Question 1

In calculating depreciation, cost, useful life, and residual value are all based on estimates.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

When an impairment loss is recorded what is the effect (if any) on Depreciation?

Accepted Answer

A) no effect 
B) credit Accumulated Depreciation 
C) debit Accumulated Depreciation 
D) Credit Depreciation Expense 
A) no effect 
B) credit Accumulated Depreciation 
C) debit Accumulated Depreciation 
D) Credit Depreciation Expense

Question 4

A patent

Accepted Answer

A) has a legal life of 20 years. 
B) is not amortized. 
C) can be renewed indefinitely. 
D) is rarely subject to litigation because it is an exclusive right. 
A) has a legal life of 20 years. 
B) is not amortized. 
C) can be renewed indefinitely. 
D) is rarely subject to litigation because it is an exclusive right.

Question 5

Mercy General Hospital installs a new parking lot.The paving cost $25,000 and the lights to illuminate the new parking lot cost $13,000.Which of the following statements is true with respect to these expenditures?

Accepted Answer

A) $25,000 should be debited to Land. 
B) $13,000 should be debited to Lighting Expense. 
C) $38,000 should be debited to Land. 
D) $38,000 should be debited to Land Improvements. 
A) $25,000 should be debited to Land. 
B) $13,000 should be debited to Lighting Expense. 
C) $38,000 should be debited to Land. 
D) $38,000 should be debited to Land Improvements.

Question 6

Which of the following is included in the cost of constructing a building?

Accepted Answer

A) cost of paving a parking lot 
B) cost of grading the land on which the building is to be constructed 
C) interest incurred during construction 
D) cost of removing the demolished building that existed on the land when it was purchased 
A) cost of paving a parking lot 
B) cost of grading the land on which the building is to be constructed 
C) interest incurred during construction 
D) cost of removing the demolished building that existed on the land when it was purchased

Question 7

If the carrying amount of an asset equals its selling price at the date of sale, then

Accepted Answer

A) a gain on disposal is recorded. 
B) no gain or loss on disposal is recorded. 
C) the asset is fully depreciated. 
D) a loss on disposal is recorded. 
A) a gain on disposal is recorded. 
B) no gain or loss on disposal is recorded. 
C) the asset is fully depreciated. 
D) a loss on disposal is recorded.

Question 8

Goodwill

Accepted Answer

A) is always expensed upon purchase. 
B) can be sold by itself to another company. 
C) can be purchased and charged directly to shareholders' equity. 
D) is the excess of cost paid to acquire a business over the fair value of the net identifiable assets of the business. 
A) is always expensed upon purchase. 
B) can be sold by itself to another company. 
C) can be purchased and charged directly to shareholders' equity. 
D) is the excess of cost paid to acquire a business over the fair value of the net identifiable assets of the business.

Question 9

On July 1, 2015, Arvolo Corporation purchased a copyright for $90,000.It is estimated that the copyright will have a useful life of 5 years with no residual value.The amount of Amortization Expense recognized for the year 2015 would be

Accepted Answer

A) $ 0. 
B) $ 9,000. 
C) $18,000. 
D) $90,000. 
A) $ 0. 
B) $ 9,000. 
C) $18,000. 
D) $90,000.

Question 10

The carrying amount of an asset is equal to the

Accepted Answer

A) asset's fair value less its original cost. 
B) "blue-book" amount relied on by secondary markets. 
C) replacement cost of the asset. 
D) asset's cost less accumulated depreciation. 
A) asset's fair value less its original cost. 
B) "blue-book" amount relied on by secondary markets. 
C) replacement cost of the asset. 
D) asset's cost less accumulated depreciation.

Question 11

Using the diminishing-balance method results in higher expense in the early years, and therefore lower profit.

Accepted Answer

A) True 
 B)False

Question 12

If a company incurs legal costs in unsuccessfully defending its patent, these costs would be debited to

Accepted Answer

A) Legal Expense. 
B) an Intangible Loss account. 
C) the Patent account. 
D) Other Comprehensive Income. 
A) Legal Expense. 
B) an Intangible Loss account. 
C) the Patent account. 
D) Other Comprehensive Income.

Question 13

When an asset is retired, a gain or loss must be recorded.

Accepted Answer

A) True 
 B)False

Question 14

Land improvements should be depreciated over the useful life of the

Accepted Answer

A) land. 
B) buildings on the land. 
C) land or land improvements, whichever is longer. 
D) land improvements. 
A) land. 
B) buildings on the land. 
C) land or land improvements, whichever is longer. 
D) land improvements.

Question 15

The cash flows from the purchase and sale of long-lived assets are reported in the operating activities section of the cash flow statement.

Accepted Answer

A) True 
 B)False

Question 16

Goodwill

Accepted Answer

A) can be recorded when generated internally. 
B) can be subdivided and sold in parts. 
C) can only be identified with the business as a whole. 
D) need not be tested annually for impairment. 
A) can be recorded when generated internally. 
B) can be subdivided and sold in parts. 
C) can only be identified with the business as a whole. 
D) need not be tested annually for impairment.

Question 17

The carrying amount of property, plant, and equipment is always equal to its fair value.

Accepted Answer

A) True 
 B)False

Question 18

Dallas Corporation purchases a new delivery truck for $35,000.The company logo is painted on the side of the truck for $1,800.The motor vehicle licence is $160.Annual insurance is $1,700.At what amount does Dallas record the cost of the new truck?

Accepted Answer

A) $35,000 
B) $35,160 
C) $36,800 
D) $36,860 
A) $35,000 
B) $35,160 
C) $36,800 
D) $36,860

Question 19

Interest incurred on the construction of a building can be included in the cost of the building

Accepted Answer

A) during the construction period of a building. 
B) for as long as the interest is payable. 
C) if the building is financed by a mortgage. 
D) under no circumstances. 
A) during the construction period of a building. 
B) for as long as the interest is payable. 
C) if the building is financed by a mortgage. 
D) under no circumstances.

Question 20

On October 1, 2015, Ming Wo Ltd.places a new asset into service.The cost of the asset is $9,000 with an estimated 5-year life and $1,500 residual value.Assuming that Ming Wo uses the double diminishing-balance method of depreciation, what is the carrying amount of the asset at December 31, 2015?

Accepted Answer

A) $8,100 
B) $6,750 
C) $6,000 
D) $5,400 
A) $8,100 
B) $6,750 
C) $6,000 
D) $5,400

In calculating depreciation, cost, useful life, and residual value are all based on estimates.

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

When an impairment loss is recorded what is the effect (if any) on Depreciation?

A patent

Mercy General Hospital installs a new parking lot.The paving cost $25,000 and the lights to illuminate the new parking lot cost $13,000.Which of the following statements is true with respect to these expenditures?

Which of the following is included in the cost of constructing a building?

If the carrying amount of an asset equals its selling price at the date of sale, then

Goodwill

On July 1, 2015, Arvolo Corporation purchased a copyright for $90,000.It is estimated that the copyright will have a useful life of 5 years with no residual value.The amount of Amortization Expense recognized for the year 2015 would be

The carrying amount of an asset is equal to the

Using the diminishing-balance method results in higher expense in the early years, and therefore lower profit.

If a company incurs legal costs in unsuccessfully defending its patent, these costs would be debited to

When an asset is retired, a gain or loss must be recorded.

Land improvements should be depreciated over the useful life of the

The cash flows from the purchase and sale of long-lived assets are reported in the operating activities section of the cash flow statement.

Goodwill

The carrying amount of property, plant, and equipment is always equal to its fair value.

Dallas Corporation purchases a new delivery truck for $35,000.The company logo is painted on the side of the truck for $1,800.The motor vehicle licence is $160.Annual insurance is $1,700.At what amount does Dallas record the cost of the new truck?

Interest incurred on the construction of a building can be included in the cost of the building

On October 1, 2015, Ming Wo Ltd.places a new asset into service.The cost of the asset is $9,000 with an estimated 5-year life and $1,500 residual value.Assuming that Ming Wo uses the double diminishing-balance method of depreciation, what is the carrying amount of the asset at December 31, 2015?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters

Exam 9: Reporting and Analyzing Long-Lived Assets

In calculating depreciation, cost, useful life, and residual value are all based on estimates.

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

When an impairment loss is recorded what is the effect (if any) on Depreciation?

A patent

Mercy General Hospital installs a new parking lot.The paving cost $25,000 and the lights to illuminate the new parking lot cost $13,000.Which of the following statements is true with respect to these expenditures?

Which of the following is included in the cost of constructing a building?

If the carrying amount of an asset equals its selling price at the date of sale, then

Goodwill

On July 1, 2015, Arvolo Corporation purchased a copyright for $90,000.It is estimated that the copyright will have a useful life of 5 years with no residual value.The amount of Amortization Expense recognized for the year 2015 would be

The carrying amount of an asset is equal to the

Using the diminishing-balance method results in higher expense in the early years, and therefore lower profit.

If a company incurs legal costs in unsuccessfully defending its patent, these costs would be debited to

When an asset is retired, a gain or loss must be recorded.

Land improvements should be depreciated over the useful life of the

The cash flows from the purchase and sale of long-lived assets are reported in the operating activities section of the cash flow statement.

Goodwill

The carrying amount of property, plant, and equipment is always equal to its fair value.

Dallas Corporation purchases a new delivery truck for $35,000.The company logo is painted on the side of the truck for $1,800.The motor vehicle licence is $160.Annual insurance is $1,700.At what amount does Dallas record the cost of the new truck?

Interest incurred on the construction of a building can be included in the cost of the building

On October 1, 2015, Ming Wo Ltd.places a new asset into service.The cost of the asset is $9,000 with an estimated 5-year life and $1,500 residual value.Assuming that Ming Wo uses the double diminishing-balance method of depreciation, what is the carrying amount of the asset at December 31, 2015?

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations and the Multiple-Step Income Statement

Reporting and Analyzing Inventory

Fraud, Internal Control, and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Long-Lived Assets

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Filters