $8,000 residual value.
-Assume that in its financial statements,Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month.Depreciation expense recognized on this machinery in 2017 and 2018 will be:

Accepted Answer

A) $2,333 in 2017 and $7,000 in 2018. 
B) $5,833 in 2017 and $10,000 in 2018. 
C) $6,667 in 2017 and $10,000 in 2018. 
D) $10,000 in 2017 and $10,000 in 2018. 
A) $2,333 in 2017 and $7,000 in 2018. 
B) $5,833 in 2017 and $10,000 in 2018. 
C) $6,667 in 2017 and $10,000 in 2018. 
D) $10,000 in 2017 and $10,000 in 2018.

Exam 9: Plant and Intangible Assets

Which of the following is not a capital expenditure?

Total stockholders' equity of Tucker Company is $4,000,000.The fair market value of Tucker 's net identifiable assets (assets less liabilities)is $5,000,000.Empire Corporation makes an offer to purchase Tucker 's entire business for $5,800,000.In this situation:

International standards require that goodwill:

Coca-Cola's famous name printed in distinctive typeface is an example of:

The fair market value of Lewis Company's net identifiable assets is $5,000,000.Martin Corporation purchases Lewis' entire business for $5,800,000.Which of the following statements is not correct?

Accelerated depreciation methods are used primarily in:

The term net identifiable assets means:

Intangible assets are assets used in business operations but which:

Wanda Company sold an asset for $10,000 on September 6,2018.The historical cost of the asset was $22,000,and the asset's accumulated depreciation at the date of sale was $14,500.Which of the following statements is correct?

Declining balance depreciation On July 6,2017,Grayson purchased new machinery with an estimated useful life of 10 years.The cost of the equipment was $80,000,with a residual value of $8,000. Compute the depreciation on this machinery in 2017 and 2018 using each of the following methods.

The gain or loss on the disposal of a depreciable asset reported in financial statements often differs from that reported for income tax purposes.The principal reason for the difference is:

Estimating the useful life and residual value of an asset is the responsibility of the firm of independent accountants that audit the company.

The rule of consistency is violated when a company uses one method of depreciation for financial statements and another method of depreciation for tax purposes.

For depreciable property other than real estate,MACRS is based upon:

If an asset is determined to be impaired,it should be:

When a depreciable asset is sold at a price equal to its book value,a journal entry would include:

Land improvements are not subject to depreciation.

Accounting: Information for Decision Making

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Statement of Cash Flows

Financial Statement Analysis

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Job Order Cost Systems and Overhead Allocations

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Costing and the Value Chain

Cost-Volume-Profit Analysis

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Rewarding Business Performance

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the Time Value of Money: Future Amounts and Present Values

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