Question 1

The depreciation expense of an asset can change for all of the following reasons EXCEPT

Accepted Answer

A)  change in the estimated useful life. 
B)  change in the asset's expected residual value. 
C)  increases due to additions to the asset for major repairs and improvements. 
D)  increase in the asset due to regular repairs and maintenance. 
A)  change in the estimated useful life. 
B)  change in the asset's expected residual value. 
C)  increases due to additions to the asset for major repairs and improvements. 
D)  increase in the asset due to regular repairs and maintenance.

Question 2

When deciding whether to expense or capitalize the costs incurred after acquiring a capital asset, which one of the following is NOT relevant to the decision?

Accepted Answer

A)  Will these costs extend useful life? 
B)  Will these costs reduce asset operating costs? 
C)  Will these costs improve output? 
D)  Will these costs be incurred for more than one year? 
A)  Will these costs extend useful life? 
B)  Will these costs reduce asset operating costs? 
C)  Will these costs improve output? 
D)  Will these costs be incurred for more than one year?

Question 3

Which of the following would NOT be capitalized as part of a purchased asset's cost?

Accepted Answer

A)  non-refundable taxes 
B)  installation cost 
C)  shipping costs 
D)  insurance costs 
A)  non-refundable taxes 
B)  installation cost 
C)  shipping costs 
D)  insurance costs

Question 4

To apply the units-of-activity method, all of the following information is needed EXCEPT the

Accepted Answer

A)  original cost. 
B)  estimated residual value. 
C)  estimated useful life. 
D)  estimated usage. 
A)  original cost. 
B)  estimated residual value. 
C)  estimated useful life. 
D)  estimated usage.

Question 5

Long-term capital assets with a(n) ___ may not be depreciable.

Accepted Answer

A)  finite life 
B)  indefinite life 
C)  residual value 
D)  undefined value 
A)  finite life 
B)  indefinite life 
C)  residual value 
D)  undefined value

Question 6

Water Company purchased a bottling machine on October 1, 2015 for $250,000. The estimated useful life is 25 years and they are using straight-line depreciation. During 2017, they spent $46,000 on the machine to double its capacity and $5,000 on routine cleaning. What should the depreciation expense be at September 30, 2017? The company's year end is September 30.

Accepted Answer

A)  $10,000 
B)  $30,000 
C)  $12,200 
D)  $12,000 
A)  $10,000 
B)  $30,000 
C)  $12,200 
D)  $12,000

Question 7

Which of the following depreciation methods calculates annual depreciation expense based on an asset's cost minus its residual value?

Accepted Answer

A)  deferred depreciation 
B)  straight-line 
C)  capital cost allowance 
D)  declining-balance 
A)  deferred depreciation 
B)  straight-line 
C)  capital cost allowance 
D)  declining-balance

Question 8

If an asset generates revenues evenly over its useful life, which depreciation method should be used?

Accepted Answer

A)  capital cost allowance 
B)  declining-balance 
C)  units-of-activity 
D)  straight-line 
A)  capital cost allowance 
B)  declining-balance 
C)  units-of-activity 
D)  straight-line

Question 9

Which of the following intangibles would be capitalized?

Accepted Answer

A)  research 
B)  advertising 
C)  goodwill acquired in a purchase 
D)  internally developed patent 
A)  research 
B)  advertising 
C)  goodwill acquired in a purchase 
D)  internally developed patent

Question 10

Jeremiah Co. purchased a machine on January 1, 2017 for $22,500. The machine had an estimated useful life of 10 years and an estimated residual value of $2,500. The company uses double-declining-balance depreciation. Assuming Jeremiah Co. uses straight-line depreciation, what would be the book value of the machine on December 31, 2021?

Accepted Answer

A)  $ 0 
B)  $2,000 
C)  $2,250 
D)  $2,500 
A)  $ 0 
B)  $2,000 
C)  $2,250 
D)  $2,500

Question 11

Ukela Corp. purchased a piece of equipment on May 15 for $27,000. It cost $400 to ship the equipment to the company's facilities and another $1,000 to install the equipment. After the equipment was installed the company had to pay an additional $1,500 for increased insurance. The capitalized cost of the equipment was

Accepted Answer

A)  $29,900. 
B)  $29,500. 
C)  $28,400. 
D)  $27,400. 
A)  $29,900. 
B)  $29,500. 
C)  $28,400. 
D)  $27,400.

Question 12

A plot of land was purchased for $120,000 which had $10,000 of past due property taxes on it. Non-refundable taxes on the purchase were $1,400 and the title search cost $500. The capitalized cost of the land was

Accepted Answer

A)  $120,000. 
B)  $121,900. 
C)  $130,000. 
D)  $131,900. 
A)  $120,000. 
B)  $121,900. 
C)  $130,000. 
D)  $131,900.

Question 13

Caricature's Inc. bought new computers on January 1 for $18,000 to improve the quality of their animation. The computers have a useful life of 8 years but Caricature's Inc. thinks that continuing technology developments will likely mean they will replace the computers after 4 years, at which time they will be worth $2,000. If they use straight-line depreciation, the depreciation expense for the first year will be

Accepted Answer

A)  $2,000. 
B)  $2,250. 
C)  $4,000. 
D)  $4,500. 
A)  $2,000. 
B)  $2,250. 
C)  $4,000. 
D)  $4,500.

Question 14

The depreciable cost of an asset is defined as the

Accepted Answer

A)  original cost less residual value. 
B)  original cost less depreciation. 
C)  original cost less accumulated depreciation. 
D)  original cost. 
A)  original cost less residual value. 
B)  original cost less depreciation. 
C)  original cost less accumulated depreciation. 
D)  original cost.

Question 15

An asset being depreciated with the straight-line method has a residual value of $10,000 and accumulated depreciation expense of $30,000 in its second year. What was the original cost of the asset if its useful life was 5 years?

Accepted Answer

A)  $160,000 
B)  $140,000 
C)  $ 85,000 
D)  $75,000 
A)  $160,000 
B)  $140,000 
C)  $ 85,000 
D)  $75,000

Question 16

Use the following information for questions 45-46.
Picton Farms purchased some equipment on January 1, 2017 for $12,600. The equipment has an estimated useful life of 10 years and an estimated residual value of $1,200. The company uses double-declining-balance depreciation.
-Depreciation expense for 2017 would be

Accepted Answer

A)  $1,140. 
B)  $1,260. 
C)  $2,280. 
D)  $2,520. 
A)  $1,140. 
B)  $1,260. 
C)  $2,280. 
D)  $2,520.

Question 17

The residual value is NOT directly used for the calculation of depreciation expense under which method?

Accepted Answer

A)  units of activity method 
B)  straight line method 
C)  interest capitalization method 
D)  declining balance method 
A)  units of activity method 
B)  straight line method 
C)  interest capitalization method 
D)  declining balance method

Question 18

Which of the following would NOT be classified as property, plant, and equipment?

Accepted Answer

A)  buildings in current use 
B)  land purchased for resale 
C)  machinery 
D)  tools used in production 
A)  buildings in current use 
B)  land purchased for resale 
C)  machinery 
D)  tools used in production

Question 19

A depreciable asset with a cost of $42,500 has a residual value of $2,500 and a useful life of 8 years. Total estimated units of output are 80,000 and in year 1; 5,200 units were produced. Under the straight-line method and the units-of-activity method the depreciation expense for the first year would be

Accepted Answer

The answer of A depreciable asset with a cost of...

Question 20

Assets acquired in a basket purchase are to be allocated a portion of the total price based on their respective

Accepted Answer

A)  fair market values. 
B)  book values. 
C)  present values. 
D)  assessed values. 
A)  fair market values. 
B)  book values. 
C)  present values. 
D)  assessed values.

The depreciation expense of an asset can change for all of the following reasons EXCEPT

When deciding whether to expense or capitalize the costs incurred after acquiring a capital asset, which one of the following is NOT relevant to the decision?

Which of the following would NOT be capitalized as part of a purchased asset's cost?

To apply the units-of-activity method, all of the following information is needed EXCEPT the

Long-term capital assets with a(n) ___ may not be depreciable.

Which of the following depreciation methods calculates annual depreciation expense based on an asset's cost minus its residual value?

If an asset generates revenues evenly over its useful life, which depreciation method should be used?

Which of the following intangibles would be capitalized?

A plot of land was purchased for $120,000 which had $10,000 of past due property taxes on it. Non-refundable taxes on the purchase were $1,400 and the title search cost $500. The capitalized cost of the land was

The depreciable cost of an asset is defined as the

An asset being depreciated with the straight-line method has a residual value of $10,000 and accumulated depreciation expense of $30,000 in its second year. What was the original cost of the asset if its useful life was 5 years?

The residual value is NOT directly used for the calculation of depreciation expense under which method?

Which of the following would NOT be classified as property, plant, and equipment?

Assets acquired in a basket purchase are to be allocated a portion of the total price based on their respective

Overview of Corporate Financial Reporting

Nalyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

Revenue Recognition and the Statement of Income

The Statement of Cash Flows

Cash and Accounts

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters

Exam 8: Inventory

The depreciation expense of an asset can change for all of the following reasons EXCEPT

When deciding whether to expense or capitalize the costs incurred after acquiring a capital asset, which one of the following is NOT relevant to the decision?

Which of the following would NOT be capitalized as part of a purchased asset's cost?

To apply the units-of-activity method, all of the following information is needed EXCEPT the

Long-term capital assets with a(n) ___ may not be depreciable.

Which of the following depreciation methods calculates annual depreciation expense based on an asset's cost minus its residual value?

If an asset generates revenues evenly over its useful life, which depreciation method should be used?

Which of the following intangibles would be capitalized?

A plot of land was purchased for $120,000 which had $10,000 of past due property taxes on it. Non-refundable taxes on the purchase were $1,400 and the title search cost $500. The capitalized cost of the land was

The depreciable cost of an asset is defined as the

An asset being depreciated with the straight-line method has a residual value of $10,000 and accumulated depreciation expense of $30,000 in its second year. What was the original cost of the asset if its useful life was 5 years?

The residual value is NOT directly used for the calculation of depreciation expense under which method?

Which of the following would NOT be classified as property, plant, and equipment?

Assets acquired in a basket purchase are to be allocated a portion of the total price based on their respective

Overview of Corporate Financial Reporting

Nalyzing Transaction and Their Effect on Financial Statement

Double-Entry Accounting and the Accounting Cycle

Revenue Recognition and the Statement of Incom

Revenue Recognition and the Statement of Income

The Statement of Cash Flows

Cash and Accounts

Long-Term Assets

Long-Term Liabilities

Shareholders Equity

Financial Statement Analysis

Filters