Question 1

A loss on disposal results if the cash proceeds received from the asset sale are less than the asset's carrying amount.

Accepted Answer

A) True 
 B)False

Question 2

What is the book value of a tangible operating asset?

Accepted Answer

A)  Acquisition cost minus the balance in accumulated depreciation. 
B)  Total depreciation that has been recorded on the asset to date. 
C)  Acquisition cost. 
D)  Current estimated market value. 
A)  Acquisition cost minus the balance in accumulated depreciation. 
B)  Total depreciation that has been recorded on the asset to date. 
C)  Acquisition cost. 
D)  Current estimated market value.

Question 3

How is the matching principle related to the recording of depreciation on tangible operational assets?

Accepted Answer

A)  The matching principle requires a company to use the same depreciation. 
B)  The accountant who calculates the depreciation may assume that the company will continue in business as long as the estimated useful life of the asset. 
C)  A portion of the cost of the asset should be allocated as an expense for the periods in which the asset helps the business to earn revenue. 
D)  Once a particular depreciation method is adopted for a particular asset, the owner must continue to use the same method. 
A)  The matching principle requires a company to use the same depreciation. 
B)  The accountant who calculates the depreciation may assume that the company will continue in business as long as the estimated useful life of the asset. 
C)  A portion of the cost of the asset should be allocated as an expense for the periods in which the asset helps the business to earn revenue. 
D)  Once a particular depreciation method is adopted for a particular asset, the owner must continue to use the same method.

Question 4

Duval Company acquired a machine on January 1, 20A, that cost $2,700 and had an estimated residual value of $200. Complete the following schedule using the three methods of depreciation: A. straight-line, B.) units-of-production, C.) declining-balance at 150% acceleration rate.

Accepted Answer

The answer of Duval Company acquired a machine on January...

Question 5

When a change in estimate is made, there is no correction of previously recorded depreciation expense.

Accepted Answer

A) True 
 B)False

Question 6

The following information is available for C Co. and P Co:
   (1) Compute the fixed asset turnover ratio for the year for both C Co. and P Co.
a. C Co.
b. P Co. ________

Accepted Answer

(1) a. 5.08 ($18,813

Question 7

Which of the following is not a factor affecting the calculation of straight-line depreciation?

Accepted Answer

A)  Carrying amount. 
B)  Cost. 
C)  Useful life. 
D)  Residual value. 
A)  Carrying amount. 
B)  Cost. 
C)  Useful life. 
D)  Residual value.

Question 8

Hilman Company purchased a truck on January 1, 20A, at a cost of $34,000. The company estimated
that the truck would have a useful life of 4 years and a residual value of $4,000. Required:
1. Complete the following table:
   2. Which of the two methods in part 1 would result in:
a. Lower profit in 20A?
b. Lower profit in 20D? ________

Accepted Answer

Declining-balance:
20A 1/4 × 200% × $34,

Question 9

A tangible asset must be fully depreciated before it can be removed from the books.

Accepted Answer

A) True 
 B)False

Question 10

If a trademark is developed internally, it cannot be recognized as an intangible asset on the statement of financial position.

Accepted Answer

A) True 
 B)False

Question 11

On April 1, 2014, Michal Company sold equipment for $11,400 cash. The equipment had originally been purchased at a cost of $24,000 on January 1, 2010. The equipment was expected to a useful life of 8 years with no residual value. As of January 1, 2014, had accumulated depreciation of $12,000. The entry to record the sale of the equipment was:

Accepted Answer

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

Question 12

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours. Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be

Accepted Answer

A)  $14,400 
B)  $11,000 
C)  $13,200 
D)  $12,000 
A)  $14,400 
B)  $11,000 
C)  $13,200 
D)  $12,000

Question 13

Expenditures made after the asset is in use are always capital expenditures.

Accepted Answer

A) True 
 B)False

Question 14

When an operational asset is acquired for non-cash consideration, the cost of the asset received always is measured as the book value of the non-cash consideration given up.

Accepted Answer

A) True 
 B)False

Question 15

If a second-hand machine is purchased for operational use in a business, all renovation and repair costs on the used machine incurred by the purchaser prior to its operational use should be excluded from the cost of the asset.

Accepted Answer

A) True 
 B)False

Question 16

Airbury Company acquired manufacturing equipment at an invoice price of $80,000 and paid $750 to have it delivered to the factory. $400 was spent to repair a door that was damaged while installing the equipment. At what amount should this equipment be recorded on the company's books?

Accepted Answer

A)  $80,400 
B)  $80,000 
C)  $80,750 
D)  $81,150 
A)  $80,400 
B)  $80,000 
C)  $80,750 
D)  $81,150

Question 17

When an asset is retired, the amount of the gain is equal to:

Accepted Answer

A)  the asset's carrying amount. 
B)  the accumulated depreciation. 
C)  the amount of cash received. 
D)  the difference between the carrying amount and the proceeds. 
A)  the asset's carrying amount. 
B)  the accumulated depreciation. 
C)  the amount of cash received. 
D)  the difference between the carrying amount and the proceeds.

Question 18

Tweed Feed & Seed purchased a new machine on January 1, 20A:
   Accumulated depreciation at the end of year 5 (assume straight-line depreciation) $12,000
It is now the beginning of year 6 and the management re-evaluated the estimates related to the machine. Compute the depreciation expense for year 6 under each of the following independent cases:

Accepted Answer

CASE A: (26,000 - 12,000 - 2,000) ÷ (15

Question 19

On March 1, 20A, Jance Company purchased a producing oil well at a cash cost of $100,000. It is estimated that 250,000 barrels of oil can be produced over the remaining life of the well. By December 31, 20A (end of the accounting period), 1,500 barrels of oil were produced and sold. What would be the amount of depletion expense for 20A on this well?

Accepted Answer

A)  $300 
B)  $600 
C)  $450 
D)  $750 
A)  $300 
B)  $600 
C)  $450 
D)  $750

Question 20

Macon Assembly Company purchased a machine on January 2, 20C, by paying cash of $85,000. The machine has an estimated useful life of five years (or the production of 200,000 units) and an estimated residual value of $5,000.
Required:
1. Determine depreciation expense (to the nearest dollar) for each year of the machine's useful life under (a). straight-line depreciation; and (b). the declining-balance method with a 200% acceleration rate.
2. What is the book value of the machine after three years with the declining-balance method and a 200% acceleration rate?
3. What is the book value of the machinery after three years with straight-line depreciation.
4. If the machine was used to produce and sell 48,000 units in 20C, what would the depreciation expense be under the units of production method?

Accepted Answer

1. a. Straight-line depreciation for yea

A loss on disposal results if the cash proceeds received from the asset sale are less than the asset's carrying amount.

What is the book value of a tangible operating asset?

How is the matching principle related to the recording of depreciation on tangible operational assets?

Duval Company acquired a machine on January 1, 20A, that cost $2,700 and had an estimated residual value of $200. Complete the following schedule using the three methods of depreciation: A. straight-line, B.) units-of-production, C.) declining-balance at 150% acceleration rate.

When a change in estimate is made, there is no correction of previously recorded depreciation expense.

The following information is available for C Co. and P Co: (1) Compute the fixed asset turnover ratio for the year for both C Co. and P Co. a. C Co. b. P Co. ________

Which of the following is not a factor affecting the calculation of straight-line depreciation?

A tangible asset must be fully depreciated before it can be removed from the books.

If a trademark is developed internally, it cannot be recognized as an intangible asset on the statement of financial position.

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours. Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be

Expenditures made after the asset is in use are always capital expenditures.

When an operational asset is acquired for non-cash consideration, the cost of the asset received always is measured as the book value of the non-cash consideration given up.

If a second-hand machine is purchased for operational use in a business, all renovation and repair costs on the used machine incurred by the purchaser prior to its operational use should be excluded from the cost of the asset.

Airbury Company acquired manufacturing equipment at an invoice price of $80,000 and paid $750 to have it delivered to the factory. $400 was spent to repair a door that was damaged while installing the equipment. At what amount should this equipment be recorded on the company's books?

When an asset is retired, the amount of the gain is equal to:

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 Property, Plant, and Equipment; Intangibles; and Natural Resources

Reporting and Interpreting Bond Securities

Reporting and Interpreting Stockholders Equity

Statement of Cash Flows

Analyzing Financial Statements

Reporting and Interpreting Investments in Other Corporations

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Exam 9: Reporting and Interpreting Liabilities

A loss on disposal results if the cash proceeds received from the asset sale are less than the asset's carrying amount.

What is the book value of a tangible operating asset?

How is the matching principle related to the recording of depreciation on tangible operational assets?

Duval Company acquired a machine on January 1, 20A, that cost $2,700 and had an estimated residual value of $200. Complete the following schedule using the three methods of depreciation: A. straight-line, B.) units-of-production, C.) declining-balance at 150% acceleration rate.

When a change in estimate is made, there is no correction of previously recorded depreciation expense.

The following information is available for C Co. and P Co: (1) Compute the fixed asset turnover ratio for the year for both C Co. and P Co. a. C Co. b. P Co. ________

Which of the following is not a factor affecting the calculation of straight-line depreciation?

A tangible asset must be fully depreciated before it can be removed from the books.

If a trademark is developed internally, it cannot be recognized as an intangible asset on the statement of financial position.

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours. Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be

Expenditures made after the asset is in use are always capital expenditures.

When an operational asset is acquired for non-cash consideration, the cost of the asset received always is measured as the book value of the non-cash consideration given up.

If a second-hand machine is purchased for operational use in a business, all renovation and repair costs on the used machine incurred by the purchaser prior to its operational use should be excluded from the cost of the asset.

Airbury Company acquired manufacturing equipment at an invoice price of $80,000 and paid $750 to have it delivered to the factory. $400 was spent to repair a door that was damaged while installing the equipment. At what amount should this equipment be recorded on the company's books?

When an asset is retired, the amount of the gain is equal to:

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 Property, Plant, and Equipment; Intangibles; and Natural Resources

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