Question 1

Which of the following assets generally is required to be tested at least annually for impairment?

Accepted Answer

A)  Machinery 
B)  Patent 
C)  Renewable broadcast license 
D)  Copyright 
A)  Machinery 
B)  Patent 
C)  Renewable broadcast license 
D)  Copyright C

Question 2

The 2014 annual report of Fracking,Inc. ,provides the following disclosures regarding its oil and gas operations:
   During 2014,the company reported exploration expenses totaling $306 million,and depreciation,depletion,and amortization totaling $1,198 million.The amount of capitalized costs for the fiscal years ending December 31,2014,and 2013,were:
   Fracking uses the successful-efforts method to account for exploration costs.
Required:

Accepted Answer

Capitalized costs of property totaling $3,495 million and having a net capitalized cost of $1,821 million ($3,495 - $1,674)were retired or otherwise disposed of.Determination of the gain or loss is not feasible due to a lack of information.

Question 3

Which of the following depreciation methods most closely approximates the method used to deplete the cost of natural resources?

Accepted Answer

A)  Straight-line method 
B)  Double-declining-balance method 
C)  Sum-of-the-years'-digits method 
D)  Units-of-production method 
A)  Straight-line method 
B)  Double-declining-balance method 
C)  Sum-of-the-years'-digits method 
D)  Units-of-production method D

Question 4

When the estimate of an asset's useful life is changed,

Accepted Answer

A)  depreciation expense for all past periods must be recalculated. 
B)  there is no change in the amount of depreciation expense recorded for future years. 
C)  only the depreciation expense in the remaining years is changed. 
D)  None of these are true. 
A)  depreciation expense for all past periods must be recalculated. 
B)  there is no change in the amount of depreciation expense recorded for future years. 
C)  only the depreciation expense in the remaining years is changed. 
D)  None of these are true.

Question 5

When an exchange of similar assets involves a gain,

Accepted Answer

A)  the recorded amount of the new asset is the cost of the old asset plus any cash paid. 
B)  the recorded amount of the new asset is the net book value of the old asset plus any cash paid. 
C)  the recorded amount of the new asset is its fair market value less any cash paid. 
D)  None of these are true. 
A)  the recorded amount of the new asset is the cost of the old asset plus any cash paid. 
B)  the recorded amount of the new asset is the net book value of the old asset plus any cash paid. 
C)  the recorded amount of the new asset is its fair market value less any cash paid. 
D)  None of these are true.

Question 6

The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were

Accepted Answer

A)  less than current market value. 
B)  greater than cost. 
C)  greater than book value. 
D)  less than book value. 
A)  less than current market value. 
B)  greater than cost. 
C)  greater than book value. 
D)  less than book value.

Question 7

Raptor Company owns a tract of land that it purchased in 2008 for $200,000.The land is held as a future plant site and has a fair market value of $280,000 on July 1,2014.Talon Company also owns a tract of land held as a future plant site.Talon paid $360,000 for the land in 2013 and the land has a fair market value of $380,000 on July 1,2014.On this date,Raptor exchanged its land and paid $100,000 cash for the land owned by Talon.The exchange had commercial substance.At what amount should Raptor record the land acquired in the exchange?

Accepted Answer

A)  $280,000 
B)  $300,000 
C)  $320,000 
D)  $380,000 
A)  $280,000 
B)  $300,000 
C)  $320,000 
D)  $380,000

Question 8

Which of the following statements is the assumption on which straight-line depreciation is based?

Accepted Answer

A)  The operating efficiency of the asset decreases in later years. 
B)  Service value declines as a function of obsolescence rather than time. 
C)  Service value declines as a function of time rather than use. 
D)  Physical wear and tear are more important than economic obsolescence. 
A)  The operating efficiency of the asset decreases in later years. 
B)  Service value declines as a function of obsolescence rather than time. 
C)  Service value declines as a function of time rather than use. 
D)  Physical wear and tear are more important than economic obsolescence.

Question 9

On December 2,2014,Loofa Company,which operates a furniture rental business,traded in a used delivery truck with a carrying amount of $5,400 for a new delivery truck having a list price of $16,000 and paid a cash difference of $7,500 to the dealer.The used truck had a fair value of $6,000 on the date of the exchange.The exchange has commercial substance.At what amount should the new truck be recorded on Loofa's books?

Accepted Answer

A)  $10,600 
B)  $12,900 
C)  $13,500 
D)  $16,000 
A)  $10,600 
B)  $12,900 
C)  $13,500 
D)  $16,000

Question 10

The Chisholm Company purchased a machine on November 1,2005,for $148,000.At the time of acquisition,the machine was estimated to have a useful life of ten years and an estimated salvage value of $4,000.Chisholm has recorded monthly depreciation using the straight-line method.On July 1,2014,the machine was sold for $13,000.What should be the loss recognized from the sale of the machine?

Accepted Answer

A)  $4,000 
B)  $5,000 
C)  $10,200 
D)  $13,000 
A)  $4,000 
B)  $5,000 
C)  $10,200 
D)  $13,000

Question 11

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

Accepted Answer

A)  Partial recognition 
B)  Immediate recognition 
C)  Systematic and rational allocation 
D)  Associating cause and effect 
A)  Partial recognition 
B)  Immediate recognition 
C)  Systematic and rational allocation 
D)  Associating cause and effect

Question 12

The Bromley Company purchased a tooling machine in 2004 for $120,000.The machine was being depreciated on the straight-line method over an estimated useful life of 20 years,with no salvage value.At the beginning of 2014,when the machine had been in use for ten years,the company paid $20,000 to overhaul the machine.As a result of this improvement,the company estimated that the useful life of the machine would be extended an additional five years.What would be the depreciation expense recorded for the machine in 2014?

Accepted Answer

A)  $4,000 
B)  $5,333 
C)  $6,000 
D)  $7,333 
A)  $4,000 
B)  $5,333 
C)  $6,000 
D)  $7,333

Question 13

Lex Soaps purchased a machine on January 1,2013,for $18,000 cash.The machine has an estimated useful life of four years and a salvage value of $4,700.Lex uses the double-declining-balance method of depreciation for all its assets.What will be the machine's book value as of December 31,2014?

Accepted Answer

A)  $5,100 
B)  $4,700 
C)  $4,500 
D)  $4,300 
A)  $5,100 
B)  $4,700 
C)  $4,500 
D)  $4,300

Question 14

In January,Fanning Corporation entered into a contract to acquire a new machine for its factory.The machine,which had a cash price of $400,000,was paid for as follows:   Prior to the machine's use,installation costs of $10,000 were incurred.The machine has an estimated useful life of ten years and an estimated salvage value of $10,000.What should Hunter record as depreciation expense for the first year under the straight-line method?

Accepted Answer

A)  $38,100 
B)  $39,100 
C)  $40,000 
D)  $41,000 
A)  $38,100 
B)  $39,100 
C)  $40,000 
D)  $41,000

Question 15

Lovejoy Co.purchased a patent on January 1,2011,for $714,000.The patent was being amortized over its remaining legal life of 15 years expiring on January 1,2026.During 2014,Lovejoy determined that the economic benefits of the patent would not last longer than 10 years from the date of acquisition.What amount should be charged to patent amortization expense for the year ended December 31,2014?

Accepted Answer

A)  $47,600 
B)  $71,400 
C)  $81,600 
D)  $142,800 
A)  $47,600 
B)  $71,400 
C)  $81,600 
D)  $142,800

Question 16

The sum-of-the-years'-digits method of depreciation is being used for a machine with a five-year estimated useful life.What would be the fraction applied to the cost to be depreciated in the fourth year?

Accepted Answer

A)  2/5 
B)  4/5 
C)  2/15 
D)  4/15 
A)  2/5 
B)  4/5 
C)  2/15 
D)  4/15

Question 17

The impairment test for an intangible asset with an indefinite life compares the

Accepted Answer

A)  fair value of the asset to its book value. 
B)  sum of the undiscounted cash flows expected to be generated by the asset to its book value. 
C)  sum of the discounted cash flows expected to be generated by the asset to its fair value. 
D)  sum of the undiscounted cash flows expected to be generated by the asset to its fair value. 
A)  fair value of the asset to its book value. 
B)  sum of the undiscounted cash flows expected to be generated by the asset to its book value. 
C)  sum of the discounted cash flows expected to be generated by the asset to its fair value. 
D)  sum of the undiscounted cash flows expected to be generated by the asset to its fair value.

Question 18

The Corey Company exchanged equipment costing $190,000 with accumulated depreciation of $45,000 for equipment owned by Salvo Corporation.The Salvo equipment cost $305,000 with accumulated depreciation of $105,000.The fair value of both pieces of equipment was $275,000.
Provide the necessary entries to record the transaction on both companies' books assuming:

Accepted Answer

The answer of The Corey Company exchanged equipment costing $190,000...

Question 19

The Fanfare Company applied for and received numerous patents at a total cost of $286,500 at the beginning of 2011.It is assumed the patents will be useful evenly during their full legal lives.At the beginning of 2013,the company paid $48,600 in legal fees for successful defense in a patent infringement suit.At the beginning of 2014,information became available that caused the company to reduce the remaining life of the patents to five years.
Calculate the amortization expense for the years 2011,2012,2013,and 2014.Round to the nearest dollar.

Accepted Answer

The answer of The Fanfare Company applied for and received...

Question 20

On January 1,2014,Jameson Company purchased equipment at a cost of $420,000.The equipment was estimated to have a useful life of five years and a salvage value of $60,000.Jameson uses the sum-of-the-years'-digits method of depreciation.What should the accumulated depreciation be at December 31,2017?

Accepted Answer

A)  $240,000 
B)  $288,000 
C)  $336,000 
D)  $360,000 
A)  $240,000 
B)  $288,000 
C)  $336,000 
D)  $360,000

Which of the following assets generally is required to be tested at least annually for impairment?

Which of the following depreciation methods most closely approximates the method used to deplete the cost of natural resources?

When the estimate of an asset's useful life is changed,

When an exchange of similar assets involves a gain,

The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were

Which of the following statements is the assumption on which straight-line depreciation is based?

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

Lex Soaps purchased a machine on January 1,2013,for $18,000 cash.The machine has an estimated useful life of four years and a salvage value of $4,700.Lex uses the double-declining-balance method of depreciation for all its assets.What will be the machine's book value as of December 31,2014?

The sum-of-the-years'-digits method of depreciation is being used for a machine with a five-year estimated useful life.What would be the fraction applied to the cost to be depreciated in the fourth year?

The impairment test for an intangible asset with an indefinite life compares the

On January 1,2014,Jameson Company purchased equipment at a cost of $420,000.The equipment was estimated to have a useful life of five years and a salvage value of $60,000.Jameson uses the sum-of-the-years'-digits method of depreciation.What should the accumulated depreciation be at December 31,2017?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters

Exam 11: Investments in Noncurrent Operating Assets-Utilization and Retirement

Which of the following assets generally is required to be tested at least annually for impairment?

Which of the following depreciation methods most closely approximates the method used to deplete the cost of natural resources?

When the estimate of an asset's useful life is changed,

When an exchange of similar assets involves a gain,

The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were

Which of the following statements is the assumption on which straight-line depreciation is based?

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

Lex Soaps purchased a machine on January 1,2013,for $18,000 cash.The machine has an estimated useful life of four years and a salvage value of $4,700.Lex uses the double-declining-balance method of depreciation for all its assets.What will be the machine's book value as of December 31,2014?

The sum-of-the-years'-digits method of depreciation is being used for a machine with a five-year estimated useful life.What would be the fraction applied to the cost to be depreciated in the fourth year?

The impairment test for an intangible asset with an indefinite life compares the

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, pensions, Other Compissues

Earnings Per Share

Derivatives, contingencies, business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters