Question 1

A method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called:

Accepted Answer

A) Accelerated depreciation. 
B) Declining-balance depreciation. 
C) Straight-line depreciation. 
D) Units-of-production depreciation. 
E) Modified accelerated cost recovery system (MACRS) depreciation.

Question 2

Mahoney Company had the following transactions involving plant assets during Year 1 and Year 2.Unless otherwise indicated,all transactions were for cash.
Prepare the general journal entries to record these transactions.

Accepted Answer

The answer of Mahoney Company had the following transactions involving...

Question 3

Depreciation expense is calculated using estimates of an asset's salvage value and useful life.

Accepted Answer

A) True 
 B)False

Question 4

A depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a (an):

Accepted Answer

A) Accelerated depreciation method. 
B) Book value depreciation method. 
C) Straight-line depreciation method. 
D) Units-of-production depreciation method. 
E) Unrealized depreciation method.

Question 5

The cost of land can include:

Accepted Answer

A) Purchase price. 
B) Assessments by local governments. 
C) Costs of removing existing structures. 
D) Fees for insuring the title. 
E) All of the costs are included in land.

Question 6

Explain the purpose of and method of depreciation for partial years.

Accepted Answer

The answer of Explain the purpose of and method of...

Question 7

Salta Company installs a manufacturing machine in its factory at the beginning of the year at a cost of $87,000.The machine's useful life is estimated to be 5 years,or 400,000 units of product,with a $7,000 salvage value.During its second year,the machine produces 84,500 units of product.Determine the machines' second year depreciation under the units-of-production method.

Accepted Answer

A) $16,900. 
B) $16,000. 
C) $17,400. 
D) $18,379. 
E) $20,880.

Question 8

When originally purchased,a vehicle had an estimated useful life of 8 years.The vehicle cost $23,000 and its estimated salvage value is $1,500.After 4 years of straight-line depreciation,the asset's total estimated useful life was revised from 8 years to 6 years and there was no change in the estimated salvage value.The depreciation expense in year 5: equals:

Accepted Answer

A) $ 5,375.00. 
B) $ 2,687.50. 
C) $ 5,543.75. 
D) $10,750.00. 
E) $ 2,856.25.

Question 9

An asset can be disposed of by:

Accepted Answer

A) Discarding it. 
B) Selling it. 
C) Exchanging it for another asset. 
D) Donating it to charity. 
E) All of these are possible ways to dispose an asset.

Question 10

Compare the different depreciation methods (straight-line,units-of-production,and double-declining-balance)with respect to the computation of depreciation per period and the total depreciation over the life of the asset.

Accepted Answer

The answer of Compare the different depreciation methods (straight-line,units-of-production,and double-declining-balance)with...

Question 11

Salvage value is an estimate of an asset's value at the end of its benefit period.

Accepted Answer

A) True 
 B)False

Question 12

On January 1,a company purchased a machine for $75,000 that had a 6-year useful life and a salvage value of $6,000.After three years of straight-line depreciation,the company paid $7,500 cash at the beginning of the year to improve the efficiency of the machine.The effect of the expenditure was to increase the productivity of the machine without increasing its remaining useful life or changing its salvage value.Straight-line depreciation is used throughout the machine's life.
1.Prepare the journal entry to record the $7,500 expenditure.
2.Prepare the journal entry to record depreciation expense for the fourth year.

Accepted Answer

The answer of On January 1,a company purchased a machine...

Question 13

Thomas Enterprises purchased a depreciable asset on October 1,Year 1 at a cost of $100,000.The asset is expected to have a salvage value of $15,000 at the end of its five-year useful life.If the asset is depreciated on the double-declining-balance method,the asset's book value on December 31,Year 3 will be:

Accepted Answer

A) $27,540 
B) $21,600 
C) $32,400 
D) $18,360 
E) $90,000

Question 14

A company made the following expenditures in connection with the construction of its new building:
  Prepare a schedule showing the amounts to be recorded as Land,Buildings,and Machinery.

Accepted Answer

The answer of A company made the following expenditures in...

Question 15

Revenue expenditures are additional costs of plant assets that materially increase the assets' life or productive capabilities.

Accepted Answer

A) True 
 B)False

Question 16

A patent is an exclusive right granted to its owner to manufacture and sell a patented device or to use a process for 20 years.

Accepted Answer

A) True 
 B)False

Question 17

The going concern assumption supports the reporting of plant assets at book value rather than market value.

Accepted Answer

A) True 
 B)False

Question 18

A change in an accounting estimate is:

Accepted Answer

A) Reflected in past financial statements. 
B) Reflected in future financial statements and also requires modification of past statements. 
C) Reflected in current and future years' financial statements, not in prior statements. 
D) Not allowed under current accounting rules. 
E) Considered an error in the financial statements.

Question 19

A company purchased mining property containing 15,000,000 tons of ore for $4,875,000.In Year 1,it mined 789,000 tons of ore and in Year 2,it mined 1,235,000 tons.Calculate the depletion expense for Year 1 and Year 2.

Accepted Answer

The answer of A company purchased mining property containing 15,000,000...

Question 20

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 the choices are ordinary repairs.

Exam 10: Plant Assets, natural Resources, and Intangibles

A method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called:

Mahoney Company had the following transactions involving plant assets during Year 1 and Year 2.Unless otherwise indicated,all transactions were for cash. Prepare the general journal entries to record these transactions.

Depreciation expense is calculated using estimates of an asset's salvage value and useful life.

A depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a (an) :

The cost of land can include:

Explain the purpose of and method of depreciation for partial years.

An asset can be disposed of by:

Compare the different depreciation methods (straight-line,units-of-production,and double-declining-balance)with respect to the computation of depreciation per period and the total depreciation over the life of the asset.

Salvage value is an estimate of an asset's value at the end of its benefit period.

A company made the following expenditures in connection with the construction of its new building: Prepare a schedule showing the amounts to be recorded as Land,Buildings,and Machinery.

Revenue expenditures are additional costs of plant assets that materially increase the assets' life or productive capabilities.

A patent is an exclusive right granted to its owner to manufacture and sell a patented device or to use a process for 20 years.

The going concern assumption supports the reporting of plant assets at book value rather than market value.

A change in an accounting estimate is:

A company purchased mining property containing 15,000,000 tons of ore for $4,875,000.In Year 1,it mined 789,000 tons of ore and in Year 2,it mined 1,235,000 tons.Calculate the depletion expense for Year 1 and Year 2.

Ordinary repairs: