Question 1

Revising depreciation estimates does affect the amounts of depreciation expense recorded in past periods.

Accepted Answer

A) True 
 B)False

Question 2

Fill in the missing numbers using the formula for Fixed Asset Turnover:
 $\begin{array}{|c|c|c|c|c|}
\hline \text { Compary D } & \text { Company C } & \text { Company B } & \text { Company A } & \
\hline & \$ 9000,000 & \$ 720,000 & \$ 5,000,000 & \text { Net Sales } \
\hline \$ 380,000 & 10 & \$ 275,000 & \$ 450,000 & \text { Beginning Fixed Assets } \
\hline \$ 420,000 & \$ 310,000 & ? & \$ 800,000 & \text { Ending Fixed Assets } \
\hline 2.6 \text { times } & 3 \text { times } & 2.4 \text { times } & \text { ? } & \text { Fixed Asset Tunnover } \
\hline
\end{array}$

Accepted Answer

The answer of Fill in the missing numbers using the...

Question 3

Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c) Buildings, (d) Machinery and Equipment, or (e) other account.
 Cost of paving parking are a for employees and customers.
Insurance duing constuction of building:
Interest incured on lo an during construction of building:
Fee paid for installation of equipment.
Special foundation for new equipment acquired.
Insurance on new equipment while in transit.
Freight charges on new equipment.
Cost of repairing vandalism damage to equipment during installation.
Sales tax on new equipment.
Cost incure din repaing damage resulting from installation of new equipment.
Cost of land fill for building site.
Cost of lubric ating oil purchased for periodic oil changes for equipment.
Parking lot lighting
Inst alling a fence around the parking lot
Repainting the trim on a building:
Special assessment paid to city for extension of water main to property.
Cost of razing and removing the old building on property acquired for a building site.
D dincuent real estate taxes assumed by purchass on property accuired for a bualding site.
Attomey's fee for title search.
Architect's fee for building plans and supervision of construction.

Accepted Answer

The answer of Identify each of the following expenditures as...

Question 4

Financial Statement data for the years ended December 31 for Parker Corporation is as follows:
2012 2011
Net Sales $2,595,600 $2,409,498
Fixed Assets:
Beginning of the year $901,070 $820,000
End of the year 829,330 901,070
a) Determine the Fixed Asset Turnover for 2012 and 2011.
b) Does the change in Fixed Asset Turnover from 2011 to 2012 indicate a favorable or unfavorable trend.?

Accepted Answer

The answer of Financial Statement data for the years ended...

Question 5

The proper journal entry to purchase a computer on account on January 2 to be utilized within the business would be:

Accepted Answer

A)  Jan 2 Office Supplies 1,350 Accounts Payable 1,350 
B)  Jan 2 Office Equipment 1,350 Accounts Payable 1,350 
C)  Jan 2 Office Supplies 1,350 Accounts Receivable 1,350 
D)  Jan 2 Office Equipment 1,350 Accounts Receivable 1,350

Question 6

Identify the following as a Fixed Asset (FA), or Intangible Asset (IA), or Natural Resource (NR), or Neither (N)
 (a)computer
(b)patent
(c)oil reserve
(d)goodwill
(e)U.S. Tressuly note
(f)land used for employe parlang
(g)gold mine

Accepted Answer

The answer of Identify the following as a Fixed Asset...

Question 7

The calculation for annual depreciation using the units-of-production method is

Accepted Answer

A)  (initial cost/estimated output) * the actual yearly output 
B)  (depreciable cost / yearly output) * estimated output 
C)  depreciable cost / yearly output 
D)  (depreciable cost / estimated output) * the actual yearly output

Question 8

Regardless of the depreciation method, the amount that will be depreciated during the life of the asset will be the same.

Accepted Answer

A) True 
 B)False

Question 9

On December 31 it was estimated that goodwill of $65,000 was impaired. In addition, a patent with an estimated useful economic life of 10 years was acquired for $60,000 on July 1.

Accepted Answer

The answer of On December 31 it was estimated that...

Question 10

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31.

Accepted Answer

The answer of Equipment costing $80,000 with a useful life...

Question 11

A double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate. Assume that an asset has a useful life of 25 years, determine the rate to be used if using the double-declining balance method.

Accepted Answer

The answer of A double-declining balance rate for calculating depreciation...

Question 12

When depreciation estimates are revised, all years of the asset's life are affected.

Accepted Answer

A) True 
 B)False

Question 13

The units of production depreciation method provides a good match of expenses against revenue.

Accepted Answer

A) True 
 B)False

Question 14

It is necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

Accepted Answer

A) True 
 B)False

Question 15

Expenditures for research and development are generally recorded as

Accepted Answer

A)  current operating expenses 
B)  assets and amortized over their estimated useful life 
C)  assets and amortized over 40 years 
D)  current assets

Question 16

When a plant asset is traded for another similar asset, losses on the asset traded are recognized.

Accepted Answer

A) True 
 B)False

Question 17

A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $5,000, and special acquisition fees of $2,000, would have a cost basis of

Accepted Answer

A)  $ 99,000 
B)  $107,000 
C)  $102,000 
D)  $109,000

Question 18

The depreciation method that does not use residual value in calculating the first year's depreciation expense is

Accepted Answer

A)  straight-line 
B)  units-of-production 
C)  double-declining-balance 
D)  none of the above

Question 19

Which of the following is included in the cost of land?

Accepted Answer

A)  cost of paving a parking lot 
B)  brokerage commission 
C)  outdoor parking lot lighting attached to the land 
D)  fences on the land

Question 20

The most widely used depreciation method is

Accepted Answer

A)  straight-line 
B)  double-declining-balance 
C)  units-of-production 
D)  units-of-production or double-declining-balance

Exam 9: Fixed Assets and Intangible Assets

Revising depreciation estimates does affect the amounts of depreciation expense recorded in past periods.

The proper journal entry to purchase a computer on account on January 2 to be utilized within the business would be:

Identify the following as a Fixed Asset (FA), or Intangible Asset (IA), or Natural Resource (NR), or Neither (N) (a)computer (b)patent (c)oil reserve (d)goodwill (e)U.S. Tressuly note (f)land used for employe parlang (g)gold mine

The calculation for annual depreciation using the units-of-production method is

Regardless of the depreciation method, the amount that will be depreciated during the life of the asset will be the same.

On December 31 it was estimated that goodwill of $65,000 was impaired. In addition, a patent with an estimated useful economic life of 10 years was acquired for $60,000 on July 1.

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31.

A double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate. Assume that an asset has a useful life of 25 years, determine the rate to be used if using the double-declining balance method.

When depreciation estimates are revised, all years of the asset's life are affected.

The units of production depreciation method provides a good match of expenses against revenue.

It is necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

Expenditures for research and development are generally recorded as

When a plant asset is traded for another similar asset, losses on the asset traded are recognized.

A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $5,000, and special acquisition fees of $2,000, would have a cost basis of

The depreciation method that does not use residual value in calculating the first year's depreciation expense is

Which of the following is included in the cost of land?

The most widely used depreciation method is