Question 1

All of the following statements regarding impairments are true except

Accepted Answer

A) an impairment is a permanent decline in an asset's market value. 
B) after an impairment write-down, depreciation is generally lower in subsequent periods. 
C) immediate recognition of impairment write-downs is now required. 
D) impairments are generally recorded when the book value falls below the market value. 
A) an impairment is a permanent decline in an asset's market value. 
B) after an impairment write-down, depreciation is generally lower in subsequent periods. 
C) immediate recognition of impairment write-downs is now required. 
D) impairments are generally recorded when the book value falls below the market value.

Question 2

The following information is provided for Nguyen Company and Northwest Corporation.   What is Northwest's return on assets for 2022?

Accepted Answer

A) 15.6% 
B) 10.5% 
C) 14.0% 
D) 12.0% 
A) 15.6% 
B) 10.5% 
C) 14.0% 
D) 12.0%

Question 3

In calculating depreciation, both plant asset cost and useful life are based on estimates.

Accepted Answer

A) True 
 B)False

Question 4

A patent should

Accepted Answer

A) be amortized over a period of 20 years. 
B) not be amortized. 
C) be amortized over its useful life or 20 years, whichever is longer. 
D) be amortized over its useful life or 20 years, whichever is shorter. 
A) be amortized over a period of 20 years. 
B) not be amortized. 
C) be amortized over its useful life or 20 years, whichever is longer. 
D) be amortized over its useful life or 20 years, whichever is shorter.

Question 5

Jack's Copy Shop bought equipment for $240,000 on January 1, 2021.Jack estimated the useful life to be 3 years with no salvage value, and the straight-line method of depreciation will be used.On January 1, 2022, Jack decides that the business will use the equipment for a total of 5 years.What is the revised depreciation expense for 2022?

Accepted Answer

A) $80,000 
B) $32,000 
C) $40,000 
D) $60,000 
A) $80,000 
B) $32,000 
C) $40,000 
D) $60,000

Question 6

Equipment was purchased for $85,000 on January 1, 2021.Freight charges amounted to $3,500 and there was a cost of $10,000 for building a foundation and installing the equipment.It is estimated that the equipment will have a $15,000 salvage value at the end of its 5-year useful life.What is the amount of accumulated depreciation at December 31, 2022 if the straight-line method of depreciation is used?

Accepted Answer

A) $33,400. 
B) $16,700. 
C) $14,300. 
D) $28,600. 
A) $33,400. 
B) $16,700. 
C) $14,300. 
D) $28,600.

Question 7

A machine with a cost of $640,000 has an estimated salvage value of $40,000 and an estimated useful life of 5 years or 15,000 hours.It is to be depreciated using the units-of-activity method of depreciation.What is the amount of depreciation for the second full year, during which the machine was used for 5,000 hours?

Accepted Answer

A) $200,000. 
B) $120,000. 
C) $173,333. 
D) -$173,333. 
A) $200,000. 
B) $120,000. 
C) $173,333. 
D) -$173,333.

Question 8

Which of the following assets is not properly classified as property, plant, and equipment?

Accepted Answer

A) A building used as a factory 
B) Land used in ordinary business operations 
C) A truck held for resale by an automobile dealership 
D) Land improvements, such as parking lots and fences 
A) A building used as a factory 
B) Land used in ordinary business operations 
C) A truck held for resale by an automobile dealership 
D) Land improvements, such as parking lots and fences

Question 9

The cost of an intangible asset with an indefinite life should

Accepted Answer

A) be amortized over 20 years. 
B) be amortized over the life of the creator plus 70 years. 
C) not be amortized. 
D) not be recorded. 
A) be amortized over 20 years. 
B) be amortized over the life of the creator plus 70 years. 
C) not be amortized. 
D) not be recorded.

Question 10

The IRS does not require the taxpayer to use the same depreciation method on the tax return that is used in preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 11

A company purchased factory equipment on April 1, 2022 for $128,000.It is estimated that the equipment will have a $16,000 salvage value at the end of its 10-year useful life.Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2022 is

Accepted Answer

A) $12,800. 
B) $11,200. 
C) $8,400. 
D) $9,600. 
A) $12,800. 
B) $11,200. 
C) $8,400. 
D) $9,600.

Question 12

The depreciation method that applies a constant percentage to depreciable cost in calculating depreciation is

Accepted Answer

A) straight-line. 
B) units-of-activity. 
C) sum-of-year's-digits. 
D) None of these answer choices are correct. 
A) straight-line. 
B) units-of-activity. 
C) sum-of-year's-digits. 
D) None of these answer choices are correct.

Question 13

Which of the following statements concerning financial statement presentation is false?

Accepted Answer

A) Intangibles are reported separately under Intangible Assets. 
B) The balances of major classes of assets may be disclosed in the footnotes. 
C) The balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes. 
D) The balances of all individual assets, as they appear in the subsidiary plant ledger, should be disclosed in the footnotes. 
A) Intangibles are reported separately under Intangible Assets. 
B) The balances of major classes of assets may be disclosed in the footnotes. 
C) The balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes. 
D) The balances of all individual assets, as they appear in the subsidiary plant ledger, should be disclosed in the footnotes.

Question 14

Goodwill

Accepted Answer

A) is only recorded when generated internally. 
B) can be subdivided and sold in parts. 
C) can only be identified with the business as a whole. 
D) can be defined as normal earnings less accumulated amortization. 
A) is only recorded when generated internally. 
B) can be subdivided and sold in parts. 
C) can only be identified with the business as a whole. 
D) can be defined as normal earnings less accumulated amortization.

Question 15

A change in the estimated salvage value of a plant asset requires a restatement of prior years' depreciation.

Accepted Answer

A) True 
 B)False

Question 16

The return on assets ratio indicates how efficiently a company uses its assets.

Accepted Answer

A) True 
 B)False

Question 17

A company purchases a remote building site for computer operations.The building will be suitable for operations after some expenditures.The wiring must be replaced to computer specifications.The roof is leaky and must be replaced.All rooms must be repainted and recarpeted and there will also be some plumbing work done.Which of the following statements is true?

Accepted Answer

A) The cost of the building will not include the repainting and recarpeting 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 is part of the computer costs, not the building cost. 
A) The cost of the building will not include the repainting and recarpeting 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 is part of the computer costs, not the building cost.

Question 18

Jamison, Inc.is a regional air cargo carrier.Jamison made a $4,500 improvement to one of its airplanes.If Jamison's accountant expensed this amount, which of the following statements is true?

Accepted Answer

A) The entry will improperly understate net income for the year. 
B) The entry will improperly overstate net income for the year. 
C) The entry is the correct treatment. 
D) The entry will overstate the balance sheet for the year. 
A) The entry will improperly understate net income for the year. 
B) The entry will improperly overstate net income for the year. 
C) The entry is the correct treatment. 
D) The entry will overstate the balance sheet for the year.

Question 19

Plant assets are ordinarily presented in the balance sheet

Accepted Answer

A) at current market values. 
B) at replacement costs. 
C) at cost less accumulated depreciation. 
D) in a separate section along with intangible assets. 
A) at current market values. 
B) at replacement costs. 
C) at cost less accumulated depreciation. 
D) in a separate section along with intangible assets.

Question 20

The Land account would include all of the following costs except

Accepted Answer

A) drainage costs. 
B) the cost of building a fence. 
C) commissions paid to real estate agents. 
D) the cost of tearing down a building. 
A) drainage costs. 
B) the cost of building a fence. 
C) commissions paid to real estate agents. 
D) the cost of tearing down a building.

All of the following statements regarding impairments are true except

The following information is provided for Nguyen Company and Northwest Corporation. What is Northwest's return on assets for 2022?

In calculating depreciation, both plant asset cost and useful life are based on estimates.

A patent should

Which of the following assets is not properly classified as property, plant, and equipment?

The cost of an intangible asset with an indefinite life should

The IRS does not require the taxpayer to use the same depreciation method on the tax return that is used in preparing financial statements.

A company purchased factory equipment on April 1, 2022 for $128,000.It is estimated that the equipment will have a $16,000 salvage value at the end of its 10-year useful life.Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2022 is

The depreciation method that applies a constant percentage to depreciable cost in calculating depreciation is

Which of the following statements concerning financial statement presentation is false?

Goodwill

A change in the estimated salvage value of a plant asset requires a restatement of prior years' depreciation.

The return on assets ratio indicates how efficiently a company uses its assets.

Jamison, Inc.is a regional air cargo carrier.Jamison made a $4,500 improvement to one of its airplanes.If Jamison's accountant expensed this amount, which of the following statements is true?

Plant assets are ordinarily presented in the balance sheet

The Land account would include all of the following costs except

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

Exam 9: Reporting and Analyzing Long-Lived Assets

All of the following statements regarding impairments are true except

The following information is provided for Nguyen Company and Northwest Corporation. What is Northwest's return on assets for 2022?

In calculating depreciation, both plant asset cost and useful life are based on estimates.

A patent should

Which of the following assets is not properly classified as property, plant, and equipment?

The cost of an intangible asset with an indefinite life should

The IRS does not require the taxpayer to use the same depreciation method on the tax return that is used in preparing financial statements.

A company purchased factory equipment on April 1, 2022 for $128,000.It is estimated that the equipment will have a $16,000 salvage value at the end of its 10-year useful life.Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2022 is

The depreciation method that applies a constant percentage to depreciable cost in calculating depreciation is

Which of the following statements concerning financial statement presentation is false?

Goodwill

A change in the estimated salvage value of a plant asset requires a restatement of prior years' depreciation.

The return on assets ratio indicates how efficiently a company uses its assets.

Jamison, Inc.is a regional air cargo carrier.Jamison made a $4,500 improvement to one of its airplanes.If Jamison's accountant expensed this amount, which of the following statements is true?

Plant assets are ordinarily presented in the balance sheet

The Land account would include all of the following costs except

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