Question 1

The book value of an asset will equal its fair value at the date of sale if

Accepted Answer

A) a gain on disposal is recorded. 
B) no gain or loss on disposal is recorded. 
C) the plant asset is fully depreciated. 
D) a loss on disposal is recorded. 
A) a gain on disposal is recorded. 
B) no gain or loss on disposal is recorded. 
C) the plant asset is fully depreciated. 
D) a loss on disposal is recorded.

Question 2

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 3

All plant assets (fixed assets) must be depreciated for accounting purposes.

Accepted Answer

A) True 
 B)False

Question 4

On July 1 2022 Dylan Company purchased a patent from Roy Orbison for $1050000.It is estimated that the patent has a remaining useful life of 5 years.Use the following tabular analysis to make the adjustment for amortization expense for the year 2022.

Accepted Answer

A) Increase Expenses and decrease Cash $105000. 
B) Increase Expenses and decrease Cash $210000. 
C) Increase Expenses and decrease Patents $105000. 
D) Increase Expenses and decrease Patents $210000. 
A) Increase Expenses and decrease Cash $105000. 
B) Increase Expenses and decrease Cash $210000. 
C) Increase Expenses and decrease Patents $105000. 
D) Increase Expenses and decrease Patents $210000.

Question 5

The cost of an intangible asset with an indefinite life should

Accepted Answer

A) be amortized over 20 years. 
B) be amortized over the life of the creator plus 70 years. 
C) not be amortized. 
D) None of these answer choices are correct. 
A) be amortized over 20 years. 
B) be amortized over the life of the creator plus 70 years. 
C) not be amortized. 
D) None of these answer choices are correct.

Question 6

A gain or loss on disposal of a plant asset is determined by comparing the

Accepted Answer

A) replacement cost of the asset with the asset's original cost. 
B) book value of the asset with the asset's original cost. 
C) original cost of the asset with the proceeds received from its sale. 
D) book value of the asset with the proceeds received from its sale. 
A) replacement cost of the asset with the asset's original cost. 
B) book value of the asset with the asset's original cost. 
C) original cost of the asset with the proceeds received from its sale. 
D) book value of the asset with the proceeds received from its sale.

Question 7

The return on assets indicates how efficiently a company uses its assets.

Accepted Answer

A) True 
 B)False

Question 8

On October 10 Givens Retail purchased a parking lot for cash of $360000.The cost of the land was $175000.The paving cost $125000 and the lights to illuminate the new parking area cost $60000.Use the following tabular analysis to record the transaction.

Accepted Answer

A) Increase Land and decrease Cash $360000. 
B) Increase Land $175000 increase Land Improvements $185000 and decrease Cash $360000. 
C) Increase Land $300000 increase Land Improvements $60000 and decrease Cash $360000. 
D) Increase Land Improvements and decrease Cash $360000. 
A) Increase Land and decrease Cash $360000. 
B) Increase Land $175000 increase Land Improvements $185000 and decrease Cash $360000. 
C) Increase Land $300000 increase Land Improvements $60000 and decrease Cash $360000. 
D) Increase Land Improvements and decrease Cash $360000.

Question 9

Schrock Company purchases a new delivery van for $70000.The sales taxes are $5250.The logo of the company is painted on the side of the van for $1400.The van's annual license is $140.The van undergoes safety testing for $250.What does Schrock record as the cost of the new van?

Accepted Answer

A) $77040. 
B) $76900. 
C) $75250. 
D) $76650. 
A) $77040. 
B) $76900. 
C) $75250. 
D) $76650.

Question 10

All of the following statements are false regarding depreciation except

Accepted Answer

A) depreciation is an asset valuation process. 
B) depreciation does not apply to land improvements. 
C) recognizing depreciation results in the accumulation of cash for asset replacement. 
D) depreciation does not apply to land. 
A) depreciation is an asset valuation process. 
B) depreciation does not apply to land improvements. 
C) recognizing depreciation results in the accumulation of cash for asset replacement. 
D) depreciation does not apply to land.

Question 11

Recording depreciation each period is an application of the matching principle.

Accepted Answer

A) True 
 B)False

Question 12

On May 1 2022 Irwin Company purchased the copyright to Quick Computer Tutorials for $120000.It is estimated that the copyright will have a useful life of 5 years.The amount of amortization expense recognized for the year 2022 would be

Accepted Answer

A) $24000. 
B) $16000. 
C) $12000. 
D) $12800. 
A) $24000. 
B) $16000. 
C) $12000. 
D) $12800.

Question 13

In computing depreciation salvage value is

Accepted Answer

A) the fair value of a plant asset on the date of acquisition. 
B) subtracted from accumulated depreciation to determine the plant asset's depreciable cost. 
C) an estimate of a plant asset's value at the end of its useful life. 
D) ignored in all the depreciation methods. 
A) the fair value of a plant asset on the date of acquisition. 
B) subtracted from accumulated depreciation to determine the plant asset's depreciable cost. 
C) an estimate of a plant asset's value at the end of its useful life. 
D) ignored in all the depreciation methods.

Question 14

If a plant asset is retired and is fully depreciated

Accepted Answer

A) a gain on disposal will be recorded. 
B) phantom depreciation must 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) phantom depreciation must 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 15

A company sells a plant asset that originally cost $360000 for $120000 on December 31 2022.The accumulated depreciation account had a balance of $180000 after the current year's depreciation of $30000 had been recorded.The company should recognize a

Accepted Answer

A) $60000 loss on disposal. 
B) $40000 gain on disposal. 
C) $120000 loss on disposal. 
D) $120000 gain on disposal. 
A) $60000 loss on disposal. 
B) $40000 gain on disposal. 
C) $120000 loss on disposal. 
D) $120000 gain on disposal.

Question 16

Which of the following methods will result in the highest depreciation in the first year?

Accepted Answer

A) Sum-of-year's-digits. 
B) Time valuation. 
C) Straight-line. 
D) Declining-balance. 
A) Sum-of-year's-digits. 
B) Time valuation. 
C) Straight-line. 
D) Declining-balance.

Question 17

Expenditures that add to the utility of plant assets for more than one accounting period are

Accepted Answer

A) committed expenditures. 
B) revenue expenditures. 
C) current expenditures. 
D) capital expenditures. 
A) committed expenditures. 
B) revenue expenditures. 
C) current expenditures. 
D) capital expenditures.

Question 18

Brevard Corporation purchased a taxicab on January 1 2021 for $34000 to use for its shuttle business.The cab is expected to have a five-year useful life and no salvage value.During 2022 it retouched the cab's paint at a cost of $1600 replaced the transmission for $4000 (which extended its life by an additional 2 years) and tuned-up the engine for $200.If Brevard Corporation uses straight-line depreciation what annual depreciation will Brevard report for 2022?

Accepted Answer

A) $6800. 
B) $5200. 
C) $5500. 
D) $5467. 
A) $6800. 
B) $5200. 
C) $5500. 
D) $5467.

Question 19

On July 1 2022 Dillman Kennels sells equipment for $110000.The equipment originally cost $300000 had an estimated 5-year life and an expected salvage value of $50000.Accumulated Depreciation had a balance of $175000 on January 1 2022 using the straight-line method.The gain or loss on disposal is

Accepted Answer

A) $15000 gain. 
B) $10000 loss. 
C) $15000 loss. 
D) $10000 gain. 
A) $15000 gain. 
B) $10000 loss. 
C) $15000 loss. 
D) $10000 gain.

Question 20

Plant assets are ordinarily presented in the balance sheet

Accepted Answer

A) at current market values. 
B) at replacement costs. 
C) at cost less accumulated depreciation. 
D) in a separate section along with intangible assets. 
A) at current market values. 
B) at replacement costs. 
C) at cost less accumulated depreciation. 
D) in a separate section along with intangible assets.

The book value of an asset will equal its fair value at the date of sale if

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

All plant assets (fixed assets) must be depreciated for accounting purposes.

On July 1 2022 Dylan Company purchased a patent from Roy Orbison for $1050000.It is estimated that the patent has a remaining useful life of 5 years.Use the following tabular analysis to make the adjustment for amortization expense for the year 2022.

The cost of an intangible asset with an indefinite life should

A gain or loss on disposal of a plant asset is determined by comparing the

The return on assets indicates how efficiently a company uses its assets.

On October 10 Givens Retail purchased a parking lot for cash of $360000.The cost of the land was $175000.The paving cost $125000 and the lights to illuminate the new parking area cost $60000.Use the following tabular analysis to record the transaction.

Schrock Company purchases a new delivery van for $70000.The sales taxes are $5250.The logo of the company is painted on the side of the van for $1400.The van's annual license is $140.The van undergoes safety testing for $250.What does Schrock record as the cost of the new van?

All of the following statements are false regarding depreciation except

Recording depreciation each period is an application of the matching principle.

On May 1 2022 Irwin Company purchased the copyright to Quick Computer Tutorials for $120000.It is estimated that the copyright will have a useful life of 5 years.The amount of amortization expense recognized for the year 2022 would be

In computing depreciation salvage value is

If a plant asset is retired and is fully depreciated

A company sells a plant asset that originally cost $360000 for $120000 on December 31 2022.The accumulated depreciation account had a balance of $180000 after the current year's depreciation of $30000 had been recorded.The company should recognize a

Which of the following methods will result in the highest depreciation in the first year?

Expenditures that add to the utility of plant assets for more than one accounting period are

On July 1 2022 Dillman Kennels sells equipment for $110000.The equipment originally cost $300000 had an estimated 5-year life and an expected salvage value of $50000.Accumulated Depreciation had a balance of $175000 on January 1 2022 using the straight-line method.The gain or loss on disposal is

Plant assets are ordinarily presented in the balance sheet

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters

Exam 7: Reporting and Analyzing Liabilities and Stockholders Equity

The book value of an asset will equal its fair value at the date of sale if

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

All plant assets (fixed assets) must be depreciated for accounting purposes.

On July 1 2022 Dylan Company purchased a patent from Roy Orbison for $1050000.It is estimated that the patent has a remaining useful life of 5 years.Use the following tabular analysis to make the adjustment for amortization expense for the year 2022.

The cost of an intangible asset with an indefinite life should

A gain or loss on disposal of a plant asset is determined by comparing the

The return on assets indicates how efficiently a company uses its assets.

On October 10 Givens Retail purchased a parking lot for cash of $360000.The cost of the land was $175000.The paving cost $125000 and the lights to illuminate the new parking area cost $60000.Use the following tabular analysis to record the transaction.

Schrock Company purchases a new delivery van for $70000.The sales taxes are $5250.The logo of the company is painted on the side of the van for $1400.The van's annual license is $140.The van undergoes safety testing for $250.What does Schrock record as the cost of the new van?

All of the following statements are false regarding depreciation except

Recording depreciation each period is an application of the matching principle.

On May 1 2022 Irwin Company purchased the copyright to Quick Computer Tutorials for $120000.It is estimated that the copyright will have a useful life of 5 years.The amount of amortization expense recognized for the year 2022 would be

In computing depreciation salvage value is

If a plant asset is retired and is fully depreciated

A company sells a plant asset that originally cost $360000 for $120000 on December 31 2022.The accumulated depreciation account had a balance of $180000 after the current year's depreciation of $30000 had been recorded.The company should recognize a

Which of the following methods will result in the highest depreciation in the first year?

Expenditures that add to the utility of plant assets for more than one accounting period are

On July 1 2022 Dillman Kennels sells equipment for $110000.The equipment originally cost $300000 had an estimated 5-year life and an expected salvage value of $50000.Accumulated Depreciation had a balance of $175000 on January 1 2022 using the straight-line method.The gain or loss on disposal is

Plant assets are ordinarily presented in the balance sheet

Introduction to Financial Statements

A Further Look at Financial Statements

The Accounting Information System

Accrual Accounting Concepts

Fraud, Internal Control, and Cash

Reporting and Analyzing Long-Lived Assets

Financial Analysis: the Big Picture

Managerial Accounting

Cost-Volume-Profit

Incremental Analysis

Budgetary Planning

Budgetary Control and Responsibility Accounting

Standard Costs and Balanced Scorecard

Planning for Capital Investments

Activity Based Costing

Cost-Volume Profit Analysis: Additional Issues

Filters