Question 1

Equipment with a cost of $160,000, an estimated residual value of $10,000, and an estimated life of 4 years, was purchased on April 1, 2022.If the straight-line method is used, the depreciation expense for calendar 2022 is

Accepted Answer

A) $40,000. 
B) $37,500. 
C) $30,000. 
D) $28,125.

Question 2

Use the following information for questions 
During 2022, Richlieu Corporation reported:
 
-Richlieu's return on assets is

Accepted Answer

A) 7.5%. 
B) 7.9%. 
C) 9.4%. 
D) 12.5%.

Question 3

Use the following information for questions 
During 2022, Richlieu Corporation reported:
 
-Richlieu's profit margin is

Accepted Answer

A) 3.7%. 
B) 5.0%. 
C) 6.3%. 
D) 8.0%.

Question 4

When an entire business is purchased, goodwill is the excess of the purchase price over the carrying amount of the net identifiable assets acquired.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements concerning financial statement presentation is false?

Accepted Answer

A) Intangibles may be reported separately. 
B) The balances of major classes of assets should be disclosed in the notes. 
C) The balances of the accumulated depreciation of major classes of assets should be disclosed in the notes. 
D) The balances of all individual assets, as they appear in the subsidiary ledger, should be disclosed in the notes.

Question 6

If the proceeds from the sale of equipment exceed its carrying amount, a gain on disposal is reported.

Accepted Answer

A) True 
 B)False

Question 7

On April 1, 2022, Check Mate Ltd.places a new asset into service.The cost of the asset is $40,000 with an estimated 8-year life and $2,500 residual value.Assuming that Check Mate uses the double diminishing-balance method of depreciation, what is the carrying amount of the asset at December 31, 2022?

Accepted Answer

A) $32,500 
B) $30,625 
C) $38,125 
D) $35,000

Question 8

Recording depreciation on equipment affects both the statement of financial position and the statement of income.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following isnot considered to be an intangible asset?

Accepted Answer

A) a copyright 
B) an oil well 
C) a franchise 
D) a patent

Question 10

A company purchased factory equipment on May 1, 2022 for $30,000.It is estimated that the equipment will have a $4,200 residual value at the end of its 8-year useful life.Using straight-line depreciation, the depreciation expense for the years ended December 31, 2022 and 2023 is

Accepted Answer

A) $2,500 in 2022 and $3,750 in 2023. 
B) $3,225 in 2022 and $3,225 in 2023. 
C) $2,150 in 2022 and $3,225 in 2023. 
D) none of the above

Question 11

Which of the following should not be classified as property, plant and equipment?

Accepted Answer

A) building used as a factory 
B) land used in ordinary business operations 
C) a truck held for resale by an automobile dealership 
D) land improvements, such as parking lots and fences

Question 12

On December 31, 2022, Cee Corp.sells an asset that originally cost $300,000 for $75,000.The company recognized a loss on disposal of $25,000.What was the balance of the accumulated depreciation account after the current year's depreciation of $15,000 was recorded?

Accepted Answer

A) $ 25,000 gain 
B) $ 25,000 loss 
C) $125,000 gain 
D) $125,000 loss

Question 13

Depreciation is a process of

Accepted Answer

A) determining the asset's fair value. 
B) asset valuation. 
C) cost allocation. 
D) determining the asset's residual value.

Question 14

Canada Revenue Agency requires a company to use the same depreciation method on its income tax return that is used in preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 15

Equipment was purchased for $20,000.It is estimated that the equipment will have a $3,000 residual value at the end of its 5-year useful life.Using the straight-line method, annual depreciation expense will be

Accepted Answer

A) $3,400. 
B) $4,000. 
C) $4,600. 
D) $5,000.

Question 16

Which of the following combinations reflects intangible assets with a finite life?

Accepted Answer

A) copyrights and patents 
B) copyrights and trademarks 
C) trademarks and brands 
D) brands and trade names

Question 17

Which of the following is not true for an operating expenditure?

Accepted Answer

A) It is recorded with a debit to a statement of financial position account. 
B) It benefits the current period only. 
C) It is incurred to maintain an asset in its normal operating condition. 
D) It often recurs.

Question 18

The cash flows from the purchase and sale of long-lived assets are reported in the operating activities section of the cash flow statement.

Accepted Answer

A) True 
 B)False

Question 19

The asset turnover indicates how efficiently a company uses its assets.

Accepted Answer

A) True 
 B)False

Question 20

Interest incurred on the construction of a building can be included in the cost of the building

Accepted Answer

A) during the construction period of a building. 
B) for as long as the interest is payable. 
C) if the building is financed by a mortgage. 
D) under no circumstances.

Exam 9: Reporting and Analyzing Long-Lived Assets

Equipment with a cost of $160,000, an estimated residual value of $10,000, and an estimated life of 4 years, was purchased on April 1, 2022.If the straight-line method is used, the depreciation expense for calendar 2022 is

Use the following information for questions During 2022, Richlieu Corporation reported: -Richlieu's return on assets is

Use the following information for questions During 2022, Richlieu Corporation reported: -Richlieu's profit margin is

When an entire business is purchased, goodwill is the excess of the purchase price over the carrying amount of the net identifiable assets acquired.

Which of the following statements concerning financial statement presentation is false?

If the proceeds from the sale of equipment exceed its carrying amount, a gain on disposal is reported.

Recording depreciation on equipment affects both the statement of financial position and the statement of income.

Which of the following isnot considered to be an intangible asset?

A company purchased factory equipment on May 1, 2022 for $30,000.It is estimated that the equipment will have a $4,200 residual value at the end of its 8-year useful life.Using straight-line depreciation, the depreciation expense for the years ended December 31, 2022 and 2023 is

Which of the following should not be classified as property, plant and equipment?

On December 31, 2022, Cee Corp.sells an asset that originally cost $300,000 for $75,000.The company recognized a loss on disposal of $25,000.What was the balance of the accumulated depreciation account after the current year's depreciation of $15,000 was recorded?

Depreciation is a process of

Canada Revenue Agency requires a company to use the same depreciation method on its income tax return that is used in preparing financial statements.

Equipment was purchased for $20,000.It is estimated that the equipment will have a $3,000 residual value at the end of its 5-year useful life.Using the straight-line method, annual depreciation expense will be

Which of the following combinations reflects intangible assets with a finite life?

Which of the following is not true for an operating expenditure?

The cash flows from the purchase and sale of long-lived assets are reported in the operating activities section of the cash flow statement.

The asset turnover indicates how efficiently a company uses its assets.

Interest incurred on the construction of a building can be included in the cost of the building