Question 1

If the proceeds from the sale of equipment exceed its carrying amount, a gain on disposal is reported.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is not considered to be an intangible asset?

Accepted Answer

A) A copyright 
B) An oil well 
C) A franchise 
D) A patent 
A) A copyright 
B) An oil well 
C) A franchise 
D) A patent

Question 3

Mandeep Ltd. has decided to change the estimate of the useful life of an asset that has been in service for two years. Which of the following statements describes the proper way to revise a useful life estimate?

Accepted Answer

A) Revisions in useful life are permitted if approved by Canada Revenue Agency. 
B) Both the current and future years will be affected by the revision. 
C) Retroactive changes must be made to correct previously recorded depreciation. 
D) Only future years will be affected by the revision. 
A) Revisions in useful life are permitted if approved by Canada Revenue Agency. 
B) Both the current and future years will be affected by the revision. 
C) Retroactive changes must be made to correct previously recorded depreciation. 
D) Only future years will be affected by the revision.

Question 4

When a company has a piece of property, plant, or equipment which has different components that depreciate at different rates, the total cost should be allocated to each component and each component should be depreciated separately.

Accepted Answer

A) True 
 B)False

Question 5

Use the following information for questions 
During 2012, Richlieu Corporation reported:  
-To one decimal, Richlieu's profit margin is

Accepted Answer

A) 3.7%. 
B) 5.0%. 
C) 6.3%. 
D) 8.0%. 
A) 3.7%. 
B) 5.0%. 
C) 6.3%. 
D) 8.0%.

Question 6

The Accumulated Depreciation account represents a cash fund available to replace property, plant, and equipment.

Accepted Answer

A) True 
 B)False

Question 7

Profit margin can be determined by multiplying the asset turnover by the return on assets.

Accepted Answer

A) True 
 B)False

Question 8

The cost of a finite intangible asset is not amortized, but the asset is tested for impairment.

Accepted Answer

A) True 
 B)False

Question 9

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 straight-line method will be

Accepted Answer

A) $5,850. 
B) $6,500. 
C) $6,875. 
D) $7,250. 
A) $5,850. 
B) $6,500. 
C) $6,875. 
D) $7,250.

Question 10

When an asset is sold, a gain is reported that is equal to the amount that the

Accepted Answer

A) sale price exceeds the carrying amount of the asset sold. 
B) sale price exceeds the original cost of the asset sold. 
C) carrying amount exceeds the sale price of the asset sold. 
D) sale price exceeds the depreciable cost of the asset sold. 
A) sale price exceeds the carrying amount of the asset sold. 
B) sale price exceeds the original cost of the asset sold. 
C) carrying amount exceeds the sale price of the asset sold. 
D) sale price exceeds the depreciable cost of the asset sold.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Amortizing an intangible asset over too long a period will understate annual amortization expense and also understate net profit.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following assets does not decline in service potential over the course of its useful life?

Accepted Answer

A) Office equipment 
B) Furnishings 
C) Land 
D) Computers 
A) Office equipment 
B) Furnishings 
C) Land 
D) Computers

Question 14

An asset with a cost of $45,000 and accumulated depreciation of $37,500 is sold for $9,500. What is the amount of the gain or loss on disposal?

Accepted Answer

A) $2,500 loss 
B) $2,500 gain 
C) $2,000 gain 
D) $2,000 loss 
A) $2,500 loss 
B) $2,500 gain 
C) $2,000 gain 
D) $2,000 loss

Question 15

On October 1, 2012, Ming Wo Ltd. places a new asset into service. The cost of the asset is $16,000 with an estimated 5-year life and $4,000 residual value. If Ming Wo uses straight-line depreciation, the depreciation expense for calendar 2012 is

Accepted Answer

A) $ 600. 
B) $ 800. 
C) $1,067. 
D) $2,400. 
A) $ 600. 
B) $ 800. 
C) $1,067. 
D) $2,400.

Question 16

The balance in the Accumulated Depreciation account represents the

Accepted Answer

A) cash fund to be used to replace assets. 
B) amount to be deducted from the cost of the asset to arrive at its fair value. 
C) amount charged to depreciation expense in the current period. 
D) amount charged to depreciation expense since the acquisition of the asset. 
A) cash fund to be used to replace assets. 
B) amount to be deducted from the cost of the asset to arrive at its fair value. 
C) amount charged to depreciation expense in the current period. 
D) amount charged to depreciation expense since the acquisition of the asset.

Question 17

Equipment was purchased for $25,000. Freight charges amounted to $700 and there was a cost of $3,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $1,600 residual value at the end of its 5-year useful life. Using the straight-line method, annual depreciation expense will be

Accepted Answer

A) $4,540. 
B) $4,680. 
C) $5,420. 
D) $5,740. 
A) $4,540. 
B) $4,680. 
C) $5,420. 
D) $5,740.

Question 18

If a building is sold at a gain, the gain on disposal should be reported in the non-operating section of the income statement.

Accepted Answer

A) True 
 B)False

Question 19

Which one of the following items is not considered to be a part of the cost of a truck purchased for business use?

Accepted Answer

A) Insurance during transit 
B) Truck licence 
C) Freight charges incurred when acquiring the truck 
D) Cost of lettering on the side of the truck 
A) Insurance during transit 
B) Truck licence 
C) Freight charges incurred when acquiring the truck 
D) Cost of lettering on the side of the truck

Question 20

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 truck 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

If the proceeds from the sale of equipment exceed its carrying amount, a gain on disposal is reported.

Which of the following is not considered to be an intangible asset?

Mandeep Ltd. has decided to change the estimate of the useful life of an asset that has been in service for two years. Which of the following statements describes the proper way to revise a useful life estimate?

When a company has a piece of property, plant, or equipment which has different components that depreciate at different rates, the total cost should be allocated to each component and each component should be depreciated separately.

Use the following information for questions During 2012, Richlieu Corporation reported: -To one decimal, Richlieu's profit margin is

The Accumulated Depreciation account represents a cash fund available to replace property, plant, and equipment.

Profit margin can be determined by multiplying the asset turnover by the return on assets.

The cost of a finite intangible asset is not amortized, but the asset is tested for impairment.

When an asset is sold, a gain is reported that is equal to the amount that the

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

Amortizing an intangible asset over too long a period will understate annual amortization expense and also understate net profit.

Which of the following assets does not decline in service potential over the course of its useful life?

An asset with a cost of $45,000 and accumulated depreciation of $37,500 is sold for $9,500. What is the amount of the gain or loss on disposal?

On October 1, 2012, Ming Wo Ltd. places a new asset into service. The cost of the asset is $16,000 with an estimated 5-year life and $4,000 residual value. If Ming Wo uses straight-line depreciation, the depreciation expense for calendar 2012 is

The balance in the Accumulated Depreciation account represents the

If a building is sold at a gain, the gain on disposal should be reported in the non-operating section of the income statement.

Which one of the following items is not considered to be a part of the cost of a truck purchased for business use?

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 truck licence is $160. Annual insurance is $1,700. At what amount does Dallas record the cost of the new truck?

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

If the proceeds from the sale of equipment exceed its carrying amount, a gain on disposal is reported.

Which of the following is not considered to be an intangible asset?

Mandeep Ltd. has decided to change the estimate of the useful life of an asset that has been in service for two years. Which of the following statements describes the proper way to revise a useful life estimate?

When a company has a piece of property, plant, or equipment which has different components that depreciate at different rates, the total cost should be allocated to each component and each component should be depreciated separately.

Use the following information for questions During 2012, Richlieu Corporation reported: -To one decimal, Richlieu's profit margin is

The Accumulated Depreciation account represents a cash fund available to replace property, plant, and equipment.

Profit margin can be determined by multiplying the asset turnover by the return on assets.

The cost of a finite intangible asset is not amortized, but the asset is tested for impairment.

When an asset is sold, a gain is reported that is equal to the amount that the

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

Amortizing an intangible asset over too long a period will understate annual amortization expense and also understate net profit.

Which of the following assets does not decline in service potential over the course of its useful life?

An asset with a cost of $45,000 and accumulated depreciation of $37,500 is sold for $9,500. What is the amount of the gain or loss on disposal?

On October 1, 2012, Ming Wo Ltd. places a new asset into service. The cost of the asset is $16,000 with an estimated 5-year life and $4,000 residual value. If Ming Wo uses straight-line depreciation, the depreciation expense for calendar 2012 is

The balance in the Accumulated Depreciation account represents the

If a building is sold at a gain, the gain on disposal should be reported in the non-operating section of the income statement.

Which one of the following items is not considered to be a part of the cost of a truck purchased for business use?

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 truck licence is $160. Annual insurance is $1,700. At what amount does Dallas record the cost of the new truck?

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