Question 1

Asset impairment occurs when the fair value of a long-term asset exceeds its carrying value.

Accepted Answer

A) True 
 B)False

Question 2

Overhauling a company's cooling system is an example of an extraordinary repair.

Accepted Answer

A) True 
 B)False

Question 3

A tractor held by a farm equipment company for sale to farmers is classified as a long-term asset.

Accepted Answer

A) True 
 B)False

Question 4

In general,how does one determine whether or not an expenditure should be included in the acquisition cost of property,plant,and equipment?

Accepted Answer

The acquisition cost of proper

Question 5

If net cash flows from operating activities total $115,000,net cash flows from financing activities total $50,000,net cash flows from investing activities total $60,000,purchases of plant assets total $30,000,dividends total $12,000,and sales of plant assets total $17,000,the free cash flow equals

Accepted Answer

A) $90,000. 
B) $174,000. 
C) $116,000. 
D) $56,000. 
A) $90,000. 
B) $174,000. 
C) $116,000. 
D) $56,000.

Question 6

Which of the following statements is true about successful efforts accounting?

Accepted Answer

A) It is a depreciation method 
B) All costs are recorded as assets and then depleted over the resource's useful life. 
C) The cost of a dry well would be written off immediately as a loss. 
D) The cost of successful exploration is recorded as an asset and is not written off. 
A) It is a depreciation method 
B) All costs are recorded as assets and then depleted over the resource's useful life. 
C) The cost of a dry well would be written off immediately as a loss. 
D) The cost of successful exploration is recorded as an asset and is not written off.

Question 7

The cost of repairing a machine damaged during installation should be charged as an operating expense.

Accepted Answer

A) True 
 B)False

Question 8

When the trade-in allowance exceeds the carrying value of an asset exchanged,a gain is realized.

Accepted Answer

A) True 
 B)False

Question 9

Horshack Mining Company purchases a gravel pit for $5,000,000.It estimates that 10,000,000 tons of gravel can be extracted over the pit's useful life.If 1,860,000 tons are extracted and sold during the first year,the entry to record depletion expense will include

Accepted Answer

A) debit to Depletion Expense,930,000; credit to Accumulated Depletion,930,000. 
B) debit to Depletion Expense,232,500; credit to Accumulated Depletion,232,500. 
C) debit to Accumulated Depletion,930,000; credit to Depletion Expense,930,000. 
D) debit to Depletion Expense,465,000; credit to Accumulated Depletion,465,000. 
A) debit to Depletion Expense,930,000; credit to Accumulated Depletion,930,000. 
B) debit to Depletion Expense,232,500; credit to Accumulated Depletion,232,500. 
C) debit to Accumulated Depletion,930,000; credit to Depletion Expense,930,000. 
D) debit to Depletion Expense,465,000; credit to Accumulated Depletion,465,000.

Question 10

Land and a building on the land are purchased for $310,000.The appraised values of the land and building are $66,000 and $264,000,respectively.The cost allocated to the building should be

Accepted Answer

A) $25,200. 
B) $109,800. 
C) $135,000. 
D) $248,000. 
A) $25,200. 
B) $109,800. 
C) $135,000. 
D) $248,000.

Question 11

A company purchases for $48,000 an asset that has a useful life of six years and no salvage value.After two years,the company spends $8,000 for a major overhaul that will extend the machine's useful life four years beyond the original six.Assuming straight-line depreciation,how much depreciation should be taken in year 3?

Accepted Answer

A) $4,000 
B) $5,000 
C) $5,600 
D) $8,000 
A) $4,000 
B) $5,000 
C) $5,600 
D) $8,000

Question 12

The exclusive right to sell a product within a certain geographic area is called a

Accepted Answer

A) leasehold. 
B) franchise. 
C) patent. 
D) copyright. 
A) leasehold. 
B) franchise. 
C) patent. 
D) copyright.

Question 13

If an asset costs $41,000,has a residual value of $3,000,and has a useful life of five years,the entry to record depreciation in the second year,using the double-declining-balance method,is

Accepted Answer

A) debit to Depreciation Expense,9,430; credit to Cash,9,430. 
B) debit to Depreciation Expense,9,840; credit to Accumulated Depreciation,9,840 
C) debit to Depreciation Expense,10,250; credit to Accumulated Depreciation,10,250 
D) debit to Accumulated Depreciation,10,660; credit to Depreciation Expense,10,660 
A) debit to Depreciation Expense,9,430; credit to Cash,9,430. 
B) debit to Depreciation Expense,9,840; credit to Accumulated Depreciation,9,840 
C) debit to Depreciation Expense,10,250; credit to Accumulated Depreciation,10,250 
D) debit to Accumulated Depreciation,10,660; credit to Depreciation Expense,10,660

Question 14

A truck is purchased for $70,000.It has a five-year life and a $10,000 residual value.Under the double-declining-balance method,what is the accumulated depreciation after two years?

Accepted Answer

A) $38,400 
B) $42,400 
C) $44,800 
D) $51,200 
A) $38,400 
B) $42,400 
C) $44,800 
D) $51,200

Question 15

A reduction in carrying value as a result of impairment is recorded as a loss.

Accepted Answer

A) True 
 B)False

Question 16

Boulder Company had net cash flows of $150,000 from operating activities.It extended $60,000 for purchases of plant assets,sold plant assets for $5,000,and paid dividends of $70,000.The company's free cash flow is

Accepted Answer

A) $25,000. 
B) $50,000. 
C) $60,000. 
D) $75,000. 
A) $25,000. 
B) $50,000. 
C) $60,000. 
D) $75,000.

Question 17

Suppose an accounting intern mistakenly calculated depreciation expense on the Land account.She assigned it a 50-year life and a residual value of $10,000,000.Using the cost of the land (assume it was $811,000,000)and the straight-line method of depreciation,discuss the dollar effect of this error on pretax earnings and total assets.

Accepted Answer

The depreciable amount would be the $811

Question 18

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of on January 1.Assume that the truck was traded for a similar truck having a price of $13,000,that an $1,800 trade-in was allowed,and that the balance was paid in cash.The amount of the gain or loss recognized on this transaction would be

Accepted Answer

A) a $1,200 loss. 
B) a $1,200 gain. 
C) a $2,400 loss. 
D) no gain or loss recognized. 
A) a $1,200 loss. 
B) a $1,200 gain. 
C) a $2,400 loss. 
D) no gain or loss recognized.

Question 19

On January 2,2013,Topanga Company purchased a machine for $90,000.The machine has a five-year estimated useful life and a $6,000 estimated residual value.In addition,the company expects to use the machine 200,000 hours.Assuming that the machine was used 35,000 hours during 2014,complete the following chart.If a figure cannot be determined,indicate so by placing an "X" in the box.(Show your work.)

Accepted Answer

@#IMG-DLM& ^a ($90,000 - $6,000)F1F1F1S1F1F1F10 5 ^b

Question 20

An asset that cost $24,000 and has accumulated depreciation of $18,000 is sold for $5,200.The entry to record the sale includes

Accepted Answer

A) no gain or loss. 
B) a debit to Loss on Sale of Asset for 800. 
C) a credit to Loss on Sale of Asset for 18,800. 
D) a credit to Gain on Sale of Asset for 800. 
A) no gain or loss. 
B) a debit to Loss on Sale of Asset for 800. 
C) a credit to Loss on Sale of Asset for 18,800. 
D) a credit to Gain on Sale of Asset for 800.

Asset impairment occurs when the fair value of a long-term asset exceeds its carrying value.

Overhauling a company's cooling system is an example of an extraordinary repair.

A tractor held by a farm equipment company for sale to farmers is classified as a long-term asset.

In general,how does one determine whether or not an expenditure should be included in the acquisition cost of property,plant,and equipment?

If net cash flows from operating activities total $115,000,net cash flows from financing activities total $50,000,net cash flows from investing activities total $60,000,purchases of plant assets total $30,000,dividends total $12,000,and sales of plant assets total $17,000,the free cash flow equals

Which of the following statements is true about successful efforts accounting?

The cost of repairing a machine damaged during installation should be charged as an operating expense.

When the trade-in allowance exceeds the carrying value of an asset exchanged,a gain is realized.

Horshack Mining Company purchases a gravel pit for $5,000,000.It estimates that 10,000,000 tons of gravel can be extracted over the pit's useful life.If 1,860,000 tons are extracted and sold during the first year,the entry to record depletion expense will include

Land and a building on the land are purchased for $310,000.The appraised values of the land and building are $66,000 and $264,000,respectively.The cost allocated to the building should be

The exclusive right to sell a product within a certain geographic area is called a

If an asset costs $41,000,has a residual value of $3,000,and has a useful life of five years,the entry to record depreciation in the second year,using the double-declining-balance method,is

A truck is purchased for $70,000.It has a five-year life and a $10,000 residual value.Under the double-declining-balance method,what is the accumulated depreciation after two years?

A reduction in carrying value as a result of impairment is recorded as a loss.

Boulder Company had net cash flows of $150,000 from operating activities.It extended $60,000 for purchases of plant assets,sold plant assets for $5,000,and paid dividends of $70,000.The company's free cash flow is

An asset that cost $24,000 and has accumulated depreciation of $18,000 is sold for $5,200.The entry to record the sale includes

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

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Exam 10: Long -Term Assets

Asset impairment occurs when the fair value of a long-term asset exceeds its carrying value.

Overhauling a company's cooling system is an example of an extraordinary repair.

A tractor held by a farm equipment company for sale to farmers is classified as a long-term asset.

In general,how does one determine whether or not an expenditure should be included in the acquisition cost of property,plant,and equipment?

If net cash flows from operating activities total $115,000,net cash flows from financing activities total $50,000,net cash flows from investing activities total $60,000,purchases of plant assets total $30,000,dividends total $12,000,and sales of plant assets total $17,000,the free cash flow equals

Which of the following statements is true about successful efforts accounting?

The cost of repairing a machine damaged during installation should be charged as an operating expense.

When the trade-in allowance exceeds the carrying value of an asset exchanged,a gain is realized.

Horshack Mining Company purchases a gravel pit for $5,000,000.It estimates that 10,000,000 tons of gravel can be extracted over the pit's useful life.If 1,860,000 tons are extracted and sold during the first year,the entry to record depletion expense will include

Land and a building on the land are purchased for $310,000.The appraised values of the land and building are $66,000 and $264,000,respectively.The cost allocated to the building should be

The exclusive right to sell a product within a certain geographic area is called a

If an asset costs $41,000,has a residual value of $3,000,and has a useful life of five years,the entry to record depreciation in the second year,using the double-declining-balance method,is

A truck is purchased for $70,000.It has a five-year life and a $10,000 residual value.Under the double-declining-balance method,what is the accumulated depreciation after two years?

A reduction in carrying value as a result of impairment is recorded as a loss.

Boulder Company had net cash flows of $150,000 from operating activities.It extended $60,000 for purchases of plant assets,sold plant assets for $5,000,and paid dividends of $70,000.The company's free cash flow is

An asset that cost $24,000 and has accumulated depreciation of $18,000 is sold for $5,200.The entry to record the sale includes

Accounting Principles and the Financial Statements

Analyzing and Recording Business Transactions

Adjusting the Accounts

Completing the Accounting Cycle

Foundations of Financial Reporting and the Classified Balance Sheet

Accounting for Merchandising Operations

Supplement: Accounting for Merchandising Operations

Inventories

Cash and Internal Control

Receivables

Current Liabilities and Fair Value Accounting

Accounting for Partnerships

Accounting for Corporations

Long Term Liabilities

The Statement of Cash Flows

Supplement: the Statement of Cash Flows

Financial Statement Analysis

Accounting for Investments

Filters