Question 1

The factor that is not relevant in computing depreciation is

Accepted Answer

A) replacement value. 
B) cost. 
C) residual value. 
D) useful life. 
A) replacement value. 
B) cost. 
C) residual value. 
D) useful life.

Question 2

Able Towing Company purchased a tow truck for $75,000 on January 1, 2010.It was originally depreciated on a straight-line basis over 10 years with an assumed residual value of $15,000.On December 31, 2012, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2012) and the residual value to $2,500.What was the depreciation expense for 2012?

Accepted Answer

A) $7,500. 
B) $6,000. 
C) $18,750. 
D) $15,125. 
A) $7,500. 
B) $6,000. 
C) $18,750. 
D) $15,125.

Question 3

Which one of the following items is not considered a part of the cost of a truck purchased for business use?

Accepted Answer

A) Sales tax 
B) Accident insurance 
C) Freight charges 
D) Cost of lettering on side of truck 
A) Sales tax 
B) Accident insurance 
C) Freight charges 
D) Cost of lettering on side of truck

Question 4

In computing depletion, residual value is

Accepted Answer

A) always immaterial. 
B) ignored. 
C) impossible to estimate. 
D) included in the calculation. 
A) always immaterial. 
B) ignored. 
C) impossible to estimate. 
D) included in the calculation.

Question 5

Gains on an exchange of plant assets that has commercial substance are

Accepted Answer

A) deducted from the cost of the new asset acquired. 
B) deferred. 
C) not possible. 
D) recognized immediately. 
A) deducted from the cost of the new asset acquired. 
B) deferred. 
C) not possible. 
D) recognized immediately.

Question 6

Chicago Furniture uses a variety of equipment in its manufacturing facility.On Chicago Furniture's statement of financial position, the "Equipment" balance would contains all of the following costs except

Accepted Answer

A) Motor vehicle licenses on delivery trucks. 
B) Installation costs on new equipment. 
C) Sales taxes paid on new delivery truck. 
D) Insurance during transit on new equipment. 
A) Motor vehicle licenses on delivery trucks. 
B) Installation costs on new equipment. 
C) Sales taxes paid on new delivery truck. 
D) Insurance during transit on new equipment.

Question 7

252
DeLong Corporation purchased land adjacent to its plant to improve access for trucks making deliveries.Expenditures incurred in purchasing the land were as follows: purchase price, €65,000; broker's fees, €6,000; title search and other fees, €5,000; demolition of an old building on the property, €5,700; grading, €1,200; digging foundation for the road, €3,000; laying and paving driveway, €25,000; lighting €7,500; signs, €1,500.List the items and amounts that should included in the Land account.

Accepted Answer

The answer of 252
DeLong Corporation purchased land adjacent to its...

Question 8

A truck that cost $42,000 and on which $35,000 of accumulated depreciation has been recorded was disposed of for $10,500 cash.The entry to record this event would include a

Accepted Answer

A) gain of $3,500. 
B) loss of $3,500. 
C) credit to the Truck account for $7,000. 
D) credit to Accumulated Depreciation for $35,000. 
A) gain of $3,500. 
B) loss of $3,500. 
C) credit to the Truck account for $7,000. 
D) credit to Accumulated Depreciation for $35,000.

Question 9

Changes in depreciation method under IFRS are reported in current and future periods, under U.S.GAAP such changes are treated as prior period adjustments.

Accepted Answer

A) True 
 B)False

Question 10

When an asset is purchased during the year, it is not necessary to record depreciation expense in the first year under the declining-balance depreciation method.

Accepted Answer

A) True 
 B)False

Question 11

Land improvements are reported on the statement of financial position at their cost less accumulated depreciation.

Accepted Answer

A) True 
 B)False

Question 12

Sargent Corporation bought equipment on January 1, 2011.The equipment cost €180,000 and had an expected residual value of €30,000.The life of the equipment was estimated to be 6 years.The book value of the equipment at the beginning of the third year would be

Accepted Answer

A) €180,000. 
B) €150,000. 
C) €130,000. 
D) €50,000. 
A) €180,000. 
B) €150,000. 
C) €130,000. 
D) €50,000.

Question 13

On October 1, 2011, Holt Company places a new asset into service.The cost of the asset is $80,000 with an estimated 5-year life and $20,000 residual value at the end of its useful life.What is the book value of the plant asset on the December 31, 2011, statement of financial position assuming that Holt Company uses the double-declining-balance method of depreciation?

Accepted Answer

A) $52,000 
B) $60,000 
C) $72,000 
D) $76,000 
A) $52,000 
B) $60,000 
C) $72,000 
D) $76,000

Question 14

When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account.

Accepted Answer

A) True 
 B)False

Question 15

Wesley Hospital installs a new parking lot.The paving cost ₤30,000 and the lights to illuminate the new parking area cost ₤15,000.Which of the following statements is true with respect to these additions?

Accepted Answer

A) ₤30,000 should be debited to the Land account. 
B) ₤15,000 should be debited to Land Improvements. 
C) ₤45,000 should be debited to the Land account. 
D) ₤45,000 should be debited to Land Improvements. 
A) ₤30,000 should be debited to the Land account. 
B) ₤15,000 should be debited to Land Improvements. 
C) ₤45,000 should be debited to the Land account. 
D) ₤45,000 should be debited to Land Improvements.

Question 16

If disposal of a plant asset occurs during the year, depreciation is

Accepted Answer

A) not recorded for the year. 
B) recorded for the whole year. 
C) recorded for the fraction of the year to the date of the disposal. 
D) not recorded if the asset is scrapped. 
A) not recorded for the year. 
B) recorded for the whole year. 
C) recorded for the fraction of the year to the date of the disposal. 
D) not recorded if the asset is scrapped.

Question 17

During 2011, Stein Corporation reported net sales of $4,000,000 and net income of $1,800,000.Stein also reported beginning total assets of $1,000,000 and ending total assets of $1,500,000.Stein's asset turnover ratio is

Accepted Answer

A) 4.0 times. 
B) 3.2 times. 
C) 2.7 times. 
D) 1.9 times. 
A) 4.0 times. 
B) 3.2 times. 
C) 2.7 times. 
D) 1.9 times.

Question 18

Companies record a gain or loss on the exchange of plant assets because most exchanges have commercial substance.

Accepted Answer

A) True 
 B)False

Question 19

Robin Company acquires a piece of land on which it intends to build a factory to produce its primary product.The land is listed for sale at $230,000, but Robin Company's real estate broker is able to negotiate a sales price of $210,000.The land contains an old office building that is razed at a cost of $12,500 ($14,500 in costs less $2,000 proceeds from salvaged materials).Robin Company pays a commission to the real estate broker of $11,500 and an attorney's fee of $3,000.On its statement of financial position at December 31, 2011, what amount will Robin Company record as the cost of the land?

Accepted Answer

A) $244,500 
B) $222,500 
C) $237,000 
D) $257,000 
A) $244,500 
B) $222,500 
C) $237,000 
D) $257,000

Question 20

A company purchased office equipment for $40,000 and estimated a residual value of $8,000 at the end of its 5-year useful life.The constant percentage to be applied against book value each year if the double-declining-balance method is used is

Accepted Answer

A) 20%. 
B) 25%. 
C) 40%. 
D) 4%. 
A) 20%. 
B) 25%. 
C) 40%. 
D) 4%.

The factor that is not relevant in computing depreciation is

Which one of the following items is not considered a part of the cost of a truck purchased for business use?

In computing depletion, residual value is

Gains on an exchange of plant assets that has commercial substance are

Chicago Furniture uses a variety of equipment in its manufacturing facility.On Chicago Furniture's statement of financial position, the "Equipment" balance would contains all of the following costs except

A truck that cost $42,000 and on which $35,000 of accumulated depreciation has been recorded was disposed of for $10,500 cash.The entry to record this event would include a

Changes in depreciation method under IFRS are reported in current and future periods, under U.S.GAAP such changes are treated as prior period adjustments.

When an asset is purchased during the year, it is not necessary to record depreciation expense in the first year under the declining-balance depreciation method.

Land improvements are reported on the statement of financial position at their cost less accumulated depreciation.

Sargent Corporation bought equipment on January 1, 2011.The equipment cost €180,000 and had an expected residual value of €30,000.The life of the equipment was estimated to be 6 years.The book value of the equipment at the beginning of the third year would be

When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account.

Wesley Hospital installs a new parking lot.The paving cost ₤30,000 and the lights to illuminate the new parking area cost ₤15,000.Which of the following statements is true with respect to these additions?

If disposal of a plant asset occurs during the year, depreciation is

During 2011, Stein Corporation reported net sales of $4,000,000 and net income of $1,800,000.Stein also reported beginning total assets of $1,000,000 and ending total assets of $1,500,000.Stein's asset turnover ratio is

Companies record a gain or loss on the exchange of plant assets because most exchanges have commercial substance.

A company purchased office equipment for $40,000 and estimated a residual value of $8,000 at the end of its 5-year useful life.The constant percentage to be applied against book value each year if the double-declining-balance method is used is

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

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

The factor that is not relevant in computing depreciation is

Which one of the following items is not considered a part of the cost of a truck purchased for business use?

In computing depletion, residual value is

Gains on an exchange of plant assets that has commercial substance are

Chicago Furniture uses a variety of equipment in its manufacturing facility.On Chicago Furniture's statement of financial position, the "Equipment" balance would contains all of the following costs except

A truck that cost $42,000 and on which $35,000 of accumulated depreciation has been recorded was disposed of for $10,500 cash.The entry to record this event would include a

Changes in depreciation method under IFRS are reported in current and future periods, under U.S.GAAP such changes are treated as prior period adjustments.

When an asset is purchased during the year, it is not necessary to record depreciation expense in the first year under the declining-balance depreciation method.

Land improvements are reported on the statement of financial position at their cost less accumulated depreciation.

Sargent Corporation bought equipment on January 1, 2011.The equipment cost €180,000 and had an expected residual value of €30,000.The life of the equipment was estimated to be 6 years.The book value of the equipment at the beginning of the third year would be

When purchasing land, the costs for clearing, draining, filling, and grading should be charged to a Land Improvements account.

Wesley Hospital installs a new parking lot.The paving cost ₤30,000 and the lights to illuminate the new parking area cost ₤15,000.Which of the following statements is true with respect to these additions?

If disposal of a plant asset occurs during the year, depreciation is

During 2011, Stein Corporation reported net sales of $4,000,000 and net income of $1,800,000.Stein also reported beginning total assets of $1,000,000 and ending total assets of $1,500,000.Stein's asset turnover ratio is

Companies record a gain or loss on the exchange of plant assets because most exchanges have commercial substance.

A company purchased office equipment for $40,000 and estimated a residual value of $8,000 at the end of its 5-year useful life.The constant percentage to be applied against book value each year if the double-declining-balance method is used is

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