Question 1

Land is not depreciated because it

Accepted Answer

A)  appreciates in value. 
B)  does not have an established depreciable life. 
C)  has a useful life that is limited to the period of time a company is in business. 
D)  will provide future benefits for a company for an unlimited period of time. 
A)  appreciates in value. 
B)  does not have an established depreciable life. 
C)  has a useful life that is limited to the period of time a company is in business. 
D)  will provide future benefits for a company for an unlimited period of time.

Question 2

Flexibility in valuation of property, plant, and equipment under IFRS may cause problems with comparability of one company with another.

Accepted Answer

A) True 
 B)False

Question 3

The Loss on Sale of Asset indicates the amount by which the asset's sales price is less than its book value.

Accepted Answer

A) True 
 B)False

Question 4

Garner, Inc. determined that it had incorrectly estimated both the estimated life and the estimated residual value of equipment that it purchased two years ago. When Garner accounts for the change in accounting estimates, it must depreciate the remaining book value of the asset over the current and future accounting periods.

Accepted Answer

A) True 
 B)False

Question 5

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method:
-Proceeds from the sale of a building

Accepted Answer

A) Operating 
B) Investing 
C) Financing 
D) Not separately reported on a statement of cash flows 
A) Operating 
B) Investing 
C) Financing 
D) Not separately reported on a statement of cash flows

Question 6

Because plant and equipment are reported as long-term assets on the balance sheet, they have no impact on net income for the period until they are sold.

Accepted Answer

A) True 
 B)False

Question 7

Acquisition cost includes all of the costs that are normal and necessary to acquire and maintain a plant asset over its useful life.

Accepted Answer

A) True 
 B)False

Question 8

If a company is concerned about minimizing its income tax burden, it would use the straight-line depreciation method to accomplish this objective.

Accepted Answer

A) True 
 B)False

Question 9

At the end of 2013, Mirror Productions determined that one of its copyrights was worthless. The copyright had a cost of $320,000. The copyright had been amortized for 8 years of its estimated 25-year legal life. Which of the following statements is the justification for removing the remaining cost of the copyright from the accounting records?

Accepted Answer

A)  The copyright no longer represents a future benefit to the company. 
B)  The federal government does not allow copyrights to be recorded as assets once they are deemed worthless. 
C)  The cost of the copyright represents an obligation to return capital contributions to the stockholders. 
D)  The cost of the copyright has usefulness that will impact the net income of future accounting periods. 
A)  The copyright no longer represents a future benefit to the company. 
B)  The federal government does not allow copyrights to be recorded as assets once they are deemed worthless. 
C)  The cost of the copyright represents an obligation to return capital contributions to the stockholders. 
D)  The cost of the copyright has usefulness that will impact the net income of future accounting periods.

Question 10

is an account that can only exist if one company purchases another business and the cost exceeds the fair market values of the identifiable net assets at the time acquired.

Accepted Answer

The answer of is an account that can only exist...

Question 11

Interest is capitalized when incurred in connection with the construction of plant assets because

Accepted Answer

A)  interest is considered a part of the acquisition cost of the related plant asset. 
B)  the decision to purchase a plant asset is a business decision separate from the financing decision. 
C)  many plant assets last longer than 20 years. 
D)  interest is considered an expense of the period. 
A)  interest is considered a part of the acquisition cost of the related plant asset. 
B)  the decision to purchase a plant asset is a business decision separate from the financing decision. 
C)  many plant assets last longer than 20 years. 
D)  interest is considered an expense of the period.

Question 12

A gain is recognized on the disposal of plant assets when:

Accepted Answer

A)  The sales price is greater than the book value and less than the residual value. 
B)  The sales price is greater than the book value and greater than the residual value. 
C)  The sales price is less than both the book value and the residual value. 
D)  The sales price is greater than the residual value but less than the book value. 
A)  The sales price is greater than the book value and less than the residual value. 
B)  The sales price is greater than the book value and greater than the residual value. 
C)  The sales price is less than both the book value and the residual value. 
D)  The sales price is greater than the residual value but less than the book value.

Question 13

Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1, 2015. The amounts below are related to the equipment purchase. Match the items below and explain why each revenue expenditure is not capitalized.
-$3,000 freight costs were paid to ship the equipment from the manufacturer,

Accepted Answer

A) This item should be included as part of the cost of the equipment. 
B) This item should be considered a revenue expenditure. 
A) This item should be included as part of the cost of the equipment. 
B) This item should be considered a revenue expenditure.

Land is not depreciated because it

Flexibility in valuation of property, plant, and equipment under IFRS may cause problems with comparability of one company with another.

The Loss on Sale of Asset indicates the amount by which the asset's sales price is less than its book value.

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method: -Proceeds from the sale of a building

Because plant and equipment are reported as long-term assets on the balance sheet, they have no impact on net income for the period until they are sold.

Acquisition cost includes all of the costs that are normal and necessary to acquire and maintain a plant asset over its useful life.

If a company is concerned about minimizing its income tax burden, it would use the straight-line depreciation method to accomplish this objective.

is an account that can only exist if one company purchases another business and the cost exceeds the fair market values of the identifiable net assets at the time acquired.

Interest is capitalized when incurred in connection with the construction of plant assets because

A gain is recognized on the disposal of plant assets when:

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International-Financial-Reporting-Standards

Filters

Exam 8: Operating Assets: Property, Plant, and Equipment, and Intangibles

Land is not depreciated because it

Flexibility in valuation of property, plant, and equipment under IFRS may cause problems with comparability of one company with another.

The Loss on Sale of Asset indicates the amount by which the asset's sales price is less than its book value.

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method: -Proceeds from the sale of a building

Because plant and equipment are reported as long-term assets on the balance sheet, they have no impact on net income for the period until they are sold.

Acquisition cost includes all of the costs that are normal and necessary to acquire and maintain a plant asset over its useful life.

If a company is concerned about minimizing its income tax burden, it would use the straight-line depreciation method to accomplish this objective.

is an account that can only exist if one company purchases another business and the cost exceeds the fair market values of the identifiable net assets at the time acquired.

Interest is capitalized when incurred in connection with the construction of plant assets because

A gain is recognized on the disposal of plant assets when:

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Current Liabilities, Contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International-Financial-Reporting-Standards

Filters