Question 1

A loss on the sale of a plant asset is recorded when the sales price exceeds the book value.

Accepted Answer

A) True 
 B)False

Question 2

The straight-line method of depreciation assigns a fixed amount of depreciation to each unit of output produced by an asset.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following would be expensed,rather than capitalized?

Accepted Answer

A)  Oil change and lubrication 
B)  Major engine overhaul 
C)  Modification for new use 
D)  Addition to storage capacity

Question 4

Avery Sales purchased telecom equipment for $5,000 on July 1,2013.It has estimated residual value of $200,and an estimated life of 8 years.If Avery uses straight-line depreciation,how much expense will be recorded in 2013?

Accepted Answer

A)  $312 
B)  $300 
C)  $600 
D)  $625

Question 5

Tangible assets must be tested for impairment at least once a year.

Accepted Answer

A) True 
 B)False

Question 6

Roberts Construction Company paid $40,000 for equipment with a market value of $45,000.At which of the following amounts should the equipment be recorded?

Accepted Answer

A)  $45,000 
B)  $40,000 
C)  $42,500 
D)  $5,000

Question 7

In 2013,Azimuth Company purchased a small business for $500,000.The market value of the business's assets were $850,000,and the market value of the liabilities were $400,000.Azimuth recorded goodwill of $50,000 at time of acquisition.At the end of 2014,they measured the goodwill and found it had a remaining value of only $20,000.Please provide the entry needed at year-end 2014.
 $$\begin{array} { | l | r | r | } 
\hline \text { Loss on goodwill } & 30,000 & \
\hline \text { Goodwill } & & 30,000 \
\hline
\end{array}$$

Accepted Answer

The answer of In 2013,Azimuth Company purchased a small business...

Question 8

Job Sales traded a truck they had owned for some time,in an even like-kind exchange for another truck.The original truck had been purchased by Job for $36,000,and had accumulated depreciation of $30,000 at the time it was exchanged.The truck Job received in exchange was valued at $8,000.Please provide the journal entry for this transaction.
 $$\begin{array} { | l | l | l | } 
\hline \quad\quad& \quad&\quad \
\hline & & \\hline & & \\hline & & \
\hline
\end{array}$$

Accepted Answer

The answer of Job Sales traded a truck they had...

Question 9

Lexis Company purchased equipment on January 1,2012 for $35,500.The estimated useful life of the equipment was 7 years and the estimated residual value was $4,000.After using the straight-line method of depreciation for 3 years,the estimated useful life was revised to 9 years on January 1,2015.How much is depreciation expense for 2015?

Accepted Answer

A)  $2,444 
B)  $3,000 
C)  $2,000 
D)  $3,667

Question 10

Which of the following should be included in the cost of land?

Accepted Answer

A)  Cost to build sidewalks on the land 
B)  Cost to clear the land of old buildings 
C)  Cost of installing signage 
D)  Cost of installing fences

Question 11

Albatross Services scrapped a van.The van originally cost $40,000,had an estimated salvage value of zero,and an estimated life of 10 years.At the time it was scrapped,it was fully depreciated.What was the effect of scrapping the van?

Accepted Answer

A)  Gain of $2,000 
B)  No gain or loss 
C)  Loss of $1,000 
D)  Loss of $2,000

Question 12

The cost of razing a building on a parcel of land to build a new building is added to the cost of the land.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following items is included in the journal entry if a company sells equipment at a price greater than its book value?

Accepted Answer

A)  A credit to Gain on sale of equipment 
B)  A debit to Loss on sale of equipment 
C)  A credit to Accumulated depreciation 
D)  A debit to Equipment for its book value

Question 14

If a company incurs an expense,but treats it as an asset,net income would be understated.

Accepted Answer

A) True 
 B)False

Question 15

Barnhart's sold a piece of restaurant equipment to another restaurant on July 1,2013 for $1,100 cash.The equipment originally cost $12,000,had an estimated life of 20 years,and an estimated salvage value of $2,000.Barnhart's had recorded total depreciation of $9,000 through the end of 2012,using the straight-line method.Barnhart's had to update the depreciation of the asset before recording the sale.After the depreciation was updated,Barnhart's then recorded the sale transaction.Please provide the entry for the sale transaction.
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\hline \quad\quad& \quad&\quad \
\hline & & \\hline & & \\hline & & \
\hline
\end{array}$$

Accepted Answer

The answer of Barnhart's sold a piece of restaurant equipment...

Question 16

Albatross Services scrapped a van.The van originally cost $40,000 and had accumulated depreciation of $38,000.What was the effect of scrapping the van?

Accepted Answer

A)  Gain of $2,000 
B)  No gain or loss 
C)  Loss of $1,600 
D)  Loss of $2,000

Question 17

Acme Investments plans to develop a shopping center.In the first quarter,they spent the following amounts: $$\begin{array} { l r } 
\text { Purchase land } & \$ 100,000 \
\text { Surveys and legal fees } & 1,200 \
\text { Land clearing } & 5,000 \
\text { Install fences around the property } & 4,600 \
\text { Install lighting and signage } & 2,600
\end{array}$$ 
-What amount should be recorded as the land cost?

Accepted Answer

A)  $7,200 
B)  $101,200 
C)  $46,200 
D)  $106,200

Question 18

Barnhart's sold a piece of restaurant equipment to another restaurant on July 1,2013 for $1,100 cash.The equipment originally cost $12,000,had an estimated life of 20 years,and estimated salvage value of $2,000.Barnhart's had recorded total depreciation of $9,000 through the end of 2012,using the straight-line method.Barnhart's had to update the depreciation of the asset before recording the sale.
-After the depreciation was updated,Barnhart's then recorded the sale transaction.The effect of the sale on the income of the company was a:

Accepted Answer

A)  gain of $250. 
B)  loss of $1,650. 
C)  loss of $1,000. 
D)  loss of $2,900.

Question 19

An asset was purchased for $12,000.The asset's estimated useful life was 5 years,and its residual value was $2,000.Straight-line depreciation was used.
-How much gain or loss is reported if the asset is sold for $3,000 at the end of the fifth year?

Accepted Answer

A)  $1,000 gain 
B)  $2,000 loss 
C)  No gain or loss 
D)  $1,000 loss

Question 20

Tangible assets are assets with no physical form that have value because of the special rights they carry.

Accepted Answer

A) True 
 B)False

Exam 9: Plant Assets and Intangibles

A loss on the sale of a plant asset is recorded when the sales price exceeds the book value.

The straight-line method of depreciation assigns a fixed amount of depreciation to each unit of output produced by an asset.

Which of the following would be expensed,rather than capitalized?

Avery Sales purchased telecom equipment for $5,000 on July 1,2013.It has estimated residual value of $200,and an estimated life of 8 years.If Avery uses straight-line depreciation,how much expense will be recorded in 2013?

Tangible assets must be tested for impairment at least once a year.

Roberts Construction Company paid $40,000 for equipment with a market value of $45,000.At which of the following amounts should the equipment be recorded?

Which of the following should be included in the cost of land?

Albatross Services scrapped a van.The van originally cost $40,000,had an estimated salvage value of zero,and an estimated life of 10 years.At the time it was scrapped,it was fully depreciated.What was the effect of scrapping the van?

The cost of razing a building on a parcel of land to build a new building is added to the cost of the land.

Which of the following items is included in the journal entry if a company sells equipment at a price greater than its book value?

If a company incurs an expense,but treats it as an asset,net income would be understated.

Albatross Services scrapped a van.The van originally cost $40,000 and had accumulated depreciation of $38,000.What was the effect of scrapping the van?

An asset was purchased for $12,000.The asset's estimated useful life was 5 years,and its residual value was $2,000.Straight-line depreciation was used. -How much gain or loss is reported if the asset is sold for $3,000 at the end of the fifth year?

Tangible assets are assets with no physical form that have value because of the special rights they carry.