Question 1

An asset with a book value of $19,000 is sold for $16,000.Which of the following answers would accurately represent the effects of the sale on the financial statements? (Note: The answers show the net effect on the total amount under each category.For example,if cash increased by $100 and Accounts Receivable decreased by $70,a net $30 increase would be shown in the assets column.)

Accepted Answer

A)   Choice A
B)   Choice B
C)   Choice C
D)   Choice D D

Question 2

Teague Company purchased a new machine on January 1,2012,at a cost of $150,000.The machine is expected to have an eight-year life and a $15,000 salvage value.The machine is expected to produce 675,000 finished products during its eight-year life.Smith produced 70,000 units in 2012 and 110,000 units during 2013.
Required:
Determine the amount of depreciation expense to be recorded on the machine for the years 2012 and 2013 under each of the following methods:

Accepted Answer

The answer of Teague Company purchased a new machine on...

Question 3

Name three examples of property,plant and equipment.

Accepted Answer

Equipment,furniture,fixtures,buildings,structures,land improvements and vehicles.

Question 4

Rodriquez Company paid $375,000 for a basket purchase that included office furniture,a building and land.An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Office furniture,$75,000; Building,$320,000; Land,$36,000.Based on this information the amount of cost that would be allocated to the office furniture is

Accepted Answer

A)   $58,250.
B)   $65,255.
C)   $75,000.
D)   $78,422.

Question 5

Graettinger Manufacturing Company spent $4,000 to extend the useful life of one of its assets.

Accepted Answer

The answer of Graettinger Manufacturing Company spent $4,000 to extend...

Question 6

Explain how the gain or loss is computed on the sale of a piece of equipment.

Accepted Answer

The answer of Explain how the gain or loss is...

Question 7

Bowen Company amortized $3,000 of patent cost.

Accepted Answer

The answer of Bowen Company amortized $3,000 of patent cost....

Question 8

What value will be recorded for the building?

Accepted Answer

A)   $113,932
B)   $406,901
C)   $537,109
D)   $625,000

Question 9

Which of the following would be classified as a tangible asset?

Accepted Answer

A)   Copyright.
B)   Goodwill.
C)   Timber reserves.
D)   Patent.

Question 10

A trademark has a total legal and useful life of 50 years.

Accepted Answer

A) True 
 B)False

Question 11

If the original expected life remained the same (i.e.,5-years),but at the beginning of 2013 the salvage value were revised to $6,000,the annual depreciation expense for each of the remaining years would be:

Accepted Answer

A)   $14,900.
B)   $9,333.
C)   $17,900.
D)   $14,675.

Question 12

Which of the following should be the main determinant in the selection of the depreciation method for long-term operational assets?

Accepted Answer

A)   The method that best matches the pattern of asset use.
B)   The method that is most convenient to compute.
C)   The method that provides the greatest return to the stockholders.
D)   The method that provides the best tax advantage.

Question 13

Which method of depreciation is used by most U.S.companies for financial reporting purposes?

Accepted Answer

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

Question 14

On January 1,2012,Ziskin Company spent $3,000 on an asset (equipment)to improve its quality.The asset had been purchased on January 1,2009 for $14,000.The asset had a $2,000 salvage value and a 6-year life.Ziskin uses straight-line depreciation.What would be the amount of depreciation expense for 2012?

Accepted Answer

A)   $4,500.
B)   $3,000.
C)   $6,000.
D)   $7,200.

Question 15

A copyright is an intangible asset with an indefinite useful life.

Accepted Answer

A) True 
 B)False

Question 16

What items are included in the cost of a newly purchased building?

Accepted Answer

The answer of What items are included in the cost...

Question 17

Which of the following industries would most likely have the highest ratio of sales revenue to property,plant and equipment?

Accepted Answer

A)   Airline
B)   Consumer product manufacturing company
C)   Electric utility
D)   Stock brokerage

Question 18

What type of account is Accumulated Depreciation?

Accepted Answer

The answer of What type of account is Accumulated Depreciation?...

Question 19

Which of the following is not classified as Property,Plant and Equipment?

Accepted Answer

A)   Computers
B)   Goodwill
C)   Machinery
D)   Office furniture

Question 20

Depletion is the process of expensing intangible assets.

Accepted Answer

A) True 
 B)False

Exam 6: Accounting for Long-Term Operational Assets

Name three examples of property,plant and equipment.

Graettinger Manufacturing Company spent $4,000 to extend the useful life of one of its assets.

Explain how the gain or loss is computed on the sale of a piece of equipment.

Bowen Company amortized $3,000 of patent cost.

What value will be recorded for the building?

Which of the following would be classified as a tangible asset?

A trademark has a total legal and useful life of 50 years.

If the original expected life remained the same (i.e.,5-years) ,but at the beginning of 2013 the salvage value were revised to $6,000,the annual depreciation expense for each of the remaining years would be:

Which of the following should be the main determinant in the selection of the depreciation method for long-term operational assets?

Which method of depreciation is used by most U.S.companies for financial reporting purposes?

A copyright is an intangible asset with an indefinite useful life.

What items are included in the cost of a newly purchased building?

Which of the following industries would most likely have the highest ratio of sales revenue to property,plant and equipment?

What type of account is Accumulated Depreciation?

Which of the following is not classified as Property,Plant and Equipment?

Depletion is the process of expensing intangible assets.