Question 1

Which of the following depreciation methods applies a uniform depreciation rate each period to an asset's book value?

Accepted Answer

A)  Straight-line 
B)  Units-of-production 
C)  Declining-balance 
D)  Sum-of-the-years'-digits 
A)  Straight-line 
B)  Units-of-production 
C)  Declining-balance 
D)  Sum-of-the-years'-digits

Question 2

Luther Soaps purchased a machine on January 1, 2010, for $18,000 cash. The machine has an estimated useful life of four years and a salvage value of $4,700. Luther uses the double-declining-balance method of depreciation for all its assets. What will be the machine's book value as of December 31, 2011?

Accepted Answer

A)  $5,100 
B)  $4,700 
C)  $4,500 
D)  $4,300 
A)  $5,100 
B)  $4,700 
C)  $4,500 
D)  $4,300

Question 3

Which of the following statements is the assumption on which straight-line depreciation is based?

Accepted Answer

A)  The operating efficiency of the asset decreases in later years. 
B)  Service value declines as a function of time rather than use. 
C)  Service value declines as a function of obsolescence rather than time. 
D)  Physical wear and tear are more important than economic obsolescence. 
A)  The operating efficiency of the asset decreases in later years. 
B)  Service value declines as a function of time rather than use. 
C)  Service value declines as a function of obsolescence rather than time. 
D)  Physical wear and tear are more important than economic obsolescence.

Question 4

When the estimate of an asset's useful life is changed,

Accepted Answer

A)  depreciation expense for all past periods must be recalculated. 
B)  there is no change in the amount of depreciation expense recorded for future years. 
C)  only the depreciation expense in the remaining years is changed. 
D)  None of these are true. 
A)  depreciation expense for all past periods must be recalculated. 
B)  there is no change in the amount of depreciation expense recorded for future years. 
C)  only the depreciation expense in the remaining years is changed. 
D)  None of these are true.

Question 5

The following is a schedule of machinery owned by Martin Manufacturing Company.
   
Martin computes depreciation on the straight-line basis. Based on the information presented, compute the:

Accepted Answer

The answer of The following is a schedule of machinery...

Question 6

Hartwell Trucking traded a used truck with a book value of $1,700 and a fair market value of $2,300 for a new truck with a list price of $17,800. Hartwell agreed to pay $13,000 in cash for the exchange in addition to giving up the used truck. Assuming the exchange has commercial substance, at what amount should the new truck be recorded?

Accepted Answer

A)  $17,800 
B)  $15,300 
C)  $14,700 
D)  None of these 
A)  $17,800 
B)  $15,300 
C)  $14,700 
D)  None of these

Question 7

At the start of its business, Snell Corp. decided to use the composite method of depreciation and prepared the following schedule of machinery owned.
 
Snell computes depreciation on the straight-line method. Based on the information presented, the composite life of these assets (in years) should be

Accepted Answer

A)  13.3. 
B)  16.0. 
C)  18.0. 
D)  19.8. 
A)  13.3. 
B)  16.0. 
C)  18.0. 
D)  19.8.

Question 8

Depreciation is the systematic allocation of historical depreciable cost to periods in which an asset is used. Depreciation is not a cash outflow but does reduce reported income and thus retained earnings by the depreciable cost of the asset less the tax savings associated with depreciation.
Required:

Accepted Answer

The answer of Depreciation is the systematic allocation of historical...

Question 9

Which of the following utilizes the straight-line depreciation method?

Accepted Answer

The answer of Which of the following utilizes the straight-line...

Question 10

A company using the group depreciation method for its delivery trucks retired one of the trucks after the average service life of the group was reached. Cash proceeds were received from a salvage company. The net carrying amount of these group asset accounts would be decreased by the

Accepted Answer

A)  original cost of the truck. 
B)  original cost of the truck less the cash proceeds. 
C)  cash proceeds received. 
D)  cash proceeds received and original cost of the truck. 
A)  original cost of the truck. 
B)  original cost of the truck less the cash proceeds. 
C)  cash proceeds received. 
D)  cash proceeds received and original cost of the truck.

Question 11

In January 2011, Vance Mining Corporation purchased a mineral mine for $7,200,000 with removable ore estimated by geological surveys at 4,320,000 tons. The property has an estimated value of $720,000 after the ore has been extracted. Vance incurred $2,160,000 of development costs preparing the property for the extraction of ore. During 2011, 540,000 tons were removed and 480,000 tons were sold. For the year ended December 31, 2011, Vance should include what amount of depletion in its cost of goods sold?

Accepted Answer

A)  $720,000 
B)  $810,000 
C)  $960,000 
D)  $1,080,000 
A)  $720,000 
B)  $810,000 
C)  $960,000 
D)  $1,080,000

Question 12

Overberg Company purchased a machine on January 2, 2010, for $1,000,000. The machine has an estimated useful life of five years and a salvage value of $100,000. Depreciation was computed by the 150% declining-balance method. The accumulated depreciation balance at December 31, 2011, should be

Accepted Answer

A)  $360,000. 
B)  $459,000. 
C)  $490,000. 
D)  $510,000. 
A)  $360,000. 
B)  $459,000. 
C)  $490,000. 
D)  $510,000.

Question 13

Eagle Company owns a tract of land that it purchased in 2008 for $200,000. The land is held as a future plant site and has a fair market value of $280,000 on July 1, 2011. Hall Company also owns a tract of land held as a future plant site. Hall paid $360,000 for the land in 2010 and the land has a fair market value of $380,000 on July 1, 2011. On this date, Eagle exchanged its land and paid $100,000 cash for the land owned by Hall. The exchange had commercial substance. At what amount should Eagle record the land acquired in the exchange?

Accepted Answer

A)  $280,000 
B)  $300,000 
C)  $320,000 
D)  $380,000 
A)  $280,000 
B)  $300,000 
C)  $320,000 
D)  $380,000

Question 14

On January 1, 2010, Herschel Locks Corporation purchased drilling equipment for $11,500. The equipment has an estimated useful life of four years and a salvage value of $200. Assuming that Herschel uses the straight-line method of depreciation, if it trades the equipment for new equipment with a list price of $15,500 on December 31, 2011, and pays $4,050 in the exchange, assuming the exchange lacks commercial substance, the new equipment should be recorded at

Accepted Answer

A)  $15,500. 
B)  $11,450. 
C)  $9,850. 
D)  $9,900. 
A)  $15,500. 
B)  $11,450. 
C)  $9,850. 
D)  $9,900.

Question 15

Depreciation of noncurrent operating assets is an accounting process for the purpose of

Accepted Answer

A)  reporting declining asset values on the balance sheet. 
B)  allocating asset costs over the periods benefited by use of the assets. 
C)  accounting for costs to reflect the change in general price levels. 
D)  setting aside funds to replace assets when their economic usefulness expires. 
A)  reporting declining asset values on the balance sheet. 
B)  allocating asset costs over the periods benefited by use of the assets. 
C)  accounting for costs to reflect the change in general price levels. 
D)  setting aside funds to replace assets when their economic usefulness expires.

Question 16

On December 2, 2011, Part Company, which operates a furniture rental business, traded in a used delivery truck with a carrying amount of $5,400 for a new delivery truck having a list price of $16,000 and paid a cash difference of $7,500 to the dealer. The used truck had a fair value of $6,000 on the date of the exchange. The exchange has commercial substance. At what amount should the new truck be recorded on Part's books?

Accepted Answer

A)  $10,600 
B)  $12,900 
C)  $13,500 
D)  $16,000 
A)  $10,600 
B)  $12,900 
C)  $13,500 
D)  $16,000

Question 17

Which of the following assets generally is required to be tested at least annually for impairment?

Accepted Answer

A)  Machinery 
B)  Patent 
C)  Goodwill 
D)  Copyright 
A)  Machinery 
B)  Patent 
C)  Goodwill 
D)  Copyright

Question 18

On January 1 Stockton Company acquired a machine with a four-year useful life. Stockton estimates the salvage value of the machine will be equal to ten percent of the acquisition cost. The company is debating between using either the double-declining-balance method or the sum-of-the-years'-digits method of depreciation. Comparing the depreciation expense for the first two years computed using these methods, the depreciation expense for the double-declining-balance method (compared to the sum-of-the-years'-digits method) will match which of the patterns shown below?

Accepted Answer

The answer of On January 1 Stockton Company acquired a...

Question 19

Melvin Motor Sales exchanged a car from its inventory for a computer to be used as a noncurrent operating asset. The following information relates to this exchange that took place on July 31, 2011:
 
The exchange has commercial substance.
On July 31, 2011, how much profit should Melvin recognize on this exchange?

Accepted Answer

A)  $0 
B)  $8,000 
C)  $10,000 
D)  $13,000 
A)  $0 
B)  $8,000 
C)  $10,000 
D)  $13,000

Question 20

The Chase Company exchanged equipment costing $240,000 with accumulated depreciation of $90,000 for equipment owned by Jones Corporation. The Jones equipment cost $330,000 with accumulated depreciation of $120,000. The fair value of both pieces of equipment was $300,000.
Provide the necessary entries to record the transaction on both companies' books assuming:

Accepted Answer

The answer of The Chase Company exchanged equipment costing $240,000...

Which of the following depreciation methods applies a uniform depreciation rate each period to an asset's book value?

Which of the following statements is the assumption on which straight-line depreciation is based?

When the estimate of an asset's useful life is changed,

The following is a schedule of machinery owned by Martin Manufacturing Company. Martin computes depreciation on the straight-line basis. Based on the information presented, compute the:

At the start of its business, Snell Corp. decided to use the composite method of depreciation and prepared the following schedule of machinery owned. Snell computes depreciation on the straight-line method. Based on the information presented, the composite life of these assets (in years) should be

Which of the following utilizes the straight-line depreciation method?

A company using the group depreciation method for its delivery trucks retired one of the trucks after the average service life of the group was reached. Cash proceeds were received from a salvage company. The net carrying amount of these group asset accounts would be decreased by the

Overberg Company purchased a machine on January 2, 2010, for $1,000,000. The machine has an estimated useful life of five years and a salvage value of $100,000. Depreciation was computed by the 150% declining-balance method. The accumulated depreciation balance at December 31, 2011, should be

Depreciation of noncurrent operating assets is an accounting process for the purpose of

Which of the following assets generally is required to be tested at least annually for impairment?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

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Exam 11: Investments in Noncurrent Operating Assets-Utilization and Retirement

Which of the following depreciation methods applies a uniform depreciation rate each period to an asset's book value?

Which of the following statements is the assumption on which straight-line depreciation is based?

When the estimate of an asset's useful life is changed,

The following is a schedule of machinery owned by Martin Manufacturing Company. Martin computes depreciation on the straight-line basis. Based on the information presented, compute the:

At the start of its business, Snell Corp. decided to use the composite method of depreciation and prepared the following schedule of machinery owned. Snell computes depreciation on the straight-line method. Based on the information presented, the composite life of these assets (in years) should be

Which of the following utilizes the straight-line depreciation method?

A company using the group depreciation method for its delivery trucks retired one of the trucks after the average service life of the group was reached. Cash proceeds were received from a salvage company. The net carrying amount of these group asset accounts would be decreased by the

Overberg Company purchased a machine on January 2, 2010, for $1,000,000. The machine has an estimated useful life of five years and a salvage value of $100,000. Depreciation was computed by the 150% declining-balance method. The accumulated depreciation balance at December 31, 2011, should be

Depreciation of noncurrent operating assets is an accounting process for the purpose of

Which of the following assets generally is required to be tested at least annually for impairment?

Financial Reporting

A Review of the Accounting Cycle

The Balance Sheet and Notes to the Financial Statements

The Income Statement

Statement of Cash Flows and Articulation

Earnings Management

The Revenuereceivablescash Cycle

Revenue Recognition

Inventory and Cost of Goods Sold

Investments in Noncurrent Operating Assets-Acquisition

Debt Financing

Equity Financing

Investments in Debt and Equity Securities

Leases

Income Taxes

Employee Compensation-Payroll, Pensions, Other Comp Issues

Earnings Per Share

Derivatives, Contingencies, Business Segments, and Interim Reports

Accounting Changes and Error Corrections

Statement of Cash Flows Revisited

Accounting in a Global Market

Analysis of Financial Statements

Filters