Question 1

A change in the estimated useful life of equipment requires

Accepted Answer

A) a retroactive change in the amount of depreciation recognized in previous years. 
B) that no change be made to depreciation calculations, so that depreciation expense amounts are comparable over the life of the asset. 
C) that the amount of depreciation expense be changed in the current and future years. 
D) that profit for the current year be increased. 
A) a retroactive change in the amount of depreciation recognized in previous years. 
B) that no change be made to depreciation calculations, so that depreciation expense amounts are comparable over the life of the asset. 
C) that the amount of depreciation expense be changed in the current and future years. 
D) that profit for the current year be increased.

Question 2

An item of property, plant, and equipment is considered to be impaired if its carrying amount exceeds its recoverable amount.

Accepted Answer

A) True 
 B)False

Question 3

The Land account would include all of the following costs except

Accepted Answer

A) drainage costs. 
B) the cost of building a parking lot. 
C) title fees. 
D) the cost of tearing down a building. 
A) drainage costs. 
B) the cost of building a parking lot. 
C) title fees. 
D) the cost of tearing down a building.

Question 4

Cordelia Corp acquires land for $120,000 cash. Additional costs are as follows:   Cordelia will record the cost of the land as

Accepted Answer

A) $120,000. 
B) $124,120. 
C) $124,880. 
D) $140,880. 
A) $120,000. 
B) $124,120. 
C) $124,880. 
D) $140,880.

Question 5

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 6

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 7

Interest may be included in the acquisition cost of property, plant, and equipment

Accepted Answer

A) during the construction period of a building. 
B) if equipment is purchased on credit. 
C) if acquisition of an existing plant is financed by a mortgage. 
D) under no circumstances. 
A) during the construction period of a building. 
B) if equipment is purchased on credit. 
C) if acquisition of an existing plant is financed by a mortgage. 
D) under no circumstances.

Question 8

The expected costs to retire an asset are called

Accepted Answer

A) off-balance sheet financing. 
B) expected retirement costs. 
C) disposal costs. 
D) asset retirement costs. 
A) off-balance sheet financing. 
B) expected retirement costs. 
C) disposal costs. 
D) asset retirement costs.

Question 9

On April 1, 2012, a machine was purchased for $33,600. It was estimated that it would have a $3,200 residual value at the end of its 5-year useful life. It was also estimated that the machine would be used for a total of 80,000 hours over the 5 years. If the actual number of machine hours used in 2012 was 12,000 hours and the company uses the units-of-production method of depreciation, the depreciation expense for 2012 would be

Accepted Answer

A) $5,040. 
B) $4,560. 
C) $3,780. 
D) $3,420. 
A) $5,040. 
B) $4,560. 
C) $3,780. 
D) $3,420.

Question 10

If the return on assets is positive, an increase in total assets will result in

Accepted Answer

A) an increase in the return on assets. 
B) a decrease in the return on assets. 
C) no change in the return on assets. 
D) The effect cannot be determined. 
A) an increase in the return on assets. 
B) a decrease in the return on assets. 
C) no change in the return on assets. 
D) The effect cannot be determined.

Question 11

Which of the following is an intangible asset with a finite life?

Accepted Answer

A) Copyright 
B) Trademark 
C) Goodwill 
D) Trade name 
A) Copyright 
B) Trademark 
C) Goodwill 
D) Trade name

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

Question 13

Use the following information for questions
On January 1, 2012, Baker Corp purchased equipment for $55,000. It was expected to last 8 years, after which it will be sold for $3,000. It is expected to be used for a total of 8,000 machine hours, and was used for 900 hours in 2012.
-The depreciation expense for 2012 using the double diminishing-balance method will be

Accepted Answer

A) $ 6,875. 
B) $12,375. 
C) $13,000. 
D) $13,750. 
A) $ 6,875. 
B) $12,375. 
C) $13,000. 
D) $13,750.

Question 14

Aye Corp purchases a remote site building for computer operations. The building will be suitable for operations after some necessary expenditures. The wiring must be replaced to handle the computer specifications. The roof is leaking and must be replaced. All rooms must be repainted and re-carpeted and there will also be some updating of the plumbing needed. Which of the following statements is true?

Accepted Answer

A) The cost of the building will not include the repainting and re-carpeting costs. 
B) The cost of the building will include the cost of replacing the roof. 
C) The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as Building Improvements. 
D) The wiring replacement will be part of the computer costs, not the building cost. 
A) The cost of the building will not include the repainting and re-carpeting costs. 
B) The cost of the building will include the cost of replacing the roof. 
C) The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as Building Improvements. 
D) The wiring replacement will be part of the computer costs, not the building cost.

Question 15

Use the following information for questions 
Pierre's Pet Shop Limited bought new grooming equipment on January 1, 2012 for $13,000. The useful life is estimated to be 3 years with a residual value of $1,000. The company uses straight-line depreciation. On January 1, 2013, Pierre determined that the value of the equipment is impaired, as its recoverable amount is expected to be $4,800.
-The journal entry to record the impairment would involve debits and credits to the following accounts:

Accepted Answer

The answer of Use the following information for questions 
Pierre's...

Question 16

The cost of land does not include

Accepted Answer

A) closing costs. 
B) annual property taxes. 
C) removal costs of an old building. 
D) title fees. 
A) closing costs. 
B) annual property taxes. 
C) removal costs of an old building. 
D) title fees.

Question 17

The depreciation method that applies a constant percentage to the carrying amount at the beginning of the period in calculating depreciation is called

Accepted Answer

A) straight-line. 
B) units-of-production. 
C) diminishing-balance. 
D) diminishing units-of-production. 
A) straight-line. 
B) units-of-production. 
C) diminishing-balance. 
D) diminishing units-of-production.

Question 18

When estimating the useful life of an asset, accountants do not consider

Accepted Answer

A) the cost to replace the asset at the end of its useful life. 
B) vulnerability to obsolescence. 
C) expected repairs and maintenance. 
D) the intended use of the asset. 
A) the cost to replace the asset at the end of its useful life. 
B) vulnerability to obsolescence. 
C) expected repairs and maintenance. 
D) the intended use of the asset.

Question 19

Use the following information for questions
On January 1, 2012, Baker Corp purchased equipment for $55,000. It was expected to last 8 years, after which it will be sold for $3,000. It is expected to be used for a total of 8,000 machine hours, and was used for 900 hours in 2012.
-The depreciation expense for 2012 using the units-of-production method will be

Accepted Answer

A) $5,850. 
B) $6,188. 
C) $6,500. 
D) $13,750. 
A) $5,850. 
B) $6,188. 
C) $6,500. 
D) $13,750.

Question 20

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

A change in the estimated useful life of equipment requires

An item of property, plant, and equipment is considered to be impaired if its carrying amount exceeds its recoverable amount.

The Land account would include all of the following costs except

Cordelia Corp acquires land for $120,000 cash. Additional costs are as follows: Cordelia will record the cost of the land as

Goodwill

Land improvements should be depreciated over the useful life of the

Interest may be included in the acquisition cost of property, plant, and equipment

The expected costs to retire an asset are called

If the return on assets is positive, an increase in total assets will result in

Which of the following is an intangible asset with a finite life?

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

The cost of land does not include

The depreciation method that applies a constant percentage to the carrying amount at the beginning of the period in calculating depreciation is called

When estimating the useful life of an asset, accountants do not consider

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

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

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Exam 9: Reporting and Analyzing Long-Lived Assets

A change in the estimated useful life of equipment requires

An item of property, plant, and equipment is considered to be impaired if its carrying amount exceeds its recoverable amount.

The Land account would include all of the following costs except

Cordelia Corp acquires land for $120,000 cash. Additional costs are as follows: Cordelia will record the cost of the land as

Goodwill

Land improvements should be depreciated over the useful life of the

Interest may be included in the acquisition cost of property, plant, and equipment

The expected costs to retire an asset are called

If the return on assets is positive, an increase in total assets will result in

Which of the following is an intangible asset with a finite life?

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

The cost of land does not include

The depreciation method that applies a constant percentage to the carrying amount at the beginning of the period in calculating depreciation is called

When estimating the useful life of an asset, accountants do not consider

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

The Purpose and Use of Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Merchandising Operations

Reporting and Analyzing Inventory

Internal Control and Cash

Reporting and Analyzing Receivables

Reporting and Analyzing Liabilities

Reporting and Analyzing Shareholders Equity

Reporting and Analyzing Investments

Statement of Cash Flows

Performance Measurement

Filters