Question 1

Vroom Company sold for $60,000 a machine that originally cost $100,000.The accumulated depreciation on this machine to date of sale was $47,000.What was Vroom Company's gain or loss on this sale?

Accepted Answer

The answer of Vroom Company sold for $60,000 a machine...

Question 2

Creek Construction owned a bulldozer which was destroyed by fire.The bulldozer originally cost $38,000.The accumulated depreciation recorded to the date of loss was $20,000.The proceeds from the insurance company were $20,000.Creek Construction should recognize:

Accepted Answer

A)  A loss of $2,000. 
B)  An expense of $2,000. 
C)  A loss of $38,000. 
D)  A gain of $20,000. 
E)  A gain of $2,000.

Question 3

Matador & Company was preparing the annual financial statements and,as part of its year-end procedures,prepared the following schedule based on adjusted values at March 31,2015:

Accepted Answer

The answer of Matador & Company was preparing the annual...

Question 4

A patent is an exclusive right granted to its owner to manufacture and sell a patented machine or device,or to use a process,for a specified period of time.

Accepted Answer

A) True 
 B)False

Question 5

Record the entry for any impairment loss assuming that Matador & Company recorded no impairment losses in previous years.
2.Record the entry for depreciation on each of the assets at March 31,2015.Assume there was no change in residual or useful lives regardless of impairment losses.

Accepted Answer

The answer of Record the entry for any impairment loss...

Question 6

Natsuko Company traded an old forklift for a new forklift,receiving a $10,500 trade-in allowance and paying the remaining $37,200 in cash.The old forklift cost $39,000,and straight-line depreciation of $27,200 had been recorded to the date of trade under the assumption it would last 5 years and have a $5,000 residual value.At the date of trade,the fair value of the old forklift is $11,000,however the fair value of the new forklift is not known.
(1)What was the book value of the old forklift?
(2)At what amount should the new forklift be recorded?

Accepted Answer

The answer of Natsuko Company traded an old forklift for...

Question 7

Depreciation is the process of allocating the cost of a tangible asset in a rational and systematic manner over the asset's estimated useful life.

Accepted Answer

A) True 
 B)False

Question 8

The cost of land can include:

Accepted Answer

A)  Purchase price. 
B)  Back property taxes. 
C)  Costs of removing existing buildings. 
D)  Real estate commissions. 
E)  All of these answers are correct.

Question 9

When originally purchased,a vehicle had cost $23,000,with an estimated residual value of $1,500,and an estimated useful life of 8 years.After 4 years of straight-line depreciation,the estimated useful life was revised from 8 to 6 years,but with zero residual value.The depreciation expense in year 5 should be:

Accepted Answer

A)  $5,543.75. 
B)  $2.687.50. 
C)  $6,125.00. 
D)  $10,750.00. 
E)  $2,856.25.

Question 10

At the end of the year,SportsWorld completed an asset impairment test and noted that a piece of equipment,with a book value of 12,000,has a recoverable value of $2,000.Calculate the amount of impairment loss on the equipment.

Accepted Answer

A)  $2,000. 
B)  $2,160. 
C)  $14,800. 
D)  $12,800. 
E)  $10,000.

Question 11

_______________________ depreciation provides for equal amounts of annual depreciation over the life of an asset.

Accepted Answer

The answer of _______________________ depreciation provides for equal amounts of...

Question 12

Amortization is the process of allocating the cost of intangibles over their estimated useful life.

Accepted Answer

A) True 
 B)False

Question 13

If the book value of a property,plant and equipment item is less than the amount to be recovered through the asset's use or sale,the difference is an impairment loss and the asset is described as impaired.

Accepted Answer

A) True 
 B)False

Question 14

When assigning values to an exchange of assets you should always use the fair value of the asset received.

Accepted Answer

A) True 
 B)False

Question 15

On January 1 of this year,SportsWorld purchased a new cash register for $5,400.This register has a useful life of 10 years and a residual value of $400.Using the double-declining-balance method,how much depreciation expense should SportsWorld recognize for next year?

Accepted Answer

A)  $500. 
B)  $540. 
C)  $1,000. 
D)  $864. 
E)  $1,080.

Question 16

On January 2,2014,Far Co.purchased a machine for $525,000.The company expects the machine to last for 10 years or 50,000 hours of operation,with an estimated residual value of $15,000.During 2014 the machine was operated for 3,000 hours,while in 2015 it was operated for 2,600 hours.Calculate the depreciation expense for the machine for 2014 and 2015 using the following depreciation methods:
(a)Straight-line.
(b)Double-declining-balance.
(c)Units-of-production.

Accepted Answer

The answer of On January 2,2014,Far Co.purchased a machine for...

Question 17

A change in accounting estimate is:

Accepted Answer

A)  Reflected only in current and future financial statements. 
B)  Reflected in current and future financial statements and also requires modification of past statements. 
C)  A change in a calculated amount used in the financial statements resulting from new information or subsequent developments and from better insight or improved judgment. 
D)  Both reflected only in current and future financial statements and a change in a calculated amount used in the financial statements resulting from new information or subsequent developments and from better insight or improved judgment. 
E)  None of these answers is correct.

Question 18

Treating small-dollar-amount capital expenditures as revenue expenditures is likely to mislead users of financial statements.

Accepted Answer

A) True 
 B)False

Question 19

Explain what could cause the impairment of goodwill.How often should goodwill be tested to see if it is impaired?

Accepted Answer

The answer of Explain what could cause the impairment of...

Question 20

A depreciation method in which a property,plant and equipment asset's depreciation expense for the period is determined by applying a constant depreciation rate each year to the asset's beginning book value is called:

Accepted Answer

A)  Book value depreciation. 
B)  Double-declining-balance depreciation. 
C)  Straight-line depreciation. 
D)  Units-of-production depreciation. 
E)  Capital cost allowancE.

Exam 10: Property,plant and Equipment,and Intangibles

Vroom Company sold for $60,000 a machine that originally cost $100,000.The accumulated depreciation on this machine to date of sale was $47,000.What was Vroom Company's gain or loss on this sale?

Creek Construction owned a bulldozer which was destroyed by fire.The bulldozer originally cost $38,000.The accumulated depreciation recorded to the date of loss was $20,000.The proceeds from the insurance company were $20,000.Creek Construction should recognize:

Matador & Company was preparing the annual financial statements and,as part of its year-end procedures,prepared the following schedule based on adjusted values at March 31,2015:

A patent is an exclusive right granted to its owner to manufacture and sell a patented machine or device,or to use a process,for a specified period of time.

Record the entry for any impairment loss assuming that Matador & Company recorded no impairment losses in previous years. 2.Record the entry for depreciation on each of the assets at March 31,2015.Assume there was no change in residual or useful lives regardless of impairment losses.

Depreciation is the process of allocating the cost of a tangible asset in a rational and systematic manner over the asset's estimated useful life.

The cost of land can include:

At the end of the year,SportsWorld completed an asset impairment test and noted that a piece of equipment,with a book value of 12,000,has a recoverable value of $2,000.Calculate the amount of impairment loss on the equipment.

_______________________ depreciation provides for equal amounts of annual depreciation over the life of an asset.

Amortization is the process of allocating the cost of intangibles over their estimated useful life.

If the book value of a property,plant and equipment item is less than the amount to be recovered through the asset's use or sale,the difference is an impairment loss and the asset is described as impaired.

When assigning values to an exchange of assets you should always use the fair value of the asset received.

On January 1 of this year,SportsWorld purchased a new cash register for $5,400.This register has a useful life of 10 years and a residual value of $400.Using the double-declining-balance method,how much depreciation expense should SportsWorld recognize for next year?

A change in accounting estimate is:

Treating small-dollar-amount capital expenditures as revenue expenditures is likely to mislead users of financial statements.

Explain what could cause the impairment of goodwill.How often should goodwill be tested to see if it is impaired?

A depreciation method in which a property,plant and equipment asset's depreciation expense for the period is determined by applying a constant depreciation rate each year to the asset's beginning book value is called: