Aquablue Roadways Corporation operates throughout the United States.The following data (in millions) were adapted from recent financial statements of Aquablue. ? $\begin{array}{|l|r|r|} \hline & { \text { Year 2 } } & { \text { Year 1 } } \\ \hline \text { Sales } & \$ 47,250 & \$ 49,675 \\ \hline \text { Beginning of year property, plant, and equipment } & 18,620 & 15,730 \\ \hline \text { End of year property, plant, and equipment } & 22,360 & 18,540 \\ \hline \end{array}$ ? From the above data, what would be the asset turnover for Year 2? (Round the answer to two decimal places.)

A) 1.15 B) 1.22 C) 2.01 D) 2.18 A) 1.15 B) 1.22 C) 2.01 D) 2.18

A) amortized in a manner similar to other intangibles. B) written down only if an impairment in value occurs. C) charged to expense immediately. D) amortized over 40 years or its economic life, whichever is shorter. A) amortized in a manner similar to other intangibles. B) written down only if an impairment in value occurs. C) charged to expense immediately. D) amortized over 40 years or its economic life, whichever is shorter.

For each of the following items indicate whether the transactions listed below increased (+), decreased (-) or had no effect (0) by inserting the appropriate symbol. ? $\begin{array}{|l|l|c|c|c|c|c|} \hline&&\text { Net }&&&\text { Owners' }&\text { Cash } \\ &&\text { Income } & \text { Assets } & \text { Liab. } & \text { Equity }&\text { Flows }\\ \hline\text { (a)}&\text { Sold equipment for cash at a } \\ &\text { gain }\\ \hline\text { (b)}&\text { Recorded amortization } \\ &\text { expense on patents }\\ \hline\text { (c)}&\text { Paid cash for minor repairs to } \\ &\text { an asset }\\ \hline\text { (d)}& \text { Recorded a revenue } \\ &\text { expenditure incurred on } \\ &\text { account }\\ \hline\text { (e)}&\text { Paid cash to remove old } \\ &\text { buil ding from land being } \\ &\text { prepared for use }\\ \hline \end{array}$

a. +, +, 0, +, + b. -, -, 0, -, 0 c. -,

Exam 7: Fixed Assets, Natural Resources, and Intangible Assets

Identify the following as a Fixed Asset (FA), Intangible Asset (IA), Natural Resource (NR), or None of these (N). (a)Computer (b)Patent (c)Oil reserve (d)Goodwill (e)U.S.Treasury note (f)Land used for employee parking (g)Gold mine

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Question 1

Correct Answer:

Verified

$\begin{array} { l l } \text { FA } & \text { (a) (f) } \\\text { IA } & \text { (b) (d) } \\\text { NR } & \text { (c) (g) } \\\mathrm { N } & \text { (e) }\end{array}$

The double-declining-balance method of depreciation is also referred to as an accelerated depreciation method.

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(True/False)

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Question 2

Correct Answer:

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True

The inventory turnover measures how efficiently a company is using its operating assets to generate sales.

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(True/False)

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Question 3

Correct Answer:

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False

During 2016, Lexie, Inc.acquired Lena, Inc.for $10,000,000.The fair market value of the net assets of Lena, Inc.was $8,500,000 on the date of purchase.During 2019, Lexie, Inc.determined the goodwill resulting from the Lena acquisition was impaired and had a value of $1,000,000. (a)Determine the amount of goodwill implied during 2016. (b)Illustrate the effects on the accounts and the financial statements of the December 31, 2019, adjustment for the goodwill impairment.

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Question 4

Aquablue Roadways Corporation operates throughout the United States.The following data (in millions) were adapted from recent financial statements of Aquablue. ? Year 2 Year 1 Sales \ 47,250 \ 49,675 Beginning of year property, plant, and equipment 18,620 15,730 End of year property, plant, and equipment 22,360 18,540 ? From the above data, what would be the asset turnover for Year 2? (Round the answer to two decimal places.)

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Question 5

A company made some expensive repairs to equipment and buildings during the past year.(a) What criteria is used in determining whether the repairs are capital expenditures or revenue expenditures, and (b) what is the effect on the company's financial statements if they are incorrectly recorded as capital expenditures?

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Question 6

Which of the following is the effect on the transaction metrics of a company when it records depreciation?

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Question 7

Amortization refers to systematic periodic transfer of the cost of a fixed asset to an expense account.

(True/False)

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Question 8

Goodwill is:

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Question 9

If the proceeds from a sale of equipment is greater than the book value of the equipment as on the date of sale, a loss is recorded.

(True/False)

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Question 10

Machine with a useful life of 5 years and a residual value of $6,000 was purchased on January 3, 2016, for $48,500.The machine was sold on January 5, 2021, for $13,000. (a)What is the book value of the machine on January 5, 2021, assuming straight-line depreciation is used? (b)Illustrate the effects on the accounts and the financial statements of the sale of the machine on January 5, 2021. (c)Illustrate the effects on the accounts and the financial statements of the sale of the machine if it had been sold for $18,000 instead.

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Question 11

Depreciable cost is computed as:

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Question 12

An asset turnover ratio of 1.87 for a company indicates that:

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Question 13

For each of the following items indicate whether the transactions listed below increased (+), decreased (-) or had no effect (0) by inserting the appropriate symbol. ? Net Owners' Cash Income Assets Liab. Equity Flows (a) Sold equipment for cash at a gain (b) Recorded amortization expense on patents (c) Paid cash for minor repairs to an asset (d) Recorded a revenue expenditure incurred on account (e) Paid cash to remove old buil ding from land being prepared for use

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Question 14

A company acquired a truck for $79,000 at the beginning of the fiscal year.It has a useful life of 5 years and a residual value of $9,000.The company uses the straight-line method of depreciation.After owning the truck for two years, the company sold it for $34,000.(a) Determine depreciation expense for each of the first two years, and (b) determine the gain or loss resulting from the sale.

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Question 15

If a company sells a fixed asset for an amount which is less than its book value, a gain must be recognized.

(True/False)

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Question 16

A company sold office furniture costing $15,800 with accumulated depreciation of $13,000 for $1,500 cash.The entry to record the sale would include:

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Question 17

A current asset account must be increased for revenue expenditures since they benefit only the current period.

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Question 18

You are examining the financial statements of a company.You observe patent amortization expense of $1.5 million and a loss on impairment of goodwill for $25 million. (a)Describe how the accountants arrived at these amounts. (b)Interpret any information provided by these disclosures.

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Question 19

The straight-line method of depreciation is appropriate if usage of the asset varies considerably from year to year.

(True/False)

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Question 20

Identify the following as a Fixed Asset (FA), Intangible Asset (IA), Natural Resource (NR), or None of these (N). (a)Computer (b)Patent (c)Oil reserve (d)Goodwill (e)U.S.Treasury note (f)Land used for employee parking (g)Gold mine

The double-declining-balance method of depreciation is also referred to as an accelerated depreciation method.

The inventory turnover measures how efficiently a company is using its operating assets to generate sales.

Which of the following is the effect on the transaction metrics of a company when it records depreciation?

Amortization refers to systematic periodic transfer of the cost of a fixed asset to an expense account.

Goodwill is:

If the proceeds from a sale of equipment is greater than the book value of the equipment as on the date of sale, a loss is recorded.

Depreciable cost is computed as:

An asset turnover ratio of 1.87 for a company indicates that:

If a company sells a fixed asset for an amount which is less than its book value, a gain must be recognized.

A company sold office furniture costing $15,800 with accumulated depreciation of $13,000 for $1,500 cash.The entry to record the sale would include:

A current asset account must be increased for revenue expenditures since they benefit only the current period.

You are examining the financial statements of a company.You observe patent amortization expense of $1.5 million and a loss on impairment of goodwill for $25 million. (a)Describe how the accountants arrived at these amounts. (b)Interpret any information provided by these disclosures.

The straight-line method of depreciation is appropriate if usage of the asset varies considerably from year to year.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Exam 7: Fixed Assets, Natural Resources, and Intangible Assets

Identify the following as a Fixed Asset (FA), Intangible Asset (IA), Natural Resource (NR), or None of these (N). (a)Computer (b)Patent (c)Oil reserve (d)Goodwill (e)U.S.Treasury note (f)Land used for employee parking (g)Gold mine

The double-declining-balance method of depreciation is also referred to as an accelerated depreciation method.

The inventory turnover measures how efficiently a company is using its operating assets to generate sales.

Which of the following is the effect on the transaction metrics of a company when it records depreciation? ​

Amortization refers to systematic periodic transfer of the cost of a fixed asset to an expense account.

Goodwill is:

If the proceeds from a sale of equipment is greater than the book value of the equipment as on the date of sale, a loss is recorded.

Depreciable cost is computed as:

An asset turnover ratio of 1.87 for a company indicates that:

If a company sells a fixed asset for an amount which is less than its book value, a gain must be recognized.

A company sold office furniture costing $15,800 with accumulated depreciation of $13,000 for $1,500 cash.The entry to record the sale would include:

A current asset account must be increased for revenue expenditures since they benefit only the current period.

You are examining the financial statements of a company.You observe patent amortization expense of $1.5 million and a loss on impairment of goodwill for $25 million. (a)Describe how the accountants arrived at these amounts. (b)Interpret any information provided by these disclosures.

The straight-line method of depreciation is appropriate if usage of the asset varies considerably from year to year.

The Role of Accounting in Business

Basic Accounting Systems: Cash Basis

Basic Accounting Systems: Accrual Basis

Accounting for Merchandising Businesses

Internal Control and Cash

Receivables and Inventories

Liabilities and Stockholders Equity

Metric Analysis of Financial Statements

Accounting for Manufacturing Operations

Cost-Volume-Profit Analysis

Differential Analysis and Product Pricing

Budgeting and Standard Costs

Performance Evaluation for Decentralized Operations

Capital Investment Analysis

Filters

Which of the following is the effect on the transaction metrics of a company when it records depreciation?