Question 1

If a mining company extracts 1,500,000 tons in a period but only sells 1,200,000 tons,

Accepted Answer

A)  total depletion on the mine is based on the 1,200,000 tons. 
B)  depletion expense is recognized on the 1,500,000 tons extracted. 
C)  depletion expense is recognized on the 1,200,000 tons extracted and sold. 
D)  a separate accumulated depletion account is set up to record depletion on the 300,000 tons extracted but not sold. 
A)  total depletion on the mine is based on the 1,200,000 tons. 
B)  depletion expense is recognized on the 1,500,000 tons extracted. 
C)  depletion expense is recognized on the 1,200,000 tons extracted and sold. 
D)  a separate accumulated depletion account is set up to record depletion on the 300,000 tons extracted but not sold.

Question 2

Research and development costs should be charged to expense when incurred.

Accepted Answer

A) True 
 B)False

Question 3

The declining-balance method of computing depreciation is known as an _____________ depreciation method.

Accepted Answer

The answer of The declining-balance method of computing depreciation is...

Question 4

When vacant land is acquired, expenditures for clearing, draining, filling, and grading should be charged to the ______________ account.

Accepted Answer

The answer of When vacant land is acquired, expenditures for...

Question 5

Farr Company purchased a new van for floral deliveries on January 1, 2010. The van cost $36,000 with an estimated life of 5 years and $9,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2011?

Accepted Answer

A)  $5,760 
B)  $17,280 
C)  $23,040 
D)  $8,640 
A)  $5,760 
B)  $17,280 
C)  $23,040 
D)  $8,640

Question 6

Sargent Corporation bought equipment on January 1, 2010. The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

Accepted Answer

A)  $90,000. 
B)  $75,000. 
C)  $50,000. 
D)  $12,500. 
A)  $90,000. 
B)  $75,000. 
C)  $50,000. 
D)  $12,500.

Question 7

For each entry below make a correcting entry if necessary. If the entry given is correct, then state "No entry required."
(a) The $60 cost of repairing a printer was charged to Computer Equipment.
(b) The $5,000 cost of a major engine overhaul was debited to Repair Expense. The overhaul is expected to increase the operating efficiency of the truck.
(c) The $6,000 closing costs associated with the acquisition of land were debited to Legal Expense.
(d) A $500 charge for transportation expenses on new equipment purchased was debited to Freight-In.

Accepted Answer

The answer of For each entry below make a correcting...

Question 8

When an entire business is purchased, goodwill is the excess of cost over the book value of the net assets acquired.

Accepted Answer

A) True 
 B)False

Question 9

Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is not an intangible asset arising from a government grant?

Accepted Answer

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

Question 11

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

Accepted Answer

A) True 
 B)False

Question 12

Interest may be included in the acquisition cost of a plant asset

Accepted Answer

A)  during the construction period of a self-constructed asset. 
B)  if the asset is purchased on credit. 
C)  if the asset acquisition is financed by a long-term note payable. 
D)  if it is a part of a lump-sum purchase. 
A)  during the construction period of a self-constructed asset. 
B)  if the asset is purchased on credit. 
C)  if the asset acquisition is financed by a long-term note payable. 
D)  if it is a part of a lump-sum purchase.

Question 13

The December 31, 2009 balance sheet of Cooper Company showed Equipment of $64,000 and Accumulated Depreciation of $18,000. On January 1, 2010, the company decided that the equipment has a remaining useful life of 6 years with a $4,000 salvage value.
Instructions
Compute the (a) depreciable cost of the equipment and (b) revised annual depreciation.

Accepted Answer

The answer of The December 31, 2009 balance sheet of...

Question 14

In the case of an exchange of plant assets resulting in a loss on disposal, the cost of the new asset acquired is equal to the ______________ of the asset given up plus any cash paid by the purchaser.

Accepted Answer

The answer of In the case of an exchange of...

Question 15

To determine a new depreciation amount after a change in estimate of a plant asset's useful life, the asset's remaining depreciable cost is divided by its remaining useful life.

Accepted Answer

A) True 
 B)False

Question 16

All of the following intangible assets are amortized except

Accepted Answer

A)  copyrights. 
B)  limited-life franchises. 
C)  patents. 
D)  trademarks. 
A)  copyrights. 
B)  limited-life franchises. 
C)  patents. 
D)  trademarks.

Question 17

If a plant asset is sold before it is fully depreciated,

Accepted Answer

A)  only a gain on disposal can occur. 
B)  only a loss on disposal can occur. 
C)  either a gain or a loss can occur. 
D)  neither a gain nor a loss can occur. 
A)  only a gain on disposal can occur. 
B)  only a loss on disposal can occur. 
C)  either a gain or a loss can occur. 
D)  neither a gain nor a loss can occur.

Question 18

Enos Company has decided to change the estimate of the useful life of an asset that has been in service for 2 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 the IRS. 
B)  Retroactive changes must be made to correct previously recorded depreciation. 
C)  Only future years will be affected by the revision. 
D)  Both current and future years will be affected by the revision. 
A)  Revisions in useful life are permitted if approved by the IRS. 
B)  Retroactive changes must be made to correct previously recorded depreciation. 
C)  Only future years will be affected by the revision. 
D)  Both current and future years will be affected by the revision.

Question 19

Additions and improvements are costs incurred to increase the operating efficiency, productive capacity, or expected useful life and are referred to as __________________.

Accepted Answer

capital ex

Question 20

On October 1, 2010, Holt Company places a new asset into service. The cost of the asset is $60,000 with an estimated 5-year life and $15,000 salvage value at the end of its useful life. What is the book value of the plant asset on the December 31, 2010, balance sheet assuming that Holt Company uses the double-declining-balance method of depreciation?

Accepted Answer

A)  $39,000 
B)  $45,000 
C)  $54,000 
D)  $57,000 
A)  $39,000 
B)  $45,000 
C)  $54,000 
D)  $57,000

Exam 10: Plant Assets, Natural Resources, and Intangible Assets

If a mining company extracts 1,500,000 tons in a period but only sells 1,200,000 tons,

Research and development costs should be charged to expense when incurred.

The declining-balance method of computing depreciation is known as an _____________ depreciation method.

When vacant land is acquired, expenditures for clearing, draining, filling, and grading should be charged to the ______________ account.

Sargent Corporation bought equipment on January 1, 2010. The equipment cost $90,000 and had an expected salvage value of $15,000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

When an entire business is purchased, goodwill is the excess of cost over the book value of the net assets acquired.

Once cost is established for a plant asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability.

Which of the following is not an intangible asset arising from a government grant?

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

Interest may be included in the acquisition cost of a plant asset

In the case of an exchange of plant assets resulting in a loss on disposal, the cost of the new asset acquired is equal to the ______________ of the asset given up plus any cash paid by the purchaser.

To determine a new depreciation amount after a change in estimate of a plant asset's useful life, the asset's remaining depreciable cost is divided by its remaining useful life.

All of the following intangible assets are amortized except

If a plant asset is sold before it is fully depreciated,

Enos Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate?

Additions and improvements are costs incurred to increase the operating efficiency, productive capacity, or expected useful life and are referred to as __________________.

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Accounting Information Systems

Fraud, Internal Control, and Cash

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Corporations: Organization and Capital Stock Transactions

Corporations: Dividends, Retained Earnings, and Income Reporting

Long-Term Liabilities

Investments

Statement of Cash Flows

Financial Analysis: the Big Picture

Managerial Accounting

Job Order Costing

Process Costing

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

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