Question 1

If technology changes rapidly, a firm should:

Accepted Answer

A)  depreciate plant assets using the same method used for its tax returns. 
B)  depreciate plant assets over long periods of time. 
C)  consider an accelerated rate of depreciation. 
D)  use the straight-line method of depreciation as it is the easiest. 
A)  depreciate plant assets using the same method used for its tax returns. 
B)  depreciate plant assets over long periods of time. 
C)  consider an accelerated rate of depreciation. 
D)  use the straight-line method of depreciation as it is the easiest.

Question 2

Upon review of Bert's statement of cash flows, the following was noted:   From this information, the most likely explanation is that Bert is:

Accepted Answer

A)  using cash from operations and selling long-term assets to pay back debt. 
B)  using cash from operations and borrowings to purchase long-term assets. 
C)  using its profits to pay back debt. 
D)  using cash from investors to provide for operations. 
A)  using cash from operations and selling long-term assets to pay back debt. 
B)  using cash from operations and borrowings to purchase long-term assets. 
C)  using its profits to pay back debt. 
D)  using cash from investors to provide for operations.

Question 3

Peck Tech. purchased a patent at the beginning of 2011 for $400,000. The patent's legal life was 20 years, but economic benefits were expected for 10 years. Also, during 2011, Peck's incurred research and development costs of $200,000. The book value of the patents at December 31, 2011, is:

Accepted Answer

A)  $400,000 
B)  $360,000 
C)  $350,000 
D)  $560,000 
A)  $400,000 
B)  $360,000 
C)  $350,000 
D)  $560,000

Question 4

Gump Shrimp Company 
On January 1, 2011, Gump Shrimp Company purchased a ship for $1,000,000. It has a ten-year useful life and a salvage value of $100,000. The company uses the double-declining-balance method.
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Refer to the information provided for Gump Shrimp Company. What was the depreciation expense for Gump Shrimp for the year ended December 31, 2012?

Accepted Answer

A)  $ -0- 
B)  $180,000 
C)  $160,000 
D)  $200,000 
A)  $ -0- 
B)  $180,000 
C)  $160,000 
D)  $200,000

Question 5

Aggie, Inc. 
Aggie, Inc. purchased a truck at a cost of $12,000. The truck has an estimated salvage value of $2,000 and an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2011, and was used 27,000 hours in 2011 and 26,000 hours in 2012.
- 
Refer to Aggie, Inc.'s information presented above, if Aggie uses the straight-line method, what is the book value at December 31, 2013?

Accepted Answer

A)  $ 8,000 
B)  $ 6,000 
C)  $10,000 
D)  $ 4,000 
A)  $ 8,000 
B)  $ 6,000 
C)  $10,000 
D)  $ 4,000

Question 6

Using different depreciation methods for book purposes versus tax purposes for the same asset is:

Accepted Answer

A)  not allowed since the amount can only be calculated one way or the other, not both. 
B)  the direct result of the differing goals of financial and tax accounting. 
C)  contrary to GAAP. 
D)  against the Internal Revenue Code, and as such, against the law. 
A)  not allowed since the amount can only be calculated one way or the other, not both. 
B)  the direct result of the differing goals of financial and tax accounting. 
C)  contrary to GAAP. 
D)  against the Internal Revenue Code, and as such, against the law.

Question 7

On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. Strike found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction?

Accepted Answer

A)  Cannot be determined 
B)  No gain or loss 
C)  Gain of $25,000 
D)  Gain of $55,000 
A)  Cannot be determined 
B)  No gain or loss 
C)  Gain of $25,000 
D)  Gain of $55,000

Question 8

Max's Tire Center Company 
Selected data from the financial statements of Max's Tire Center are provided below.
 
-Refer to the selected data provided for Max's Tire Center. What is Max's fixed assets turnover in 2012?

Accepted Answer

A)  The fixed assets turnover is 2.75 in 2012. 
B)  The fixed assets turnover is 2.68 in 2012. 
C)  The fixed assets turnover is 2.36 in 2012. 
D)  The fixed assets turnover is 2.57 in 2012. 
A)  The fixed assets turnover is 2.75 in 2012. 
B)  The fixed assets turnover is 2.68 in 2012. 
C)  The fixed assets turnover is 2.36 in 2012. 
D)  The fixed assets turnover is 2.57 in 2012.

Question 9

If the depreciation method is known, which of the following sets of factors is needed to calculate depreciation on plant and equipment?

Accepted Answer

A)  The asset's historical cost, replacement cost, and its estimated salvage value 
B)  The estimated salvage value of the asset, its replacement cost, and its market value 
C)  The asset's replacement cost, its estimated life, and its estimated salvage value 
D)  The useful life of the asset, its historical cost, and its estimated salvage value 
A)  The asset's historical cost, replacement cost, and its estimated salvage value 
B)  The estimated salvage value of the asset, its replacement cost, and its market value 
C)  The asset's replacement cost, its estimated life, and its estimated salvage value 
D)  The useful life of the asset, its historical cost, and its estimated salvage value

Question 10

Clear Window Cleaners 
Clear Window Cleaners purchased new cleaning equipment at the beginning of 2011. The equipment has a cost of $53,000, an estimated life of 5 years, and an estimated residual value of $3,000. A full year's depreciation expense is to be recorded in 2011. The equipment was used 20,000 hours during 2011 and 24,000 hours during 2012. The number of expected hours over five years is 125,000.
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Refer to the information provided for Clear Window Cleaners. Clear Window Cleaners wants to use the depreciation method that will result in the highest net income for 2011. Which method should be used?

Accepted Answer

A)  Straight-line 
B)  Units-of-activity 
C)  Double-declining-balance 
D)  All methods create the same income in 2011. 
A)  Straight-line 
B)  Units-of-activity 
C)  Double-declining-balance 
D)  All methods create the same income in 2011.

Question 11

Which of the following accounts would not be reported in the property, plant, and equipment section of a balance sheet?

Accepted Answer

A)  Accumulated depreciation--buildings 
B)  Buildings 
C)  Depreciation Expense--buildings 
D)  Land 
A)  Accumulated depreciation--buildings 
B)  Buildings 
C)  Depreciation Expense--buildings 
D)  Land

Question 12

On the balance sheet, the cumulative amount of depreciation expense recognized to date on a fixed asset is called:

Accepted Answer

A)  accumulated amortization. 
B)  accumulated depreciation. 
C)  amortization expense. 
D)  depreciation expense. 
A)  accumulated amortization. 
B)  accumulated depreciation. 
C)  amortization expense. 
D)  depreciation expense.

Question 13

Fill in the table shown below indicating the period of time over which each intangible asset should be amortized, and indicate the amount of amortization expense that should be reported for 2011.

Accepted Answer

The answer of Fill in the table shown below indicating...

Question 14

Gump Shrimp Company 
On January 1, 2011, Gump Shrimp Company purchased a ship for $1,000,000. It has a ten-year useful life and a salvage value of $100,000. The company uses the double-declining-balance method.
-
Refer to the information provided for Gump Shrimp Company. What would be the book value of the ship after ten years?

Accepted Answer

A)  $200,000 
B)  $400,000 
C)  $ 0 
D)  $100,000 
A)  $200,000 
B)  $400,000 
C)  $ 0 
D)  $100,000

Question 15

Upon review of Mack's statement of cash flows, the following was noted:   From this information, the most likely explanation is that Mack is:

Accepted Answer

A)  using cash from operations and selling long-term assets to pay back debt. 
B)  using cash from operations and borrowing to purchase long-term assets. 
C)  using its profits to expand growth. 
D)  using cash from investors to provide for operations. 
A)  using cash from operations and selling long-term assets to pay back debt. 
B)  using cash from operations and borrowing to purchase long-term assets. 
C)  using its profits to expand growth. 
D)  using cash from investors to provide for operations.

Question 16

Capitalizing an expenditure rather than recording it as a revenue expenditure:

Accepted Answer

A)  impacts the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period. 
B)  impacts the total book value of plant assets on the balance sheet, but has no effect on the amount of net income reported during an accounting period. 
C)  impacts the amount of net income reported during an accounting period, but has no effect on the total book value of plant assets on the balance sheet. 
D)  has no impact on the book value of plant assets on the balance sheet or the amount of income reported on the income statement. 
A)  impacts the total book value of plant assets reported on the balance sheet and the amount of net income reported during a period. 
B)  impacts the total book value of plant assets on the balance sheet, but has no effect on the amount of net income reported during an accounting period. 
C)  impacts the amount of net income reported during an accounting period, but has no effect on the total book value of plant assets on the balance sheet. 
D)  has no impact on the book value of plant assets on the balance sheet or the amount of income reported on the income statement.

Question 17

Able Company purchased land and incurred the following costs: Purchase price $~~~~~~~~~~~~~~~\$1,000,000$
Excavation cost$~~~~~~~~~~~~~~~~~~100,000$
Rarzing wild building$~~~~~~~~~~25,000$
Broker fees$~~~~~~~~~~~~~~~~~~~~~~~~20,000$
Cost off property taxas$~~~~~~~~~~50,000$

What is the cost of the land?

Accepted Answer

A)  $1,100,000 
B)  $1,195,000 
C)  $1,145,000 
D)  $1,125,000 
A)  $1,100,000 
B)  $1,195,000 
C)  $1,145,000 
D)  $1,125,000

Question 18

Butler Corporation uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration. Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of the company's assets?

Accepted Answer

A)  Double-declining-balance method 
B)  Revenue expenditure method 
C)  Straight-line method 
D)  Units-of-activity method 
A)  Double-declining-balance method 
B)  Revenue expenditure method 
C)  Straight-line method 
D)  Units-of-activity method

Question 19

Aggie, Inc. 
Aggie, Inc. purchased a truck at a cost of $12,000. The truck has an estimated salvage value of $2,000 and an estimated life of 5 years, or 100,000 hours of operation. The truck was purchased on January 1, 2011, and was used 27,000 hours in 2011 and 26,000 hours in 2012.
-
Refer to Aggie, Inc.'s information presented above, what method of depreciation will maximize depreciation expense in 2011?

Accepted Answer

A)  Straight-line 
B)  Double-declining-balance 
C)  Units-of-activity 
D)  All methods produce the same expense in 2011. 
A)  Straight-line 
B)  Double-declining-balance 
C)  Units-of-activity 
D)  All methods produce the same expense in 2011.

Question 20

A machine with a cost of $80,000 has an estimated salvage value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used for 5,000 hours?

Accepted Answer

A)  $5,000 
B)  $25,000 
C)  $15,000 
D)  $26,667 
A)  $5,000 
B)  $25,000 
C)  $15,000 
D)  $26,667

If technology changes rapidly, a firm should:

Upon review of Bert's statement of cash flows, the following was noted: From this information, the most likely explanation is that Bert is:

Peck Tech. purchased a patent at the beginning of 2011 for $400,000. The patent's legal life was 20 years, but economic benefits were expected for 10 years. Also, during 2011, Peck's incurred research and development costs of $200,000. The book value of the patents at December 31, 2011, is:

Using different depreciation methods for book purposes versus tax purposes for the same asset is:

Max's Tire Center Company Selected data from the financial statements of Max's Tire Center are provided below. -Refer to the selected data provided for Max's Tire Center. What is Max's fixed assets turnover in 2012?

If the depreciation method is known, which of the following sets of factors is needed to calculate depreciation on plant and equipment?

Which of the following accounts would not be reported in the property, plant, and equipment section of a balance sheet?

On the balance sheet, the cumulative amount of depreciation expense recognized to date on a fixed asset is called:

Fill in the table shown below indicating the period of time over which each intangible asset should be amortized, and indicate the amount of amortization expense that should be reported for 2011.

Upon review of Mack's statement of cash flows, the following was noted: From this information, the most likely explanation is that Mack is:

Capitalizing an expenditure rather than recording it as a revenue expenditure:

Able Company purchased land and incurred the following costs: Purchase price $~\$1,000,000$ Excavation cost $100,000$ Rarzing wild building $25,000$ Broker fees $~~~~20,000$ Cost off property taxas $50,000$ What is the cost of the land?

Butler Corporation uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration. Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of the company's assets?

A machine with a cost of $80,000 has an estimated salvage value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used for 5,000 hours?

Financial Accounting

Corporate Financial Statements

Recording Accounting Transactions

Accrual Accounting and Adjusting Entries

Internal Control and Cash

Receivables

Inventory

Liabilities

Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

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Exam 8: Fixed Assets and Intangible Assets

If technology changes rapidly, a firm should:

Upon review of Bert's statement of cash flows, the following was noted: From this information, the most likely explanation is that Bert is:

Peck Tech. purchased a patent at the beginning of 2011 for $400,000. The patent's legal life was 20 years, but economic benefits were expected for 10 years. Also, during 2011, Peck's incurred research and development costs of $200,000. The book value of the patents at December 31, 2011, is:

Using different depreciation methods for book purposes versus tax purposes for the same asset is:

Max's Tire Center Company Selected data from the financial statements of Max's Tire Center are provided below. -Refer to the selected data provided for Max's Tire Center. What is Max's fixed assets turnover in 2012?

If the depreciation method is known, which of the following sets of factors is needed to calculate depreciation on plant and equipment?

Which of the following accounts would not be reported in the property, plant, and equipment section of a balance sheet?

On the balance sheet, the cumulative amount of depreciation expense recognized to date on a fixed asset is called:

Fill in the table shown below indicating the period of time over which each intangible asset should be amortized, and indicate the amount of amortization expense that should be reported for 2011.

Upon review of Mack's statement of cash flows, the following was noted: From this information, the most likely explanation is that Mack is:

Capitalizing an expenditure rather than recording it as a revenue expenditure:

Butler Corporation uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration. Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of the company's assets?

A machine with a cost of $80,000 has an estimated salvage value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-activity method. What is the amount of depreciation for the second full year, during which the machine was used for 5,000 hours?

Financial Accounting

Corporate Financial Statements

Recording Accounting Transactions

Accrual Accounting and Adjusting Entries

Internal Control and Cash

Receivables

Inventory

Liabilities

Stockholders Equity

Statement of Cash Flows

Financial Statement Analysis

Filters