Question 1

A truck that cost $250 000 and had accumulated depreciation of $180 000 was sold for $50 000 cash in June 2017. This transaction will:

Accepted Answer

A)  increase assets and decrease profits. 
B)  increase assets and increase profits. 
C)  decrease assets and decrease profits. 
D)  decrease assets and increase profits. 
A)  increase assets and decrease profits. 
B)  increase assets and increase profits. 
C)  decrease assets and decrease profits. 
D)  decrease assets and increase profits.

Question 2

X buys Y for $1 million. The fair value of the following items is: property, plant and equipment $800 000; accounts receivable $160 000; loan from the bank $60 000; and provision for employee entitlements $80 000. The value of goodwill is:

Accepted Answer

A)  $40 000. 
B)  $10 000. 
C)  $180 000. 
D)  $820 000. 
A)  $40 000. 
B)  $10 000. 
C)  $180 000. 
D)  $820 000.

Question 3

Where there is an asset revaluation increment that does not reverse a previous decrement, the amount of the increment is credited to:

Accepted Answer

A)  retained profits. 
B)  accumulated depreciation. 
C)  revaluation surplus. 
D)  capital. 
A)  retained profits. 
B)  accumulated depreciation. 
C)  revaluation surplus. 
D)  capital.

Question 4

Equipment that cost $500 000 and had accumulated depreciation of $300 000 was sold for $180 000. This results in a:

Accepted Answer

A)  $20 000 gain. 
B)  $20 000 loss. 
C)  $180 000 gain. 
D)  $320 000 loss. 
A)  $20 000 gain. 
B)  $20 000 loss. 
C)  $180 000 gain. 
D)  $320 000 loss.

Question 5

Which of the following statements about the capitalisation of goodwill is true?

Accepted Answer

A)  Neither internally generated nor purchased goodwill may be capitalised. 
B)  Both internally generated and purchased goodwill may be capitalised. 
C)  Internally generated goodwill is never capitalised, but purchased goodwill is capitalised. 
D)  Internally generated goodwill may be capitalised, but purchased goodwill is never capitalised. 
A)  Neither internally generated nor purchased goodwill may be capitalised. 
B)  Both internally generated and purchased goodwill may be capitalised. 
C)  Internally generated goodwill is never capitalised, but purchased goodwill is capitalised. 
D)  Internally generated goodwill may be capitalised, but purchased goodwill is never capitalised.

Question 6

On 1 January 2015, a new motor vehicle with a useful life of four years and an estimated trade-in value of $12 000 was purchased by a business for $54 000. The straight-line method is employed and the financial year ends on 31 December. What was the depreciation expense for year ended 31 December 2016?

Accepted Answer

A)  $5250 
B)  $10 500 
C)  $13 500 
D)  $21 000 
A)  $5250 
B)  $10 500 
C)  $13 500 
D)  $21 000

Question 7

A building with a cost of $500 000, an estimated residual value of $50 000, and an estimated useful life of 20 years was depreciated by the straight-line method for 10 years. In the eleventh year, it was determined that the useful life should be extended by 10 years (i.e. from 20 years to 30 years). The residual value was to remain the same. The depreciation expense for the eleventh year is:

Accepted Answer

A)  $11 250. 
B)  $12 500. 
C)  $13 750. 
D)  $15 000. 
A)  $11 250. 
B)  $12 500. 
C)  $13 750. 
D)  $15 000.

Question 8

When a company discards machinery that is fully depreciated, this transaction will be recorded with which of the following entries?

Accepted Answer

A)  Dr Accumulated depreciation
Cr Machinery 
B)  Dr Machinery
Cr Accumulated depreciation 
C)  Dr Cash
Cr Accumulated depreciation 
D)  Dr Depreciation expense
Cr Accumulated depreciation 
A)  Dr Accumulated depreciation
Cr Machinery 
B)  Dr Machinery
Cr Accumulated depreciation 
C)  Dr Cash
Cr Accumulated depreciation 
D)  Dr Depreciation expense
Cr Accumulated depreciation

Question 9

Bully Ltd acquires all the business assets and liabilities of Small Ltd for $700 000 cash. The best estimates of the fair market values of the assets and liabilities are:
 
What is the value of goodwill acquired by Bully Ltd?

Accepted Answer

A)  $20 000 
B)  $110 000 
C)  $200 000 
D)  $500 000 
A)  $20 000 
B)  $110 000 
C)  $200 000 
D)  $500 000

Question 10

On 1 January 2015, a new motor vehicle with a useful life of four years and an estimated trade-in value of $12 000 was purchased by a business for $54 000. The straight-line method is employed and the financial year ends on 31 December. What was the accumulated depreciation at 31 December 2017?

Accepted Answer

A)  $21 000 
B)  $31 500 
C)  $42 000 
D)  $52 500 
A)  $21 000 
B)  $31 500 
C)  $42 000 
D)  $52 500

Question 11

Squires Ltd purchased equipment for $90 000 on 1 July 2015. It had an estimated life of 200 000 units. The machine was depreciated using the units of production method. The financial period of Squires Ltd ends on 30 June. What was the depreciation expense for year ended 30 June 2016 if 26 000 units were produced in that year?

Accepted Answer

A)  $11 000 
B)  $11 700 
C)  $23 400 
D)  $35 100 
A)  $11 000 
B)  $11 700 
C)  $23 400 
D)  $35 100

Question 12

When the accumulated depreciation is deducted from the long-term asset account, the figure is known as the:

Accepted Answer

A)  market value. 
B)  replacement value. 
C)  net book value. 
D)  realisable value. 
A)  market value. 
B)  replacement value. 
C)  net book value. 
D)  realisable value.

Question 13

If equipment that cost $100 000 and has accumulated depreciation of $70 000 is sold for $20 000, the journal entry to record the sale would include:

Accepted Answer

A)  Cr Loss on sale, $10 000. 
B)  Dr Gain on sale, $10 000. 
C)  Dr Accumulated depreciation, $70 000. 
D)  Cr Equipment, $20 000. 
A)  Cr Loss on sale, $10 000. 
B)  Dr Gain on sale, $10 000. 
C)  Dr Accumulated depreciation, $70 000. 
D)  Cr Equipment, $20 000.

Question 14

Jacques Ltd purchased a computer for $4500 on 1 July 2015. It had an estimated useful life of 3 years. It was depreciated using the straight-line method. The financial year ends on 30 June. What was the balance of accumulated depreciation at 30 June 2018?

Accepted Answer

A)  $0 
B)  $1500 
C)  $3000 
D)  $4500 
A)  $0 
B)  $1500 
C)  $3000 
D)  $4500

Question 15

Which of the following do NOT need to be disclosed in financial statements?

Accepted Answer

A)  Details concerning revaluations. 
B)  Cost and accumulated depreciation by major classes of assets. 
C)  A description of the enterprise's accounting policies with respect to depreciation/amortisation. 
D)  Reasons for assets not being revalued. 
A)  Details concerning revaluations. 
B)  Cost and accumulated depreciation by major classes of assets. 
C)  A description of the enterprise's accounting policies with respect to depreciation/amortisation. 
D)  Reasons for assets not being revalued.

Question 16

Accumulated depreciation is:

Accepted Answer

A)  a shareholders' equity account. 
B)  a liability. 
C)  an expense. 
D)  a contra asset. 
A)  a shareholders' equity account. 
B)  a liability. 
C)  an expense. 
D)  a contra asset.

Question 17

Norman Ltd purchased a motor vehicle for $45 000 on 1 July 2015. The vehicle was expected to have a four-year life span. The financial period ends on 30 June. Assuming Norman Ltd used the straight-line method of depreciation, the accumulated depreciation at 30 June 2017 was:

Accepted Answer

A)  $0. 
B)  $11 250. 
C)  $22 500. 
D)  none of the answers provided. 
A)  $0. 
B)  $11 250. 
C)  $22 500. 
D)  none of the answers provided.

Question 18

Delta Ltd purchased a motor vehicle for $45 000 on 1 January 2016. The vehicle was expected to have a life of three years and an estimated disposal value of $15 000. The straight-line method of depreciation is employed and the financial year ends on 30 June. What was the depreciation expense for year ended 30 June 2016?

Accepted Answer

A)  $5000 
B)  $7500 
C)  $10 000 
D)  $15 000 
A)  $5000 
B)  $7500 
C)  $10 000 
D)  $15 000

Question 19

Speedy Ltd purchased a delivery truck on 1 July 2014 for $450 000. It had an estimated salvage value of $150 000. The estimated number of kilometres to be driven was 150 000 km. The truck was depreciated using the units-of-production method. Speedy Ltd's financial period ends on 31 December. The truck was driven the following distances: during 6 months to 31 December 2014, 25 000 km; during 12 months to 31 December 2015, 75 000 km; and during 12 months to 31 December 2016, 40 000 km. What was the depreciation expense for the year ended 31 December 2014?

Accepted Answer

A)  $50 000 
B)  $80 000 
C)  $150 000 
D)  $225 000 
A)  $50 000 
B)  $80 000 
C)  $150 000 
D)  $225 000

Question 20

Where there is an asset revaluation decrement that does not reverse a previous increment, the amount is debited to:

Accepted Answer

A)  an expense account. 
B)  retained profits. 
C)  revaluation surplus. 
D)  share capital. 
A)  an expense account. 
B)  retained profits. 
C)  revaluation surplus. 
D)  share capital.

A truck that cost $250 000 and had accumulated depreciation of $180 000 was sold for $50 000 cash in June 2017. This transaction will:

X buys Y for $1 million. The fair value of the following items is: property, plant and equipment $800 000; accounts receivable $160 000; loan from the bank $60 000; and provision for employee entitlements $80 000. The value of goodwill is:

Where there is an asset revaluation increment that does not reverse a previous decrement, the amount of the increment is credited to:

Equipment that cost $500 000 and had accumulated depreciation of $300 000 was sold for $180 000. This results in a:

Which of the following statements about the capitalisation of goodwill is true?

When a company discards machinery that is fully depreciated, this transaction will be recorded with which of the following entries?

Bully Ltd acquires all the business assets and liabilities of Small Ltd for $700 000 cash. The best estimates of the fair market values of the assets and liabilities are: What is the value of goodwill acquired by Bully Ltd?

On 1 January 2015, a new motor vehicle with a useful life of four years and an estimated trade-in value of $12 000 was purchased by a business for $54 000. The straight-line method is employed and the financial year ends on 31 December. What was the accumulated depreciation at 31 December 2017?

When the accumulated depreciation is deducted from the long-term asset account, the figure is known as the:

If equipment that cost $100 000 and has accumulated depreciation of $70 000 is sold for $20 000, the journal entry to record the sale would include:

Jacques Ltd purchased a computer for $4500 on 1 July 2015. It had an estimated useful life of 3 years. It was depreciated using the straight-line method. The financial year ends on 30 June. What was the balance of accumulated depreciation at 30 June 2018?

Which of the following do NOT need to be disclosed in financial statements?

Accumulated depreciation is:

Norman Ltd purchased a motor vehicle for $45 000 on 1 July 2015. The vehicle was expected to have a four-year life span. The financial period ends on 30 June. Assuming Norman Ltd used the straight-line method of depreciation, the accumulated depreciation at 30 June 2017 was:

Where there is an asset revaluation decrement that does not reverse a previous increment, the amount is debited to:

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters

Exam 10: Noncurrent Assets

A truck that cost $250 000 and had accumulated depreciation of $180 000 was sold for $50 000 cash in June 2017. This transaction will:

X buys Y for $1 million. The fair value of the following items is: property, plant and equipment $800 000; accounts receivable $160 000; loan from the bank $60 000; and provision for employee entitlements $80 000. The value of goodwill is:

Where there is an asset revaluation increment that does not reverse a previous decrement, the amount of the increment is credited to:

Equipment that cost $500 000 and had accumulated depreciation of $300 000 was sold for $180 000. This results in a:

Which of the following statements about the capitalisation of goodwill is true?

When a company discards machinery that is fully depreciated, this transaction will be recorded with which of the following entries?

Bully Ltd acquires all the business assets and liabilities of Small Ltd for $700 000 cash. The best estimates of the fair market values of the assets and liabilities are: What is the value of goodwill acquired by Bully Ltd?

On 1 January 2015, a new motor vehicle with a useful life of four years and an estimated trade-in value of $12 000 was purchased by a business for $54 000. The straight-line method is employed and the financial year ends on 31 December. What was the accumulated depreciation at 31 December 2017?

When the accumulated depreciation is deducted from the long-term asset account, the figure is known as the:

If equipment that cost $100 000 and has accumulated depreciation of $70 000 is sold for $20 000, the journal entry to record the sale would include:

Jacques Ltd purchased a computer for $4500 on 1 July 2015. It had an estimated useful life of 3 years. It was depreciated using the straight-line method. The financial year ends on 30 June. What was the balance of accumulated depreciation at 30 June 2018?

Which of the following do NOT need to be disclosed in financial statements?

Accumulated depreciation is:

Norman Ltd purchased a motor vehicle for $45 000 on 1 July 2015. The vehicle was expected to have a four-year life span. The financial period ends on 30 June. Assuming Norman Ltd used the straight-line method of depreciation, the accumulated depreciation at 30 June 2017 was:

Where there is an asset revaluation decrement that does not reverse a previous increment, the amount is debited to:

Introduction to Financial Accounting

Measuring and Evaluating Financial Position and Financial Performance

The Double-Entry System

Record-Keeping

Accrual Accounting Adjustments

Financial Reporting Principles, Accounting Standards and Auditing

Internal Control and Cash

Accounts Receivable and Further Record-Keeping

Inventory

Liabilities

Completing the Balance Sheet

Revenue and Expense Recognition: Additional Concepts

The Statement of Cash Flows

Financial Statement Analysis

Accounting Policy Choices

Sustainability Reporting

Filters