Question 1

The declining-balance method of depreciation produces

Accepted Answer

A) a decreasing depreciation expense each period. 
B) an increasing depreciation expense each period. 
C) a declining percentage rate each period. 
D) a constant amount of depreciation expense each period. 
A) a decreasing depreciation expense each period. 
B) an increasing depreciation expense each period. 
C) a declining percentage rate each period. 
D) a constant amount of depreciation expense each period.

Question 2

The four subdivisions for plant assets are

Accepted Answer

A) land, land improvements, buildings, and equipment. 
B) intangibles, land, buildings, and equipment. 
C) furnishings and fixtures, land, buildings, and equipment. 
D) property, plant, equipment, and land. 
A) land, land improvements, buildings, and equipment. 
B) intangibles, land, buildings, and equipment. 
C) furnishings and fixtures, land, buildings, and equipment. 
D) property, plant, equipment, and land.

Question 3

On January 1, 2011, Cooper Tree Company (CTC) purchases a copper mine for €10,000,000.The mine is estimated to have 20 million tons of copper and no residual value.CTC estimates that it will take 10 years to extract all the copper contained in the mine.CTC spends an additional €2,000,000 during the early part of 2011 preparing the mine.During 2011, CTC extracts 3 million tons of copper; however due to price fluctuations none of the copper is sold during 2011.On CTC's financial statement for 2011, how would the depletion associated with the extracted copper be reported?

Accepted Answer

A) As an expense on the income statement. 
B) As inventory on the statement of financial position. 
C) As a loss on the income statement. 
D) As part of comprehensive income(unrealized gain). 
A) As an expense on the income statement. 
B) As inventory on the statement of financial position. 
C) As a loss on the income statement. 
D) As part of comprehensive income(unrealized gain).

Question 4

When constructing a building, a company is permitted to include the acquisition cost and certain interest costs incurred in financing the project.

Accepted Answer

A) True 
 B)False

Question 5

The units-of-activity method is generally not suitable for

Accepted Answer

A) airplanes. 
B) buildings. 
C) delivery equipment. 
D) factory machinery. 
A) airplanes. 
B) buildings. 
C) delivery equipment. 
D) factory machinery.

Question 6

Which depreciation method is most frequently used in businesses today?

Accepted Answer

A) Straight-line 
B) Declining-balance 
C) Units-of-activity 
D) Double-declining-balance 
A) Straight-line 
B) Declining-balance 
C) Units-of-activity 
D) Double-declining-balance

Question 7

Equipment was purchased for $17,000 on January 1, 2010.Freight charges amounted to $700 and there was a cost of $2,000 for building a foundation and installing the equipment.It is estimated that the equipment will have a $3,000 residual value at the end of its 5-year useful life.What is the amount of accumulated depreciation at December 31, 2011, if the straight-line method of depreciation is used?

Accepted Answer

A) $6,680 
B) $3,340 
C) $2,860 
D) $5,720 
A) $6,680 
B) $3,340 
C) $2,860 
D) $5,720

Question 8

IFRS allows companies to revalue plant assets to fair value at the reporting date.

Accepted Answer

A) True 
 B)False

Question 9

Land improvements should be depreciated over the useful life of the

Accepted Answer

A) land. 
B) buildings on the land. 
C) land or land improvements, whichever is longer. 
D) land improvements. 
A) land. 
B) buildings on the land. 
C) land or land improvements, whichever is longer. 
D) land improvements.

Question 10

Which of the following is not disclosed in the statement of financial position or the notes to the financial statements?

Accepted Answer

A) The year the asset was purchased. 
B) Accumulated depreciation by class of asset. 
C) Depreciation method used. 
D) Depreciation expense for the period. 
A) The year the asset was purchased. 
B) Accumulated depreciation by class of asset. 
C) Depreciation method used. 
D) Depreciation expense for the period.

Question 11

A company sells a plant asset which originally cost ¥210,000 for ¥70,000 on December 31, 2011.The Accumulated Depreciation account had a balance of ¥84,000 after the current year's depreciation of ¥21,000 had been recorded.The company should recognize a

Accepted Answer

A) ¥140,000 loss on disposal. 
B) ¥56,000 gain on disposal. 
C) ¥56,000 loss on disposal. 
D) ¥35,000 loss on disposal. 
A) ¥140,000 loss on disposal. 
B) ¥56,000 gain on disposal. 
C) ¥56,000 loss on disposal. 
D) ¥35,000 loss on disposal.

Question 12

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

Accepted Answer

A) €11,500,000 
B) €7,500,000 
C) €5,500,000 
D) €9,500,000 
A) €11,500,000 
B) €7,500,000 
C) €5,500,000 
D) €9,500,000

Question 13

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

Accepted Answer

A) True 
 B)False

Question 14

Regarding depreciation,

Accepted Answer

A) External auditors select the method believed to be most appropriate and consistent with other companies in the same industry. 
B) The income statement is impacted by depreciation through the accumulated depreciation account, and the statement of financial position is impacted by depreciation expense. 
C) Once a company chooses a depreciation method, it should apply the same method consistently over the entire useful life of the asset. 
D) All of the choices are correct regarding depreciation. 
A) External auditors select the method believed to be most appropriate and consistent with other companies in the same industry. 
B) The income statement is impacted by depreciation through the accumulated depreciation account, and the statement of financial position is impacted by depreciation expense. 
C) Once a company chooses a depreciation method, it should apply the same method consistently over the entire useful life of the asset. 
D) All of the choices are correct regarding depreciation.

Question 15

Franchises can be classified as a property, plant, and equipment item or as an intangible asset.

Accepted Answer

A) True 
 B)False

Question 16

Depletion expense for a period is only recognized on natural resources that have been extracted and sold during the period.

Accepted Answer

A) True 
 B)False

Question 17

A truck costing $132,000 was destroyed when its engine caught fire.At the date of the fire, the accumulated depreciation on the truck was $60,000.An insurance check for $150,000 was received based on the replacement cost of the truck.The entry to record the insurance proceeds and the disposition of the truck will include a

Accepted Answer

A) Gain on Disposal of $18,000. 
B) credit to the Truck account of $72,000. 
C) credit to the Accumulated Depreciation account for $60,000. 
D) Gain on Disposal of $78,000. 
A) Gain on Disposal of $18,000. 
B) credit to the Truck account of $72,000. 
C) credit to the Accumulated Depreciation account for $60,000. 
D) Gain on Disposal of $78,000.

Question 18

The entry to record patent amortization usually includes a credit to

Accepted Answer

A) Amortization Expense. 
B) Accumulated Amortization. 
C) Accumulated Depreciation. 
D) Patent. 
A) Amortization Expense. 
B) Accumulated Amortization. 
C) Accumulated Depreciation. 
D) Patent.

Question 19

Intangible assets

Accepted Answer

A) should 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 as a separate classification on the statement of financial position. 
A) should 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 as a separate classification on the statement of financial position.

Question 20

Orr Corporation sold equipment for $12,000.The equipment had an original cost of $36,000 and accumulated depreciation of $18,000.As a result of the sale,

Accepted Answer

A) net income will increase $12,000. 
B) net income will increase $6,000. 
C) net income will decrease $6,000. 
D) net income will decrease $12,000. 
A) net income will increase $12,000. 
B) net income will increase $6,000. 
C) net income will decrease $6,000. 
D) net income will decrease $12,000.

The declining-balance method of depreciation produces

The four subdivisions for plant assets are

When constructing a building, a company is permitted to include the acquisition cost and certain interest costs incurred in financing the project.

The units-of-activity method is generally not suitable for

Which depreciation method is most frequently used in businesses today?

IFRS allows companies to revalue plant assets to fair value at the reporting date.

Land improvements should be depreciated over the useful life of the

Which of the following is not disclosed in the statement of financial position or the notes to the financial statements?

A company sells a plant asset which originally cost ¥210,000 for ¥70,000 on December 31, 2011.The Accumulated Depreciation account had a balance of ¥84,000 after the current year's depreciation of ¥21,000 had been recorded.The company should recognize a

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

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

Regarding depreciation,

Franchises can be classified as a property, plant, and equipment item or as an intangible asset.

Depletion expense for a period is only recognized on natural resources that have been extracted and sold during the period.

The entry to record patent amortization usually includes a credit to

Intangible assets

Orr Corporation sold equipment for $12,000.The equipment had an original cost of $36,000 and accumulated depreciation of $18,000.As a result of the sale,

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Payroll Accounting

Other Significant Liabilities

Filters

Exam 9: Plant Assets, Natural Resources, and Intangible Assets

The declining-balance method of depreciation produces

The four subdivisions for plant assets are

When constructing a building, a company is permitted to include the acquisition cost and certain interest costs incurred in financing the project.

The units-of-activity method is generally not suitable for

Which depreciation method is most frequently used in businesses today?

IFRS allows companies to revalue plant assets to fair value at the reporting date.

Land improvements should be depreciated over the useful life of the

Which of the following is not disclosed in the statement of financial position or the notes to the financial statements?

A company sells a plant asset which originally cost ¥210,000 for ¥70,000 on December 31, 2011.The Accumulated Depreciation account had a balance of ¥84,000 after the current year's depreciation of ¥21,000 had been recorded.The company should recognize a

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

A characteristic of capital expenditures is that the expenditures occur frequently during the period of ownership.

Regarding depreciation,

Franchises can be classified as a property, plant, and equipment item or as an intangible asset.

Depletion expense for a period is only recognized on natural resources that have been extracted and sold during the period.

The entry to record patent amortization usually includes a credit to

Intangible assets

Orr Corporation sold equipment for $12,000.The equipment had an original cost of $36,000 and accumulated depreciation of $18,000.As a result of the sale,

Accounting in Action

The Recording Process

Adjusting the Accounts

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories

Fraud, Internal Control, and Cash

Accounting for Receivables

Liabilities

Corporations: Organization, Share Transactions, Dividends,and Retained Earnings

Investments

Statement of Cash Flows

Financial Statement Analysis

Payroll Accounting

Other Significant Liabilities

Filters