Question 1

On January 2,2017,Barnes Enterprises purchased equipment for $42,000 cash,expecting the equipment to remain in service for five years,with a $4,000 residual value.Barnes uses straight-line depreciation.On April 30,2019,Barnes sold the equipment for $20,000 cash.
Requirement:
Prepare the journal entries to record the purchase of the equipment; depreciation for 2017,2018,and 2019; and the sale of the equipment.Omit explanations and round to the nearest dollar.

Accepted Answer

The answer of On January 2,2017,Barnes Enterprises purchased equipment for...

Question 2

Brentwood Auto Repair purchased a new machine and placed it in service on June 14.Which of the following is NOT included in the cost of equipment?

Accepted Answer

A)  cost of testing the machine on June 12 
B)  purchase commission 
C)  sales tax 
D)  a six month insurance policy which was paid on June 5 and became effective on June 15

Question 3

Millburn Company has acquired a property that included both land and a building for $530,000.The company hired an appraiser who has determined that the market value of the land is $320,000 and that of the building is $480,000.At what amount should the company record the cost of land? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar.)

Accepted Answer

A)  $349,800 
B)  $128,000 
C)  $265,000 
D)  $212,000

Question 4

The cost paid to a laborer to assemble a desk is recorded as an expense.

Accepted Answer

A) True 
 B)False

Question 5

Goodwill is the excess cost of an acquired company over the market value of its net assets.

Accepted Answer

A) True 
 B)False

Question 6

When a company makes an accounting change in estimate,Generally Accepted Accounting Principles require that the company make changes to financial statements of prior years.

Accepted Answer

A) True 
 B)False

Question 7

All plant assets are depreciated.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an asset that represents distinctive identifications of a product or service?

Accepted Answer

A)  license 
B)  copyright 
C)  franchise 
D)  trademark

Question 9

An asset is considered to be obsolete when a newer asset can perform the job more efficiently.

Accepted Answer

A) True 
 B)False

Question 10

Provide definitions for the following terms.
1.Capitalize
2.Revenue Expenditure
3.Depreciation

Accepted Answer

The answer of Provide definitions for the following terms.
1.Capitalize
2.Revenue Expenditure
3.Depreciation...

Question 11

Capitalizing a cost involves crediting the asset account.

Accepted Answer

A) True 
 B)False

Question 12

Geller Electronics paid $200,000 to acquire Tabletz Company,an electronic gadget-advertising website.At the time of the acquisition,Tabletz's balance sheet reported total assets of $200,000 and liabilities of $100,000.The fair market value of Tabletz's assets was $200,000.The fair market value of its liabilities was $100,000.Journalize the acquisition of Tabletz in the books of Geller Electronics.Omit explanation.

Accepted Answer

The answer of Geller Electronics paid $200,000 to acquire Tabletz...

Question 13

The intellectual property of a business is easy to measure.

Accepted Answer

A) True 
 B)False

Question 14

Newell Company has acquired land and paid $500 as a brokerage commission to acquire the land.However,the company's accountant has recorded the $500 as a revenue expenditure.What is the effect of this error?

Accepted Answer

A)  Net income is understated by $500. 
B)  Liabilities are overstated by $500. 
C)  Revenue is overstated by $500. 
D)  Assets are overstated by $500.

Question 15

The cost principle requires a business to record the assets acquired,or services received,at their actual cost.

Accepted Answer

A) True 
 B)False

Question 16

Blueribbon Gallery reported the following assets on its December 31,2019 balance sheet:
 $\begin{array}{lll}
&\text { Dec. 31,2018}&\text { Dec. 31,2019}\
\text { Cash } & \$ 35,000 & \$ 28,000 \
\text { Accounts Receivable } & 97,000 & 85,000 \
\text { Merchandise Inventory } & 80,000 & 62,000 \
\text { Prepaid Expenses } & 29,000 & 20,000 \
\text { Property, plant, and equipment, net } & 30,000 & 18,000
\end{array}$
 If the net sales for the year amounted to $850,000,what is the asset turnover ratio for 2019?

Accepted Answer

The answer of Blueribbon Gallery reported the following assets on...

Question 17

Exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is included in the cost of a plant asset?

Accepted Answer

A)  amounts paid to make the asset ready for its intended use 
B)  regular repair and maintenance costs 
C)  replacement of damaged parts of the asset 
D)  wages of workers who use the asset in normal operations

Question 19

Equipment was acquired for $256,000 and has accumulated depreciation of $190,000.The business exchanges this equipment for new equipment.The new equipment has a market value of $209,000 and the business pays $157,000 cash.Assume the exchange has commercial substance.The exchange results in ________.

Accepted Answer

A)  loss $14,000 
B)  gain $14,000 
C)  gain $143,000 
D)  loss $143,000

Question 20

Which of the following items should be amortized?

Accepted Answer

A)  natural resources 
B)  goodwill 
C)  patents, copyrights, trademarks 
D)  tangible property, plant, and equipment, other than land

Exam 10: Plant Assets,natural Resources,and Intangibles

Brentwood Auto Repair purchased a new machine and placed it in service on June 14.Which of the following is NOT included in the cost of equipment?

The cost paid to a laborer to assemble a desk is recorded as an expense.

Goodwill is the excess cost of an acquired company over the market value of its net assets.

When a company makes an accounting change in estimate,Generally Accepted Accounting Principles require that the company make changes to financial statements of prior years.

All plant assets are depreciated.

Which of the following is an asset that represents distinctive identifications of a product or service?

An asset is considered to be obsolete when a newer asset can perform the job more efficiently.

Provide definitions for the following terms. 1.Capitalize 2.Revenue Expenditure 3.Depreciation

Capitalizing a cost involves crediting the asset account.

The intellectual property of a business is easy to measure.

Newell Company has acquired land and paid $500 as a brokerage commission to acquire the land.However,the company's accountant has recorded the $500 as a revenue expenditure.What is the effect of this error?

The cost principle requires a business to record the assets acquired,or services received,at their actual cost.

Exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized.

Which of the following is included in the cost of a plant asset?

Which of the following items should be amortized?