Question 1

The land cost initially reported on the balance sheet may include legal fees and title insurance.

Accepted Answer

A) True 
 B)False

Question 2

If a long-lived asset has been impaired,the journal entry will require a debit to a loss account and a credit to the long-lived asset account.

Accepted Answer

A) True 
 B)False

Question 3

Operating leases

Accepted Answer

A) are reported on the balance sheet as an intangible asset. 
B) are,in essence,the acquisition of an asset using debt. 
C) allow companies to take advantage of various tax benefits 
D) have a lease term of one year or less. 
A) are reported on the balance sheet as an intangible asset. 
B) are,in essence,the acquisition of an asset using debt. 
C) allow companies to take advantage of various tax benefits 
D) have a lease term of one year or less.

Question 4

On January 1,2017,Gordon Company purchased a patent for $420,000 from an inventor who had developed a new manufacturing process.At the time of the purchase,the patent had a remaining useful life of 10 years.
A.Prepare the journal entry to record Gordon's purchase of the patent.
B.Prepare the journal entry to record amortization of the patent on December 31,2017.
C.At the end of 2020,after amortization had been recorded through December 31,2020,Gordon concluded that the estimated future cash flows from the patent to be $250,000.The patent's estimated fair value on December 31,2020 was $200,000.Prepare the journal entry to record the patent impairment,if necessary.

Accepted Answer

@#IMG-DLM& Computations:
The loss is the differenc

Question 5

Which of the following statements is correct?

Accepted Answer

A) Companies will change the method of depreciating assets from one year to the next to reflect usage of an asset. 
B) Companies can maximize net income in the first year of an asset's life by selecting the double-declining-balance method rather than the straight-line depreciation method. 
C) Companies can use one method of depreciation for some of their long-lived productive assets but then use a different method for another group or type of long-lived productive assets. 
D) Companies can minimize an asset's book value in the first year of use by selecting the straight-line depreciation method rather than the double-declining-balance method. 
A) Companies will change the method of depreciating assets from one year to the next to reflect usage of an asset. 
B) Companies can maximize net income in the first year of an asset's life by selecting the double-declining-balance method rather than the straight-line depreciation method. 
C) Companies can use one method of depreciation for some of their long-lived productive assets but then use a different method for another group or type of long-lived productive assets. 
D) Companies can minimize an asset's book value in the first year of use by selecting the straight-line depreciation method rather than the double-declining-balance method.

Question 6

Schager Company purchased a computer system on January 1,2019,at a cash cost of $25,000.The estimated useful life is 10 years,and the estimated residual value is $3,000.The company will use the double declining-balance depreciation method. How much is the 2020 depreciation expense?

Accepted Answer

A) $5,000. 
B) $4,120. 
C) $4,000. 
D) $3,520. 
A) $5,000. 
B) $4,120. 
C) $4,000. 
D) $3,520.

Question 7

Smith Company exchanges assets to acquire a building.The market price of the Smith stock on the exchange date was $35 per share and the building's book value on the books of the seller was $250,000. Which of the following journal entries is correct for Smith Company when Smith issues 10,000 shares of $10 par value common stock and pays $20,000 cash in exchange for the building?

Accepted Answer

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

Question 8

Sadler Corporation purchased equipment to be used in manufacturing.The purchase was made at the beginning of 2018 by paying cash of $150,000.The equipment has an estimated residual value of $10,000 and an expected useful life of 10 years.At the beginning of 2020,Sadler concluded that the total useful life of the equipment will be 8 years rather than 10,and that the residual value will be zero.Sadler uses the straight-line method for depreciation.
A.Prepare the journal entry to record depreciation on the equipment for 2019.
B.Prepare the journal entry to record depreciation on the equipment for 2020,including the effect of the changes in estimates.
C.Describe how and when a business should account for a change in the estimated useful life and/or residual value of a depreciable asset.

Accepted Answer

@#IMG-DLM& Computations:
($150,000 - $10,000)÷ 10

Question 9

Under GAAP,research and development costs are capitalized once a product or process has been developed.

Accepted Answer

A) True 
 B)False

Question 10

Goodwill is recorded only when an existing company is bought by another company and the purchase price exceeds the fair value of the purchased company's net assets.

Accepted Answer

A) True 
 B)False

Question 11

In most cases,the depreciation method chosen for financial reporting purposes (GAAP)must also be utilized for income tax reporting (IRS).

Accepted Answer

A) True 
 B)False

Question 12

Benson Mining Company purchased a site containing a mineral deposit during 2019.The purchase price was $820,000,and the site is estimated to contain 400,000 tons of extractable ore.Benson constructed a building at the site,at a cost of $500,000,to be used while the ore is being extracted.When the ore reserves are gone,the building will have no further value.
A.Explain the objective of recording depletion of natural resources.
B.Determine Benson's depletion rate per ton of ore.
C.Prepare the journal entry to record depletion for the year 2019,when Benson mined and sold 150,000 tons of ore.
D.Prepare the journal entry to record depreciation on the building for 2019.Benson calculates depreciation on the building using the units-of-production method based on the amount of ore extracted (150,000 tons in 2019).

Accepted Answer

A.The purpose of recording depletion is

Question 13

Barkley Company has a piece of equipment that it has been depreciating for 3 years.The equipment originally was estimated to have a useful life of 8 years and at the beginning of the current year,Barkley determines that the equipment's life has been extended to 10 years.When Barkley calculates depreciation for the current year,how many years of life should be used to calculate the depreciation expense?

Accepted Answer

A) 7 years. 
B) 5 years. 
C) 8 years. 
D) 10 years. 
A) 7 years. 
B) 5 years. 
C) 8 years. 
D) 10 years.

Question 14

Which of the following is correct regarding gain or loss on disposal of a long-lived asset?

Accepted Answer

A) Failure to report a gain on the sale of an asset results in an overstatement of net income. 
B) Failure to report a gain on the sale of an asset results in an understatement of stockholders' equity. 
C) Failure to report a loss on the sale of an asset results in an understatement of net income. 
D) Failure to report a loss on the sale of an asset results in an understatement of earnings per share. 
A) Failure to report a gain on the sale of an asset results in an overstatement of net income. 
B) Failure to report a gain on the sale of an asset results in an understatement of stockholders' equity. 
C) Failure to report a loss on the sale of an asset results in an understatement of net income. 
D) Failure to report a loss on the sale of an asset results in an understatement of earnings per share.

Question 15

Which of the following accounts would not be considered a tangible asset?

Accepted Answer

A) Buildings 
B) Land 
C) Equipment 
D) Copyright 
A) Buildings 
B) Land 
C) Equipment 
D) Copyright

Question 16

Failure to record amortization expense on a patent during the current year will result in which of the following?

Accepted Answer

A) Net income will be overstated,but there would be no effect on total assets. 
B) Net income for the year and total assets would both be overstated. 
C) Assets will be overstated,but there would be no effect on net income for the year. 
D) Net income and assets will both be understated. 
A) Net income will be overstated,but there would be no effect on total assets. 
B) Net income for the year and total assets would both be overstated. 
C) Assets will be overstated,but there would be no effect on net income for the year. 
D) Net income and assets will both be understated.

Question 17

Which of the following best describes the objective of depreciation?

Accepted Answer

A) To allocate the cost of a tangible asset to the periods in which its use contributes to earning revenue. 
B) To estimate the remaining useful life of the asset. 
C) To report the asset on the balance sheet at the estimated amount for which the asset could be sold on the balance sheet date. 
D) To estimate the current market value of the asset. 
A) To allocate the cost of a tangible asset to the periods in which its use contributes to earning revenue. 
B) To estimate the remaining useful life of the asset. 
C) To report the asset on the balance sheet at the estimated amount for which the asset could be sold on the balance sheet date. 
D) To estimate the current market value of the asset.

Question 18

A company has some bottling equipment which cost $8.5 million,has a net book value of $4.1 million,estimated future cash flows of $3.7 million,and a fair value of $3.1 million. How much is the asset impairment loss?

Accepted Answer

A) $5.4 million. 
B) $4.1 million. 
C) $0.4 million. 
D) $1.0 million. 
A) $5.4 million. 
B) $4.1 million. 
C) $0.4 million. 
D) $1.0 million.

Question 19

Hi-Crest Company purchased a machine on January 1,2019,for $300,000.The machine has an estimated useful life of 5 years and a $10,000 residual value.
Calculate depreciation expense and the year-end book value for 2019 and 2020 using the double declining-balance method of depreciation.

Accepted Answer

@#IMG-DLM& *$120,000 = $300,00

Question 20

Lue Company sold used equipment for $450,000 cash.The equipment was purchased 5 years ago for a cost of $800,000.It has been depreciated using the straight-line method over an estimated useful life of 10 years with an estimated residual value of $50,000.
Prepare the journal entry at the end of year five for the asset's disposal assuming the fifth year's depreciation had been recorded.

Accepted Answer

@#IMG-DLM& *[($800,0

The land cost initially reported on the balance sheet may include legal fees and title insurance.

If a long-lived asset has been impaired,the journal entry will require a debit to a loss account and a credit to the long-lived asset account.

Operating leases

Which of the following statements is correct?

Schager Company purchased a computer system on January 1,2019,at a cash cost of $25,000.The estimated useful life is 10 years,and the estimated residual value is $3,000.The company will use the double declining-balance depreciation method. How much is the 2020 depreciation expense?

Under GAAP,research and development costs are capitalized once a product or process has been developed.

Goodwill is recorded only when an existing company is bought by another company and the purchase price exceeds the fair value of the purchased company's net assets.

In most cases,the depreciation method chosen for financial reporting purposes (GAAP)must also be utilized for income tax reporting (IRS).

Which of the following is correct regarding gain or loss on disposal of a long-lived asset?

Which of the following accounts would not be considered a tangible asset?

Failure to record amortization expense on a patent during the current year will result in which of the following?

Which of the following best describes the objective of depreciation?

A company has some bottling equipment which cost $8.5 million,has a net book value of $4.1 million,estimated future cash flows of $3.7 million,and a fair value of $3.1 million. How much is the asset impairment loss?

Hi-Crest Company purchased a machine on January 1,2019,for $300,000.The machine has an estimated useful life of 5 years and a $10,000 residual value. Calculate depreciation expense and the year-end book value for 2019 and 2020 using the double declining-balance method of depreciation.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters

Exam 8: Reporting and Interpreting Property,plant,and Equipment;intangibles;and Natural Resources

The land cost initially reported on the balance sheet may include legal fees and title insurance.

If a long-lived asset has been impaired,the journal entry will require a debit to a loss account and a credit to the long-lived asset account.

Operating leases

Which of the following statements is correct?

Schager Company purchased a computer system on January 1,2019,at a cash cost of $25,000.The estimated useful life is 10 years,and the estimated residual value is $3,000.The company will use the double declining-balance depreciation method. How much is the 2020 depreciation expense?

Under GAAP,research and development costs are capitalized once a product or process has been developed.

Goodwill is recorded only when an existing company is bought by another company and the purchase price exceeds the fair value of the purchased company's net assets.

In most cases,the depreciation method chosen for financial reporting purposes (GAAP)must also be utilized for income tax reporting (IRS).

Which of the following is correct regarding gain or loss on disposal of a long-lived asset?

Which of the following accounts would not be considered a tangible asset?

Failure to record amortization expense on a patent during the current year will result in which of the following?

Which of the following best describes the objective of depreciation?

A company has some bottling equipment which cost $8.5 million,has a net book value of $4.1 million,estimated future cash flows of $3.7 million,and a fair value of $3.1 million. How much is the asset impairment loss?

Hi-Crest Company purchased a machine on January 1,2019,for $300,000.The machine has an estimated useful life of 5 years and a $10,000 residual value. Calculate depreciation expense and the year-end book value for 2019 and 2020 using the double declining-balance method of depreciation.

Financial Statements and Business Decisions

Investing and Financing Decisions and the Accounting System

Operating Decisions and the Accounting System

Adjustments,financial Statements,and the Quality of Earnings

Communicating and Interpreting Accounting Information

Reporting and Interpreting Sales Revenue,receivables,and Cash

Reporting and Interpreting Cost of Goods Sold and Inventory

Reporting and Interpreting Liabilities

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

Filters