Question 1

The book value of a plant asset is the amount originally paid for the asset less anticipated salvage value.

Accepted Answer

A) True 
 B)False

Question 2

Equipment was purchased for $150,000.Freight charges amounted to $7,000 and there was a cost of $20,000 for building a foundation and installing the equipment.It is estimated that the equipment will have a $30,000 salvage value at the end of its 5-year useful life.Depreciation expense each year using the straight-line method will be

Accepted Answer

A) $35,400. 
B) $29,400. 
C) $24,600. 
D) $24,000. 
A) $35,400. 
B) $29,400. 
C) $24,600. 
D) $24,000.

Question 3

A truck costing $72,000 and on which $60,000 of accumulated depreciation has been recorded was discarded as having no value.The entry to record this event would include a

Accepted Answer

A) gain of $12,000. 
B) loss of $12,000. 
C) credit to Accumulated Depreciation for $60,000. 
D) credit to Accumulated Depreciation for $72,000. 
A) gain of $12,000. 
B) loss of $12,000. 
C) credit to Accumulated Depreciation for $60,000. 
D) credit to Accumulated Depreciation for $72,000.

Question 4

A truck costing $75,000 and on which $65,000 of accumulated depreciation has been re-corded was discarded as having no value.The entry to record this event would include a

Accepted Answer

A) gain of $10,000. 
B) loss of $10,000. 
C) credit to Accumulated Depreciation for $65,000. 
D) credit to Accumulated Depreciation for $75,000. 
A) gain of $10,000. 
B) loss of $10,000. 
C) credit to Accumulated Depreciation for $65,000. 
D) credit to Accumulated Depreciation for $75,000.

Question 5

Wesley Hospital installs a new parking lot.The paving cost $60,000 and the lights to illuminate the new parking area cost $24,000.Which of the following statements is true with respect to these additions?

Accepted Answer

A) $60,000 should be debited to the Land account. 
B) $24,000 should be debited to Land Improvements. 
C) $84,000 should be debited to the Land account. 
D) $84,000 should be debited to Land Improvements. 
A) $60,000 should be debited to the Land account. 
B) $24,000 should be debited to Land Improvements. 
C) $84,000 should be debited to the Land account. 
D) $84,000 should be debited to Land Improvements.

Question 6

If an acquired franchise or license is for an indefinite time period, then the cost of the asset should not be amortized.

Accepted Answer

A) True 
 B)False

Question 7

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

Accepted Answer

A) expensed when incurred. 
B) capitalized as a part of the cost of the asset. 
C) debited to the Accumulated Depreciation account. 
D) not recorded until they become material in amount. 
A) expensed when incurred. 
B) capitalized as a part of the cost of the asset. 
C) debited to the Accumulated Depreciation account. 
D) not recorded until they become material in amount.

Question 8

A company sells a plant asset that originally cost $375,000 for $125,000 on December 31, 2022.The accumulated depreciation account had a balance of $150,000 after the current year's depreciation of $37,500 had been recorded.The company should recognize a

Accepted Answer

A) $250,000 loss on disposal. 
B) $100,000 gain on disposal. 
C) $100,000 loss on disposal. 
D) $62,500 loss on disposal. 
A) $250,000 loss on disposal. 
B) $100,000 gain on disposal. 
C) $100,000 loss on disposal. 
D) $62,500 loss on disposal.

Question 9

Research and development costs that result in a successful product that is patentable are charged to the Patent account.

Accepted Answer

A) True 
 B)False

Question 10

Capital expenditures are expenditures that increase the company's investment in productive facilities.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is not considered an intangible asset?

Accepted Answer

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

Question 12

Sprague Associates sold office furniture for $48,000.The furniture had an original cost of $144,000 and accumulated depreciation of $72,000.Ignoring the tax effect, as a result of the sale

Accepted Answer

A) net income will increase $48,000. 
B) net income will increase $24,000. 
C) net income will decrease $24,000. 
D) net income will decrease $48,000. 
A) net income will increase $48,000. 
B) net income will increase $24,000. 
C) net income will decrease $24,000. 
D) net income will decrease $48,000.

Question 13

Grant 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 the 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 the current and future years will be affected by the revision.

Question 14

Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n)

Accepted Answer

A) equal and equitable manner. 
B) accelerated and accurate manner. 
C) systematic and rational manner. 
D) conservative market-based manner. 
A) equal and equitable manner. 
B) accelerated and accurate manner. 
C) systematic and rational manner. 
D) conservative market-based manner.

Question 15

All of the following statements are false regarding depreciation except

Accepted Answer

A) depreciation is an asset valuation process. 
B) depreciation does not apply to land improvements. 
C) recognizing depreciation results in the accumulation of cash for asset replacement. 
D) depreciation does not apply to land. 
A) depreciation is an asset valuation process. 
B) depreciation does not apply to land improvements. 
C) recognizing depreciation results in the accumulation of cash for asset replacement. 
D) depreciation does not apply to land.

Question 16

Machinery was purchased for $340,000 on January 1, 2022.Freight charges amounted to $14,000 and there was a cost of $40,000 for building a foundation and installing the machinery.It is estimated that the machinery will have a $60,000 salvage value at the end of its 5-year useful life.What is the amount of accumulated depreciation at December 31, 2023 if the straight-line method of depreciation is used?

Accepted Answer

A) $133,600. 
B) $66,800. 
C) $57,200. 
D) $114,400. 
A) $133,600. 
B) $66,800. 
C) $57,200. 
D) $114,400.

Question 17

A factory machine was purchased for $140,000 on January 1, 2022.It was estimated that it would have a $28,000 salvage value at the end of its 5-year useful life.It was also estimated that the machine would be run 40,000 hours in the 5 years.If the actual number of machine hours ran in 2022 was 4,000 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2022 would be

Accepted Answer

A) $14,000. 
B) $22,400. 
C) $28,000. 
D) $11,200. 
A) $14,000. 
B) $22,400. 
C) $28,000. 
D) $11,200.

Question 18

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Accepted Answer

A) True 
 B)False

Question 19

Salvage value is not subtracted from plant asset cost in determining depreciation expense under the declining-balance method of depreciation.

Accepted Answer

A) True 
 B)False

Question 20

Given the following account balances at year-end, compute the total intangible assets on the balance sheet of Janssen Enterprises.

Accepted Answer

A) $9,700,000 
B) $5,700,000 
C) $3,700,000 
D) $7,700,000 
A) $9,700,000 
B) $5,700,000 
C) $3,700,000 
D) $7,700,000

The book value of a plant asset is the amount originally paid for the asset less anticipated salvage value.

A truck costing $72,000 and on which $60,000 of accumulated depreciation has been recorded was discarded as having no value.The entry to record this event would include a

A truck costing $75,000 and on which $65,000 of accumulated depreciation has been re-corded was discarded as having no value.The entry to record this event would include a

Wesley Hospital installs a new parking lot.The paving cost $60,000 and the lights to illuminate the new parking area cost $24,000.Which of the following statements is true with respect to these additions?

If an acquired franchise or license is for an indefinite time period, then the cost of the asset should not be amortized.

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

A company sells a plant asset that originally cost $375,000 for $125,000 on December 31, 2022.The accumulated depreciation account had a balance of $150,000 after the current year's depreciation of $37,500 had been recorded.The company should recognize a

Research and development costs that result in a successful product that is patentable are charged to the Patent account.

Capital expenditures are expenditures that increase the company's investment in productive facilities.

Which of the following is not considered an intangible asset?

Sprague Associates sold office furniture for $48,000.The furniture had an original cost of $144,000 and accumulated depreciation of $72,000.Ignoring the tax effect, as a result of the sale

Grant 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?

Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n)

All of the following statements are false regarding depreciation except

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Salvage value is not subtracted from plant asset cost in determining depreciation expense under the declining-balance method of depreciation.

Given the following account balances at year-end, compute the total intangible assets on the balance sheet of Janssen Enterprises.

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 Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

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Exam 9: Reporting and Analyzing Long-Lived Assets

The book value of a plant asset is the amount originally paid for the asset less anticipated salvage value.

A truck costing $72,000 and on which $60,000 of accumulated depreciation has been recorded was discarded as having no value.The entry to record this event would include a

A truck costing $75,000 and on which $65,000 of accumulated depreciation has been re-corded was discarded as having no value.The entry to record this event would include a

Wesley Hospital installs a new parking lot.The paving cost $60,000 and the lights to illuminate the new parking area cost $24,000.Which of the following statements is true with respect to these additions?

If an acquired franchise or license is for an indefinite time period, then the cost of the asset should not be amortized.

Expenditures that maintain the operating efficiency and expected productive life of a plant asset are generally

A company sells a plant asset that originally cost $375,000 for $125,000 on December 31, 2022.The accumulated depreciation account had a balance of $150,000 after the current year's depreciation of $37,500 had been recorded.The company should recognize a

Research and development costs that result in a successful product that is patentable are charged to the Patent account.

Capital expenditures are expenditures that increase the company's investment in productive facilities.

Which of the following is not considered an intangible asset?

Sprague Associates sold office furniture for $48,000.The furniture had an original cost of $144,000 and accumulated depreciation of $72,000.Ignoring the tax effect, as a result of the sale

Grant 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?

Depreciation is the process of allocating the cost of a plant asset over its useful life in a(n)

All of the following statements are false regarding depreciation except

A loss on disposal of a plant asset occurs if the cash proceeds received from the asset sale is less than the asset's book value.

Salvage value is not subtracted from plant asset cost in determining depreciation expense under the declining-balance method of depreciation.

Given the following account balances at year-end, compute the total intangible assets on the balance sheet of Janssen Enterprises.

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 Liabilities

Reporting and Analyzing Stockholders Equity

Statement of Cash Flows

Financial Analysis: The Big Picture

Understanding Investments in Debt and Equity Securities

Filters