Question 1

Units-of-production is an appropriate depreciation method to use when

Accepted Answer

A) it is impossible to determine the productivity of the asset. 
B) the asset's use will be constant over its useful life. 
C) the company is a manufacturing company. 
D) the asset's use varies significantly from one period to another. 
A) it is impossible to determine the productivity of the asset. 
B) the asset's use will be constant over its useful life. 
C) the company is a manufacturing company. 
D) the asset's use varies significantly from one period to another.

Question 2

Enmerick Corporation purchases a new delivery truck for $45,000.The company logo is painted on the side of the truck for $1,500.The motor vehicle licence is $175.Annual insurance is $1,500.At what amount does Enmerick record the cost of the new truck?

Accepted Answer

A) $45,000 
B) $45,175 
C) $46,500 
D) $46,675 
A) $45,000 
B) $45,175 
C) $46,500 
D) $46,675

Question 3

The calculation of depreciation using the diminishing-balance method

Accepted Answer

A) ignores residual value in determining the amount to which a constant rate is applied. 
B) multiplies a constant percentage times the previous year's depreciation expense. 
C) yields an increasing depreciation expense each period. 
D) multiplies a diminishing percentage times a constant carrying amount. 
A) ignores residual value in determining the amount to which a constant rate is applied. 
B) multiplies a constant percentage times the previous year's depreciation expense. 
C) yields an increasing depreciation expense each period. 
D) multiplies a diminishing percentage times a constant carrying amount.

Question 4

If a company incurs legal costs in unsuccessfully defending its patent, these costs would be debited to

Accepted Answer

A) Legal Expense. 
B) Intangible Loss account. 
C) Patent account. 
D) Other Comprehensive Income. 
A) Legal Expense. 
B) Intangible Loss account. 
C) Patent account. 
D) Other Comprehensive Income.

Question 5

Intangible assets are the rights and privileges that result from ownership of assets that

Accepted Answer

A) must be generated internally. 
B) benefit only the current period. 
C) have physical substance. 
D) do not have physical substance. 
A) must be generated internally. 
B) benefit only the current period. 
C) have physical substance. 
D) do not have physical substance.

Question 6

Tran Inc.purchased equipment for $48,000, and estimated that the equipment will have a $4,000 residual value at the end of its 8-year useful life.Using the double diminishing-balance method, the depreciation expense for the third year would be

Accepted Answer

A) $9,000. 
B) $6,750. 
C) $6,188. 
D) $5,500. 
A) $9,000. 
B) $6,750. 
C) $6,188. 
D) $5,500.

Question 7

Harmon Medical Ltd.purchases land for $290,500 cash.The title and legal fees totalled $1,500.The clinic has the land graded for $25,000.What amount does Harmon Medical record as the cost for the land?

Accepted Answer

A) $290,500 
B) $292,000 
C) $315,500 
D) $317,000 
A) $290,500 
B) $292,000 
C) $315,500 
D) $317,000

Question 8

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

Accepted Answer

A) Goodwill is reported separately from intangible assets. 
B) Companies must disclose their policy for testing impairments in the notes to their statements. 
C) Companies reporting under ASPE must include a reconciliation of the changes during the year in the carrying amount for each class of long-lived asset in the notes to their statements. 
D) Companies reporting under IFRS must disclose whether they are using the cost or revaluation model for each class of long-lived asset in the notes to their statements. 
A) Goodwill is reported separately from intangible assets. 
B) Companies must disclose their policy for testing impairments in the notes to their statements. 
C) Companies reporting under ASPE must include a reconciliation of the changes during the year in the carrying amount for each class of long-lived asset in the notes to their statements. 
D) Companies reporting under IFRS must disclose whether they are using the cost or revaluation model for each class of long-lived asset in the notes to their statements.

Question 9

The cost allocation of an intangible asset is referred to as

Accepted Answer

A) amortization. 
B) impairment. 
C) depreciation. 
D) depletion. 
A) amortization. 
B) impairment. 
C) depreciation. 
D) depletion.

Question 10

A change in the estimated residual value of property, plant, and equipment requires a restatement of prior years' depreciation.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

Under both IFRS and ASPE, notes to the financial statements must include a reconciliation of the carrying amount at the beginning and end of the period for each class of non-current assets.For IFRS, this means they must show for each class of non-current assets:

Accepted Answer

A) additions, disposals, depreciation or amortization. 
B) additions, disposals, depreciation or amortization, impairment losses and reversals of impairment losses. 
C) additions, disposals, impairment losses and reversals of impairment losses. 
D) additions and disposals only. 
A) additions, disposals, depreciation or amortization. 
B) additions, disposals, depreciation or amortization, impairment losses and reversals of impairment losses. 
C) additions, disposals, impairment losses and reversals of impairment losses. 
D) additions and disposals only.

Question 13

Which of the following is not an acceptable method of depreciation?

Accepted Answer

A) straight-line 
B) increasing-balance 
C) diminishing-balance 
D) units-of-production 
A) straight-line 
B) increasing-balance 
C) diminishing-balance 
D) units-of-production

Question 14

With regard to depreciation and income taxes, which of the following statements is not true?

Accepted Answer

A) When calculating taxable income, the taxpayer must choose the method that best reflects the pattern in which the asset's future economic benefits are consumed. 
B) When calculating taxable income, the taxpayer must use the rate set by Canada Revenue Agency. 
C) When calculating taxable income, the taxpayer must use the diminishing-balance method for most assets. 
D) When calculating taxable income, the amount of depreciation calculated for income tax purposes must be deducted, rather than the amount of depreciation calculated for financial reporting purposes. 
A) When calculating taxable income, the taxpayer must choose the method that best reflects the pattern in which the asset's future economic benefits are consumed. 
B) When calculating taxable income, the taxpayer must use the rate set by Canada Revenue Agency. 
C) When calculating taxable income, the taxpayer must use the diminishing-balance method for most assets. 
D) When calculating taxable income, the amount of depreciation calculated for income tax purposes must be deducted, rather than the amount of depreciation calculated for financial reporting purposes.

Question 15

Use the following information for questions 
During 2022, Richlieu Corporation reported:
  
-Richlieu's asset turnover ratio is

Accepted Answer

A) 2.5 times. 
B) 1.9 times. 
C) 1.5 times. 
D) 1.3 times. 
A) 2.5 times. 
B) 1.9 times. 
C) 1.5 times. 
D) 1.3 times.

Question 16

If an asset is fully depreciated and retired for proceeds equal to its residual value

Accepted Answer

A) a gain on disposal will be recorded. 
B) depreciation must continue to be taken as though the asset were still on the books. 
C) a loss on disposal will be recorded. 
D) no gain or loss on disposal will be recorded. 
A) a gain on disposal will be recorded. 
B) depreciation must continue to be taken as though the asset were still on the books. 
C) a loss on disposal will be recorded. 
D) no gain or loss on disposal will be recorded.

Question 17

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours.Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be

Accepted Answer

A) $14,400. 
B) $13,200. 
C) $12,000. 
D) $11,000. 
A) $14,400. 
B) $13,200. 
C) $12,000. 
D) $11,000.

Question 18

Intangible assets

Accepted Answer

A) must be reported under the heading Property, Plant, and Equipment. 
B) are not reported on the statement of financial position because they lack physical substance. 
C) should be reported as Current Assets on the statement of financial position. 
D) should be reported separately from Property, Plant, and Equipment. 
A) must be reported under the heading Property, Plant, and Equipment. 
B) are not reported on the statement of financial position because they lack physical substance. 
C) should be reported as Current Assets on the statement of financial position. 
D) should be reported separately from Property, Plant, and Equipment.

Question 19

When an asset is retired, a gain or loss must be recorded.

Accepted Answer

A) True 
 B)False

Question 20

Equipment was purchased on January 1 for $39,000 with an estimated residual value of $3,000.The current year's Depreciation Expense is $4,000, calculated on the straight-line basis, and the balance of the Accumulated Depreciation account at the end of the year is $12,000.The remaining useful life of the equipment is

Accepted Answer

A) 3 years. 
B) 5 years. 
C) 6 years. 
D) 9 years. 
A) 3 years. 
B) 5 years. 
C) 6 years. 
D) 9 years.

Units-of-production is an appropriate depreciation method to use when

Enmerick Corporation purchases a new delivery truck for $45,000.The company logo is painted on the side of the truck for $1,500.The motor vehicle licence is $175.Annual insurance is $1,500.At what amount does Enmerick record the cost of the new truck?

The calculation of depreciation using the diminishing-balance method

If a company incurs legal costs in unsuccessfully defending its patent, these costs would be debited to

Intangible assets are the rights and privileges that result from ownership of assets that

Tran Inc.purchased equipment for $48,000, and estimated that the equipment will have a $4,000 residual value at the end of its 8-year useful life.Using the double diminishing-balance method, the depreciation expense for the third year would be

Harmon Medical Ltd.purchases land for $290,500 cash.The title and legal fees totalled $1,500.The clinic has the land graded for $25,000.What amount does Harmon Medical record as the cost for the land?

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

The cost allocation of an intangible asset is referred to as

A change in the estimated residual value of property, plant, and equipment requires a restatement of prior years' depreciation.

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

Under both IFRS and ASPE, notes to the financial statements must include a reconciliation of the carrying amount at the beginning and end of the period for each class of non-current assets.For IFRS, this means they must show for each class of non-current assets:

Which of the following is not an acceptable method of depreciation?

With regard to depreciation and income taxes, which of the following statements is not true?

Use the following information for questions During 2022, Richlieu Corporation reported: -Richlieu's asset turnover ratio is

If an asset is fully depreciated and retired for proceeds equal to its residual value

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours.Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be

Intangible assets

When an asset is retired, a gain or loss must be recorded.

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

Exam 9: Reporting and Analyzing Long-Lived Assets

Units-of-production is an appropriate depreciation method to use when

Enmerick Corporation purchases a new delivery truck for $45,000.The company logo is painted on the side of the truck for $1,500.The motor vehicle licence is $175.Annual insurance is $1,500.At what amount does Enmerick record the cost of the new truck?

The calculation of depreciation using the diminishing-balance method

If a company incurs legal costs in unsuccessfully defending its patent, these costs would be debited to

Intangible assets are the rights and privileges that result from ownership of assets that

Tran Inc.purchased equipment for $48,000, and estimated that the equipment will have a $4,000 residual value at the end of its 8-year useful life.Using the double diminishing-balance method, the depreciation expense for the third year would be

Harmon Medical Ltd.purchases land for $290,500 cash.The title and legal fees totalled $1,500.The clinic has the land graded for $25,000.What amount does Harmon Medical record as the cost for the land?

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

The cost allocation of an intangible asset is referred to as

A change in the estimated residual value of property, plant, and equipment requires a restatement of prior years' depreciation.

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

Under both IFRS and ASPE, notes to the financial statements must include a reconciliation of the carrying amount at the beginning and end of the period for each class of non-current assets.For IFRS, this means they must show for each class of non-current assets:

Which of the following is not an acceptable method of depreciation?

With regard to depreciation and income taxes, which of the following statements is not true?

Use the following information for questions During 2022, Richlieu Corporation reported: -Richlieu's asset turnover ratio is

If an asset is fully depreciated and retired for proceeds equal to its residual value

A machine that cost $72,000 has an estimated residual value of $6,000 and an estimated useful life of 5 years or 30,000 hours.Using the units-of-production method, the depreciation expense for the second year, during which the machine was used 5,000 hours, would be

Intangible assets

When an asset is retired, a gain or loss must be recorded.

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