Question 1

The term,obsolescence,as it relates to the useful life of an asset,refers to:

Accepted Answer

A) The end of an asset's useful life. 
B) A plant asset that no longer has a competitive advantage because of innovations. 
C) The inability of a company's plant assets to meet the company's demands. 
D) An asset's salvage value becoming less than its replacement cost. 
E) Intangible assets that have been fully amortized. 
A) The end of an asset's useful life. 
B) A plant asset that no longer has a competitive advantage because of innovations. 
C) The inability of a company's plant assets to meet the company's demands. 
D) An asset's salvage value becoming less than its replacement cost. 
E) Intangible assets that have been fully amortized.

Question 2

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

Accepted Answer

A) Produce the same total depreciation over an asset's useful life. 
B) Produce the same depreciation expense each year. 
C) Produce the same book value each year. 
D) Are acceptable for tax purposes only. 
E) Are the only acceptable methods of depreciation for financial reporting. 
A) Produce the same total depreciation over an asset's useful life. 
B) Produce the same depreciation expense each year. 
C) Produce the same book value each year. 
D) Are acceptable for tax purposes only. 
E) Are the only acceptable methods of depreciation for financial reporting.

Question 3

When the usefulness of plant assets used to extract natural resources is directly related to the depletion of a natural resource,their costs are depreciated using the units-of-production method of depreciation,as long as the assets will not be moved to and used at another site when extraction of the natural resources is complete.

Accepted Answer

A) True 
 B)False

Question 4

A company purchased a weaving machine for $190,000.The machine has a useful life of 8 years and a residual value of $10,000.It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life.In the first year,15,000 bolts were produced.In the second year,production increased to 19,000 units.Using the units-of-production method,what is the book value of the machine at the end of the second year?

Accepted Answer

A) $108,400. 
B) $144,400. 
C) $81,600. 
D) $190,000. 
E) $180,000. 
A) $108,400. 
B) $144,400. 
C) $81,600. 
D) $190,000. 
E) $180,000.

Question 5

A company purchased mining property for $1,837,500 containing an estimated 7,350,000 tons of ore.In Year 1,it mined and sold 857,000 tons of ore.Calculate the depletion expense for Year 1 and prepare the journal entry to record the depletion.

Accepted Answer

$1,837,500/7,350,000 tons = $0

Question 6

The term inadequacy,as it relates to the useful life of an asset,refers to:

Accepted Answer

A) The inability of a company's plant assets to meet the company's demands. 
B) An asset that is worn out. 
C) An asset that is no longer useful in producing goods and services. 
D) The condition where the salvage value is too small to replace the asset. 
E) The condition where the asset's salvage value is less than its cost. 
A) The inability of a company's plant assets to meet the company's demands. 
B) An asset that is worn out. 
C) An asset that is no longer useful in producing goods and services. 
D) The condition where the salvage value is too small to replace the asset. 
E) The condition where the asset's salvage value is less than its cost.

Question 7

Colvin Enterprises purchased a depreciable asset on October 1,Year 1 at a cost of $100,000.The asset is expected to have a salvage value of $20,000 at the end of its five-year useful life.If the asset is depreciated on the double-declining-balance method,the asset's depreciation expense in Year 2 will be:

Accepted Answer

A) $36,000 
B) $42,000 
C) $54,000 
D) $16,000 
E) $90,000 
A) $36,000 
B) $42,000 
C) $54,000 
D) $16,000 
E) $90,000

Question 8

Crestfield leases office space for $7,000 per month.On January 3,the company incurs $12,000 to improve the leased office space.These improvements are expected to yield benefits for 10 years.Crestfield has 4 years remaining on its lease.What journal entry would be needed to record the expense for the first year related to the improvements?

Accepted Answer

A) Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200. 
B) Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000. 
C) Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200. 
D) Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000. 
E) Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000. 
A) Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200. 
B) Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000. 
C) Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200. 
D) Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000. 
E) Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000.

Question 9

Revenue expenditures to keep an asset in normal,good operating condition; they are necessary if an asset is to perform to expectations over its useful life are called ________.

Accepted Answer

The answer of Revenue expenditures to keep an asset in...

Question 10

Describe the accounting for intangible assets,including their acquisition,cost allocation,and accounts involved.

Accepted Answer

Intangible assets are recorded at acquis

Question 11

Gain or loss on the disposal of assets is determined by comparing the disposed asset's book value to the market value of any assets received.

Accepted Answer

A) True 
 B)False

Question 12

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.Depreciation expense in year 4 is:

Accepted Answer

A) $13,750. 
B) $3,750. 
C) $30,000. 
D) $2,500. 
E) $5,000. 
A) $13,750. 
B) $3,750. 
C) $30,000. 
D) $2,500. 
E) $5,000.

Question 13

A machine originally had an estimated useful life of 6 years,but after 4 complete years,it was decided that the original estimate of useful life should have been 10 years.At that point the remaining cost to be depreciated should be allocated over the remaining:

Accepted Answer

A) 2 years. 
B) 4 years. 
C) 6 years. 
D) 16 years. 
E) 10 years. 
A) 2 years. 
B) 4 years. 
C) 6 years. 
D) 16 years. 
E) 10 years.

Question 14

On April 1 of the current year,a company traded an old machine that originally cost $32,000 and that had accumulated depreciation of $24,000 for a similar new machine that had a cash price of $40,000.
1.Prepare the entry to record the exchange under the assumption that a $5,000 trade-in allowance was received and the balance of $35,000 was paid in cash.Assume the exchange transaction had commercial substance.
2.Prepare the entry to record the exchange under the assumption that instead of a $5,000 trade-in allowance,a $12,500 trade-in allowance was received and the balance of $27,500 was paid in cash.Assume the exchange transaction has commercial substance.

Accepted Answer

The answer of On April 1 of the current year,a...

Question 15

Ordinary repairs meet all of the following criteria except:

Accepted Answer

A) Are expenditures to keep an asset in normal operating condition. 
B) Are necessary if an asset is to perform to expectations over its useful life. 
C) Extend the useful life of an asset beyond its original estimate. 
D) Include cleaning,lubricating,and normal adjusting. 
E) Are treated as expenses. 
A) Are expenditures to keep an asset in normal operating condition. 
B) Are necessary if an asset is to perform to expectations over its useful life. 
C) Extend the useful life of an asset beyond its original estimate. 
D) Include cleaning,lubricating,and normal adjusting. 
E) Are treated as expenses.

Question 16

The first step in accounting for an asset disposal is to calculate the gain or loss on disposal.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not classified as plant assets?

Accepted Answer

A) Land. 
B) Land improvements. 
C) Buildings. 
D) Machinery and equipment. 
E) Patent. 
A) Land. 
B) Land improvements. 
C) Buildings. 
D) Machinery and equipment. 
E) Patent.

Question 18

A company purchased a cooling system on January 2 for $225,000.The system had an estimated useful life of 15 years.After using the system for 13 full years,the company completed a renovation of the system at a cost of $33,000 and now expects the system to be more efficient and last 8 years beyond the original estimate.The company uses the straight-line method of depreciation.
(a)Prepare the journal entry at January 3,to record the renovation of the cooling system.
(b)Prepare the journal entry at December 31,to record the revised depreciation for the thirteenth year.

Accepted Answer

The answer of A company purchased a cooling system on...

Question 19

Betterments are a type of capital expenditure.

Accepted Answer

A) True 
 B)False

Question 20

Additional costs of plant assets that do not materially increase the asset's life or productive capabilities are recorded as ________.

Accepted Answer

revenue ex

The term,obsolescence,as it relates to the useful life of an asset,refers to:

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

A company purchased mining property for $1,837,500 containing an estimated 7,350,000 tons of ore.In Year 1,it mined and sold 857,000 tons of ore.Calculate the depletion expense for Year 1 and prepare the journal entry to record the depletion.

The term inadequacy,as it relates to the useful life of an asset,refers to:

Revenue expenditures to keep an asset in normal,good operating condition; they are necessary if an asset is to perform to expectations over its useful life are called ________.

Describe the accounting for intangible assets,including their acquisition,cost allocation,and accounts involved.

Gain or loss on the disposal of assets is determined by comparing the disposed asset's book value to the market value of any assets received.

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.Depreciation expense in year 4 is:

A machine originally had an estimated useful life of 6 years,but after 4 complete years,it was decided that the original estimate of useful life should have been 10 years.At that point the remaining cost to be depreciated should be allocated over the remaining:

Ordinary repairs meet all of the following criteria except:

The first step in accounting for an asset disposal is to calculate the gain or loss on disposal.

Which of the following is not classified as plant assets?

Betterments are a type of capital expenditure.

Additional costs of plant assets that do not materially increase the asset's life or productive capabilities are recorded as ________.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters

Exam 8: Reporting and Analyzing Long-Term Assets

The term,obsolescence,as it relates to the useful life of an asset,refers to:

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

A company purchased mining property for $1,837,500 containing an estimated 7,350,000 tons of ore.In Year 1,it mined and sold 857,000 tons of ore.Calculate the depletion expense for Year 1 and prepare the journal entry to record the depletion.

The term inadequacy,as it relates to the useful life of an asset,refers to:

Revenue expenditures to keep an asset in normal,good operating condition; they are necessary if an asset is to perform to expectations over its useful life are called ________.

Describe the accounting for intangible assets,including their acquisition,cost allocation,and accounts involved.

Gain or loss on the disposal of assets is determined by comparing the disposed asset's book value to the market value of any assets received.

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.Depreciation expense in year 4 is:

A machine originally had an estimated useful life of 6 years,but after 4 complete years,it was decided that the original estimate of useful life should have been 10 years.At that point the remaining cost to be depreciated should be allocated over the remaining:

Ordinary repairs meet all of the following criteria except:

The first step in accounting for an asset disposal is to calculate the gain or loss on disposal.

Which of the following is not classified as plant assets?

Betterments are a type of capital expenditure.

Additional costs of plant assets that do not materially increase the asset's life or productive capabilities are recorded as ________.

Introducing Financial Statements

Financial Statements and the Accounting System

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash,fraud,and Internal Control

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments

International Operations

Filters