Question 1

Goodwill can be recorded as an asset when a(n)

Accepted Answer

A) business has above normal profitability compared to other businesses in its industry. 
B) business can determine that it has created customer goodwill and name recognition. 
C) offer is received to purchase the business at a price in excess of the value of the assets. 
D) business is purchased and payment is made in excess of the value of the net assets. 
A) business has above normal profitability compared to other businesses in its industry. 
B) business can determine that it has created customer goodwill and name recognition. 
C) offer is received to purchase the business at a price in excess of the value of the assets. 
D) business is purchased and payment is made in excess of the value of the net assets. D

Question 2

Fabulous Creations
The assets section of the company's balance sheets for the years ended December 31, 2020 and 2019, is provided below.  
-Refer to Fabulous Creations. Determine the book value of the company's property, plant and equipment at December 31, 2020 and 2019.
​
What types of transaction(s) could have caused the change in book value of property, plant, and equipment during 2020?

Accepted Answer

Book Value at December 31,2020
$12,684
Book Value at December 31, 2019
$ 1,041
The transactions that could cause the change in the book value of property, plant, and equipment in 2020 would be mainly due to investments and acquisitions. By making a review of the statement of cash flows, the type of investments made by the company during 2020 could be better determined.

Question 3

Explain what costs are included in the acquisition cost of operating assets.

Accepted Answer

Acquisition costs should include all of the costs that are normal and necessary to acquire the asset and prepare it for its intended use. This generally includes: purchase price, taxes paid at the time of purchase, transportation charges, and installation costs.

Question 4

Depreciation is

Accepted Answer

A) an effort to achieve proper matching of the cost of operating assets with related revenues. 
B) an accumulation of funds to replace the related plant asset. 
C) the difference between the original cost and salvage value of an asset. 
D) the cash allocated each period to maintain a plant asset. 
A) an effort to achieve proper matching of the cost of operating assets with related revenues. 
B) an accumulation of funds to replace the related plant asset. 
C) the difference between the original cost and salvage value of an asset. 
D) the cash allocated each period to maintain a plant asset.

Question 5

Which of the following factors is not related to the decline in the usefulness of plant and equipment assets, and therefore does not need to be considered in selecting an appropriate depreciation method?

Accepted Answer

A) physical deterioration 
B) obsolescence 
C) repair and maintenance policies 
D) current replacement cost 
A) physical deterioration 
B) obsolescence 
C) repair and maintenance policies 
D) current replacement cost

Question 6

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.)
-Building

Accepted Answer

A) Balance Sheet--Property, Plant, and Equipment 
B) Balance Sheet--Intangible Assets 
C) Balance Sheet--Current Assets 
D) Balance Sheet--Other Assets 
E) Income Statement--Operating Section
F)Income Statement--Other Revenue and Expense Section 
A) Balance Sheet--Property, Plant, and Equipment 
B) Balance Sheet--Intangible Assets 
C) Balance Sheet--Current Assets 
D) Balance Sheet--Other Assets 
E) Income Statement--Operating Section
F)Income Statement--Other Revenue and Expense Section

Question 7

Finicky Freight purchased a truck at the beginning of 2019 for $80,000. The company decided to depreciate the truck over a 5-year period using the double-declining-balance method. The company estimated the equipment's salvage value at $8,000. Show how the costs should be presented on the financial statements at December 31, 2020. Label the statements properly.

Accepted Answer

The answer of Finicky Freight purchased a truck at the...

Question 8

Plant assets, current assets, property, plant and equipment, and fixed assets are all tangible assets.

Accepted Answer

A) True 
 B)False

Question 9

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.)
-Accumulated depreciation

Accepted Answer

A) Balance Sheet--Property, Plant, and Equipment 
B) Balance Sheet--Intangible Assets 
C) Balance Sheet--Current Assets 
D) Balance Sheet--Other Assets 
E) Income Statement--Operating Section
F)Income Statement--Other Revenue and Expense Section 
A) Balance Sheet--Property, Plant, and Equipment 
B) Balance Sheet--Intangible Assets 
C) Balance Sheet--Current Assets 
D) Balance Sheet--Other Assets 
E) Income Statement--Operating Section
F)Income Statement--Other Revenue and Expense Section

Question 10

A _________________ is the right to produce or sell a published work.

Accepted Answer

The answer of A _________________ is the right to produce...

Question 11

Company A has equipment that cost $5,250,000 which has accumulated depreciation of $500,000 while Company B has equipment that costs $4,600,000 and has accumulated depreciation of $4,400,000. Assuming both companies use straight line depreciation and estimated useful lives of 40 years with $100,000 residual values, which of the following statements is true?

Accepted Answer

A) Both companies have relative old equipment. 
B) Company A's equipment is older than Company B. 
C) Company A's equipment is newer than Company B. 
D) Company B's equipment has a higher book value than Company A. 
A) Both companies have relative old equipment. 
B) Company A's equipment is older than Company B. 
C) Company A's equipment is newer than Company B. 
D) Company B's equipment has a higher book value than Company A.

Question 12

On January 1, a company sold a machine for $5,000 that it had used for several years. The machine cost $11,000, and had accumulated depreciation of $4,500 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine for the year ended December 31?

Accepted Answer

A) gain of $5,000 
B) loss of $6,500 
C) loss of $1,500 
D) gain of $1,500 
A) gain of $5,000 
B) loss of $6,500 
C) loss of $1,500 
D) gain of $1,500

Question 13

An expenditure that does not increase the future economic benefits of the asset is referred to as a capital expenditure.

Accepted Answer

A) True 
 B)False

Question 14

Fantasy Cruise Lines
​
On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method.
-Refer to Fantasy Cruise Lines. What will be the book value of the ship at the end of its useful life?

Accepted Answer

A) $ -0- 
B) $100,000 
C) $200,000 
D) Need more information to determine this answer. 
A) $ -0- 
B) $100,000 
C) $200,000 
D) Need more information to determine this answer.

Question 15

Fabulous Creations
The assets section of the company's balance sheets for the years ended December 31, 2020 and 2019, is provided below.  
-Refer to Fabulous Creations. The company spends significant dollars on research and development initiatives each year to develop new products that allow it to remain competitive. Yet, the company's balance sheet does not reflect these costs. Why?

Accepted Answer

Amounts expended for research and develo

Question 16

During the year, Fisher Apartments purchased an apartment building to rent to university students. It cost the company $250 to repair damage done by a tenant to one of its units. How should this cost be recorded?

Accepted Answer

A) It should be recorded as part of the asset account. 
B) It should be recorded as repair and maintenance expense. 
C) It should not be recorded as the tenants will be charged for the damage. 
D) It should not be recorded since this is an immaterial amount to the landlord. 
A) It should be recorded as part of the asset account. 
B) It should be recorded as repair and maintenance expense. 
C) It should not be recorded as the tenants will be charged for the damage. 
D) It should not be recorded since this is an immaterial amount to the landlord.

Question 17

Flag Financial uses straight-line depreciation for its equipment with an estimated useful life of 10 years and zero residual value. The CEO points out that the equipment will last much shorter than 10 years, perhaps 5 years. What is the impact on earnings per share and net income of depreciating equipment over 5 years rather than 10 years?

Accepted Answer

A) Both earnings per share and net income will decrease. 
B) Both earnings per share and net income will increase. 
C) Earnings per share will decrease and net income will increase. 
D) Earnings per share will increase and net income will decrease. 
A) Both earnings per share and net income will decrease. 
B) Both earnings per share and net income will increase. 
C) Earnings per share will decrease and net income will increase. 
D) Earnings per share will increase and net income will decrease.

Question 18

A company purchased a building for $900,000 on January 1. The building is being depreciated over 40 years with an estimated residual value of $100,000. What will be the book value of the building in 10 years (assuming a December 31 year end)?

Accepted Answer

A) $575,000 
B) $600,000 
C) $675,000 
D) $700,000 
A) $575,000 
B) $600,000 
C) $675,000 
D) $700,000

Question 19

Costs incurred to keep plant assets in normal operating condition are called revenue expenditures.

Accepted Answer

A) True 
 B)False

Question 20

____________ costs are expenditures incurred in the discovery of new knowledge and the translation of research into a design or plan for a new product.

Accepted Answer

Research a

Goodwill can be recorded as an asset when a(n)

Explain what costs are included in the acquisition cost of operating assets.

Depreciation is

Which of the following factors is not related to the decline in the usefulness of plant and equipment assets, and therefore does not need to be considered in selecting an appropriate depreciation method?

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Building

Plant assets, current assets, property, plant and equipment, and fixed assets are all tangible assets.

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Accumulated depreciation

A _________________ is the right to produce or sell a published work.

On January 1, a company sold a machine for $5,000 that it had used for several years. The machine cost $11,000, and had accumulated depreciation of $4,500 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine for the year ended December 31?

An expenditure that does not increase the future economic benefits of the asset is referred to as a capital expenditure.

During the year, Fisher Apartments purchased an apartment building to rent to university students. It cost the company $250 to repair damage done by a tenant to one of its units. How should this cost be recorded?

A company purchased a building for $900,000 on January 1. The building is being depreciated over 40 years with an estimated residual value of $100,000. What will be the book value of the building in 10 years (assuming a December 31 year end)?

Costs incurred to keep plant assets in normal operating condition are called revenue expenditures.

____________ costs are expenditures incurred in the discovery of new knowledge and the translation of research into a design or plan for a new product.

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Sales And Receivables

Cost Of Goods Sold and Inventory

Current and Contingent Liabilities

Long Term Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Finance and Stock Market Equilibrium

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Exam 7: Operating Assets

Goodwill can be recorded as an asset when a(n)

Explain what costs are included in the acquisition cost of operating assets.

Depreciation is

Which of the following factors is not related to the decline in the usefulness of plant and equipment assets, and therefore does not need to be considered in selecting an appropriate depreciation method?

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Building

Plant assets, current assets, property, plant and equipment, and fixed assets are all tangible assets.

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Accumulated depreciation

A _________________ is the right to produce or sell a published work.

On January 1, a company sold a machine for $5,000 that it had used for several years. The machine cost $11,000, and had accumulated depreciation of $4,500 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine for the year ended December 31?

An expenditure that does not increase the future economic benefits of the asset is referred to as a capital expenditure.

During the year, Fisher Apartments purchased an apartment building to rent to university students. It cost the company $250 to repair damage done by a tenant to one of its units. How should this cost be recorded?

A company purchased a building for $900,000 on January 1. The building is being depreciated over 40 years with an estimated residual value of $100,000. What will be the book value of the building in 10 years (assuming a December 31 year end)?

Costs incurred to keep plant assets in normal operating condition are called revenue expenditures.

____________ costs are expenditures incurred in the discovery of new knowledge and the translation of research into a design or plan for a new product.

Accounting and The Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control And Cash

Sales And Receivables

Cost Of Goods Sold and Inventory

Current and Contingent Liabilities

Long Term Liabilities

Stockholders Apos Equity

The Statement Of Cash Flows

Financial Statement Analysis

Finance and Stock Market Equilibrium

Filters