Question 1

Use the information above to answer the following question.What is the depreciation expense for 2014?

Accepted Answer

A) $4,000. 
B) $3,000. 
C) $6,000. 
D) $8,000. 
A) $4,000. 
B) $3,000. 
C) $6,000. 
D) $8,000.

Question 2

When a company sells a long-lived asset,stockholders' equity will change by the:

Accepted Answer

A) amount of the sale. 
B) amount of the asset's book value. 
C) amount of the asset's accumulated depreciation. 
D) difference between the sales price and the asset's book value. 
A) amount of the sale. 
B) amount of the asset's book value. 
C) amount of the asset's accumulated depreciation. 
D) difference between the sales price and the asset's book value.

Question 3

The calculation for depletion of natural resources is similar to the calculation for units-of-production depreciation.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is not an amount that is needed to calculate straight-line depreciation?

Accepted Answer

A) The cost of the asset. 
B) An estimate of the asset's useful economic life to the company. 
C) The estimated amount that the company will receive when it disposes of the asset. 
D) The cost the company will be required to incur to replace the asset. 
A) The cost of the asset. 
B) An estimate of the asset's useful economic life to the company. 
C) The estimated amount that the company will receive when it disposes of the asset. 
D) The cost the company will be required to incur to replace the asset.

Question 5

For each of the following,indicate if the asset would be depreciated,amortized or neither.
D - Depreciate
A - Amortize
N - Neither
_____ Transportation equipment
_____ Copyright
_____ Licensing rights
_____ Office equipment
_____ Goodwill
_____ Patents
_____ Self-constructed buildings
_____ Land
_____ Production equipment
_____ Trademark

Accepted Answer

The answer of For each of the following,indicate if the...

Question 6

Which of the following is not a characteristic of tangible long-lived assets?

Accepted Answer

A) productive 
B) used for a year or more 
C) not for resale 
D) amortized over their useful life 
A) productive 
B) used for a year or more 
C) not for resale 
D) amortized over their useful life

Question 7

Trademarks and goodwill are intangible assets that are not amortized.

Accepted Answer

A) True 
 B)False

Question 8

A company sells a piece of equipment half-way through the accounting period.The straight-line rate of depreciation on the equipment is $40,000 per year.Before recording the asset sale,the company should debit:

Accepted Answer

A) depreciation expense for $40,000 and credit accumulated depreciation for $40,000. 
B) accumulated depreciation for $40,000 and credit cash for $40,000. 
C) depreciation expense for $20,000 and credit accumulated depreciation for $20,000. 
D) cash for $20,000 and credit depreciation expense for $20,000. 
A) depreciation expense for $40,000 and credit accumulated depreciation for $40,000. 
B) accumulated depreciation for $40,000 and credit cash for $40,000. 
C) depreciation expense for $20,000 and credit accumulated depreciation for $20,000. 
D) cash for $20,000 and credit depreciation expense for $20,000.

Question 9

At the beginning of 2013,your company buys a $30,000 piece of equipment that it expects to use for 4 years.The company expects to produce a total of 200,000 units.The equipment has an estimated residual value of $2,000.
a.Find the depreciable cost.
b.Find the depreciation expense per year under the straight-line method.
c.Prepare a depreciation schedule under the straight-line method.
d.Find the depreciation rate per unit under the units-of-production method.
e.Prepare a depreciation schedule under the units-of-production method if,44,000 units are produced in one year,53,000 units in year two,51,000 units in year three,and 52,000 units in year four.

Accepted Answer

a.Depreciable cost = acquisition cost -

Question 10

Tax accounting and financial accounting use the same depreciation calculations and there are no differences in the results between the two accounting systems.

Accepted Answer

A) True 
 B)False

Question 11

During 2014,Company X sells 500,000 units for $8 each.Sales discounts are $100,000 and sales returns and allowances are $300,000.The company reported a total of $710,000 in fixed assets on January 1,2014 and $890,000 in fixed assets on December 31,2014.
a.Calculate net sales revenue.
b.Calculate average fixed assets.
c.Calculate the fixed asset turnover ratio.
d.Assume the 2014 fixed asset turnover ratio was lower than the 2013 ratio.Describe one circumstance where this change would indicate bad news and one circumstance where this change would be consistent with good news.

Accepted Answer

a.Net sales revenue = (500,000 x $8)- $1

Question 12

Which of the following statements regarding disposal of long-lived assets is not correct?

Accepted Answer

A) The gain or loss resulting from the disposal of a long-lived asset always appears below the "Income from Operations" line on the income statement. 
B) A journal entry is usually needed to update depreciation expense on a long-lived asset at the time of disposal. 
C) A company may dispose of long-lived assets by selling them,trading them in on new assets,or by scrapping them. 
D) The amount of the gain or loss on disposal of a long-lived asset before the end of its useful life will be influenced by the depreciation method that had been used. 
A) The gain or loss resulting from the disposal of a long-lived asset always appears below the "Income from Operations" line on the income statement. 
B) A journal entry is usually needed to update depreciation expense on a long-lived asset at the time of disposal. 
C) A company may dispose of long-lived assets by selling them,trading them in on new assets,or by scrapping them. 
D) The amount of the gain or loss on disposal of a long-lived asset before the end of its useful life will be influenced by the depreciation method that had been used.

Question 13

The right to exclude others from making or using an invention is a

Accepted Answer

A) patent. 
B) copyright. 
C) franchise. 
D) licensing right. 
A) patent. 
B) copyright. 
C) franchise. 
D) licensing right.

Question 14

Freight costs incurred when a long-lived asset is purchased should generally be

Accepted Answer

A) expensed in the period incurred. 
B) deducted from the accumulated depreciation account. 
C) added to the cost of the asset. 
D) not recorded in the accounts. 
A) expensed in the period incurred. 
B) deducted from the accumulated depreciation account. 
C) added to the cost of the asset. 
D) not recorded in the accounts.

Question 15

Use the information above to answer the following question.If the company sells the machine at the end of 5 years and receives $11,500,the journal entry to record the sale will include which of the following?

Accepted Answer

A) Debit to Accumulated Depreciation for $138,000. 
B) Credit to Machine for $138,000. 
C) Debit to Loss on Sale for $500. 
D) Credit to Residual Value for $12,000. 
A) Debit to Accumulated Depreciation for $138,000. 
B) Credit to Machine for $138,000. 
C) Debit to Loss on Sale for $500. 
D) Credit to Residual Value for $12,000.

Question 16

The Buddy Burger Corporation has $3.5 million in long-lived assets and has an accumulated depreciation account of $1.1 million.Which of the following statements is true?

Accepted Answer

A) The book value of long-lived assets is $2.4 million. 
B) The market value of long-lived assets is $3.5 million. 
C) The carrying value of long-lived assets is $3.5 million. 
D) The resale value of long-lived assets is $2.4 million. 
A) The book value of long-lived assets is $2.4 million. 
B) The market value of long-lived assets is $3.5 million. 
C) The carrying value of long-lived assets is $3.5 million. 
D) The resale value of long-lived assets is $2.4 million.

Question 17

The straight-line depreciation method and the double-declining-balance depreciation method

Accepted Answer

A) produce the same total depreciation over the asset's useful life. 
B) produce the same amount of depreciation expense each year. 
C) produce the same book value each year. 
D) are the only acceptable methods of depreciation for financial reporting. 
A) produce the same total depreciation over the asset's useful life. 
B) produce the same amount of depreciation expense each year. 
C) produce the same book value each year. 
D) are the only acceptable methods of depreciation for financial reporting.

Question 18

Which of the following statements most appropriately describes the purpose of depreciating a long-lived tangible asset?

Accepted Answer

A) To indicate how the asset has physically deteriorated. 
B) To show that the asset will eventually and gradually become obsolete. 
C) To record that the asset's market value declines over time. 
D) To match the cost of the asset to the period in which it generates revenue. 
A) To indicate how the asset has physically deteriorated. 
B) To show that the asset will eventually and gradually become obsolete. 
C) To record that the asset's market value declines over time. 
D) To match the cost of the asset to the period in which it generates revenue.

Question 19

On January 1,2016,Horton Inc.sells a machine for $23,000.The machine was originally purchased on January 1,2014 for $40,000.The machine was estimated to have a useful life of 5 years and no residual value.Horton uses straight-line depreciation.
a.Prepare the journal entry to record the sale.
b.If the company had used the double-declining balance method,how would this have affected any gain or loss on the sale?

Accepted Answer

a. @#IMG-DLM& @#IMG-DLM& @#IMG-DLM& b.Use of an accelerated depreciati

Question 20

A company purchases property that includes land,buildings and equipment for $5.5 million.The company pays $180,000 in legal fees,$220,000 in commissions,and $100,000 in appraisal fees.The land is estimated at 25%,the buildings are at 40%,and the equipment at 35% of the property value.Prepare the journal entry that is required to record the purchase assuming that the company paid 50% of the amounts using cash and signed a note for the remainder.

Accepted Answer

Acquisition cost = $5,500,000

Use the information above to answer the following question.What is the depreciation expense for 2014?

When a company sells a long-lived asset,stockholders' equity will change by the:

The calculation for depletion of natural resources is similar to the calculation for units-of-production depreciation.

Which of the following is not an amount that is needed to calculate straight-line depreciation?

Which of the following is not a characteristic of tangible long-lived assets?

Trademarks and goodwill are intangible assets that are not amortized.

A company sells a piece of equipment half-way through the accounting period.The straight-line rate of depreciation on the equipment is $40,000 per year.Before recording the asset sale,the company should debit:

Tax accounting and financial accounting use the same depreciation calculations and there are no differences in the results between the two accounting systems.

Which of the following statements regarding disposal of long-lived assets is not correct?

The right to exclude others from making or using an invention is a

Freight costs incurred when a long-lived asset is purchased should generally be

Use the information above to answer the following question.If the company sells the machine at the end of 5 years and receives $11,500,the journal entry to record the sale will include which of the following?

The Buddy Burger Corporation has $3.5 million in long-lived assets and has an accumulated depreciation account of $1.1 million.Which of the following statements is true?

The straight-line depreciation method and the double-declining-balance depreciation method

Which of the following statements most appropriately describes the purpose of depreciating a long-lived tangible asset?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control, Cash, and Merchandise Sales

Inventories and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 9: Long-Lived Tangible and Intangible Assets

Use the information above to answer the following question.What is the depreciation expense for 2014?

When a company sells a long-lived asset,stockholders' equity will change by the:

The calculation for depletion of natural resources is similar to the calculation for units-of-production depreciation.

Which of the following is not an amount that is needed to calculate straight-line depreciation?

Which of the following is not a characteristic of tangible long-lived assets?

Trademarks and goodwill are intangible assets that are not amortized.

A company sells a piece of equipment half-way through the accounting period.The straight-line rate of depreciation on the equipment is $40,000 per year.Before recording the asset sale,the company should debit:

Tax accounting and financial accounting use the same depreciation calculations and there are no differences in the results between the two accounting systems.

Which of the following statements regarding disposal of long-lived assets is not correct?

The right to exclude others from making or using an invention is a

Freight costs incurred when a long-lived asset is purchased should generally be

Use the information above to answer the following question.If the company sells the machine at the end of 5 years and receives $11,500,the journal entry to record the sale will include which of the following?

The Buddy Burger Corporation has $3.5 million in long-lived assets and has an accumulated depreciation account of $1.1 million.Which of the following statements is true?

The straight-line depreciation method and the double-declining-balance depreciation method

Which of the following statements most appropriately describes the purpose of depreciating a long-lived tangible asset?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments, Financial Statements, and Financial Results

Financial Reporting and Analysis

Internal Control, Cash, and Merchandise Sales

Inventories and Cost of Goods Sold

Receivables, Bad Debt Expense, and Interest Revenue

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters