Question 1

When a change in estimate is made there is no correction of previously recorded depreciation expense.

Accepted Answer

A) True 
 B)False

Question 2

Machinery was purchased for $340000.Freight charges amounted to $14000 and there was a cost of $40000 for building a foundation and installing the machinery.It is estimated that the machinery will have a $60000 salvage value at the end of its 5-year useful life.Depreciation expense each year using the straight-line method will be

Accepted Answer

A) $78800. 
B) $66800. 
C) $57200. 
D) $56000. 
A) $78800. 
B) $66800. 
C) $57200. 
D) $56000.

Question 3

The return on assets can be computed from the profit margin ratio and the asset turnover ratio.

Accepted Answer

A) True 
 B)False

Question 4

Additions and improvements to a plant asset that increase the asset's operating efficiency productive capacity or expected useful life are generally expensed in the period incurred.

Accepted Answer

A) True 
 B)False

Question 5

Stine Company purchased machinery with a list price of $96000.The company was given a 10% discount by the manufacturer.They paid $600 for shipping and sales tax of $4500.Stine estimates that the machinery will have a useful life of 10 years and a residual value of $30000.If Stine uses straight-line depreciation annual depreciation will be

Accepted Answer

A) $6150. 
B) $6108. 
C) $9150. 
D) $5640. 
A) $6150. 
B) $6108. 
C) $9150. 
D) $5640.

Question 6

Intangible assets are rights privileges and competitive advantages that result from ownership of long-lived assets without physical substance.

Accepted Answer

A) True 
 B)False

Question 7

Goodwill

Accepted Answer

A) may be expensed upon purchase if desired. 
B) can be sold by itself to another company. 
C) can be purchased and charged directly to stockholders' equity. 
D) is only recorded when the purchase of an entire business occurs. 
A) may be expensed upon purchase if desired. 
B) can be sold by itself to another company. 
C) can be purchased and charged directly to stockholders' equity. 
D) is only recorded when the purchase of an entire business occurs.

Question 8

The depreciable cost of a plant asset is its original cost minus obsolescence.

Accepted Answer

A) True 
 B)False

Question 9

Equipment with a cost of $300000 has an estimated salvage value of $20000 and an estimated life of 4 years or 10000 hours.It is to be depreciated by the straight-line method.What is the amount of depreciation for the first full year during which the equipment was used 2700 hours?

Accepted Answer

A) $75000. 
B) $70000. 
C) $75600. 
D) $72500. 
A) $75000. 
B) $70000. 
C) $75600. 
D) $72500.

Question 10

Expenditures to maintain the operating efficiency and expected productive life of a plant asset are

Accepted Answer

A) additions. 
B) ordinary repairs. 
C) improvements. 
D) capital expenditures. 
A) additions. 
B) ordinary repairs. 
C) improvements. 
D) capital expenditures.

Question 11

A machine was purchased for $180000 and it was estimated to have an $12000 salvage value at the end of its useful life.Monthly depreciation expense of $1750 was recorded using the straight-line method.The annual depreciation rate is

Accepted Answer

A) 15.0%. 
B) 2.5%. 
C) 10.0%. 
D) 12.5%. 
A) 15.0%. 
B) 2.5%. 
C) 10.0%. 
D) 12.5%.

Question 12

The book value of a plant asset is the difference between the

Accepted Answer

A) replacement cost of the asset and its historical cost. 
B) cost of the asset and the amount of depreciation expense for the year. 
C) cost of the asset and the accumulated depreciation to date. 
D) proceeds received from the sale of the asset and its original cost. 
A) replacement cost of the asset and its historical cost. 
B) cost of the asset and the amount of depreciation expense for the year. 
C) cost of the asset and the accumulated depreciation to date. 
D) proceeds received from the sale of the asset and its original cost.

Question 13

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following methods of computing depreciation is production based?

Accepted Answer

A) Straight-line. 
B) Declining-balance. 
C) Units-of-activity. 
D) None of these answer choices are correct. 
A) Straight-line. 
B) Declining-balance. 
C) Units-of-activity. 
D) None of these answer choices are correct.

Question 15

On October 1 2022 Mann Company places a new asset into service.The cost of the asset is $120000 with an estimated 5-year life and $30000 salvage value at the end of its useful life.What is the depreciation expense for 2022 if Mann Company uses the straight-line method of depreciation?

Accepted Answer

A) $4500. 
B) $24000. 
C) $6000. 
D) $12000. 
A) $4500. 
B) $24000. 
C) $6000. 
D) $12000.

Question 16

Newell Company purchased a machine with a list price of $160000.The company was given a 10% discount by the manufacturer and paid $1000 for shipping and sales tax of $7500.Newell estimates that the machine will have a useful life of 10 years and a salvage value of $50000.If Newell uses straight-line depreciation annual depreciation will be

Accepted Answer

A) $10250. 
B) $10180. 
C) $15250. 
D) $9400. 
A) $10250. 
B) $10180. 
C) $15250. 
D) $9400.

Question 17

During 2022 Hernandez Company incurred $1900000 of research and development costs in its laboratory to develop a new product and $220000 in legal fees to patent the product.Use the following tabular analysis to record these costs assuming that the payments were made in cash

Accepted Answer

A) Increase Patents $220000 increase Expenses $1900000 decrease Cash $2120000. 
B) Increase Patents and decrease Cash $2120000. 
C) Decrease Cash and increase Expenses $2120000. 
D) Increase Revenues and Cash $2120000. 
A) Increase Patents $220000 increase Expenses $1900000 decrease Cash $2120000. 
B) Increase Patents and decrease Cash $2120000. 
C) Decrease Cash and increase Expenses $2120000. 
D) Increase Revenues and Cash $2120000.

Question 18

A change in the estimated salvage value of a plant asset requires a restatement of prior years' depreciation.

Accepted Answer

A) True 
 B)False

Question 19

Machinery was purchased for $340000 on January 1 2022.Freight charges amounted to $14000 and there was a cost of $40000 for building a foundation and installing the machinery.It is estimated that the machinery will have a $60000 salvage value at the end of its 5-year useful life.What is the amount of accumulated depreciation at December 31 2023 if the straight-line method of depreciation is used?

Accepted Answer

A) $133600. 
B) $66800. 
C) $57200. 
D) $114400. 
A) $133600. 
B) $66800. 
C) $57200. 
D) $114400.

Question 20

On August 7 Gideon Ridge Restaurant purchased a building in exchange for a note with a face amount of $1660000.The cost of the land was $600000.The building cost $900000 and the parking lot was valued at $160000.Use the following tabular analysis to record the transaction.

Accepted Answer

A) Increase Building and increase Notes Payable $1660000. 
B) Increase Land $600000 increase Land Improvements $160000 increase Building $900000 and increase Notes Payable $1660000. 
C) Increase Land $600000 increase Land Improvements $160000 increase Building $900000 and decrease Notes Payable $1660000. 
D) Increase Building $760000 increase Land $600000 and increase Notes Payable $1660000. 
A) Increase Building and increase Notes Payable $1660000. 
B) Increase Land $600000 increase Land Improvements $160000 increase Building $900000 and increase Notes Payable $1660000. 
C) Increase Land $600000 increase Land Improvements $160000 increase Building $900000 and decrease Notes Payable $1660000. 
D) Increase Building $760000 increase Land $600000 and increase Notes Payable $1660000.

When a change in estimate is made there is no correction of previously recorded depreciation expense.

The return on assets can be computed from the profit margin ratio and the asset turnover ratio.

Additions and improvements to a plant asset that increase the asset's operating efficiency productive capacity or expected useful life are generally expensed in the period incurred.

Intangible assets are rights privileges and competitive advantages that result from ownership of long-lived assets without physical substance.

Goodwill

The depreciable cost of a plant asset is its original cost minus obsolescence.

Equipment with a cost of $300000 has an estimated salvage value of $20000 and an estimated life of 4 years or 10000 hours.It is to be depreciated by the straight-line method.What is the amount of depreciation for the first full year during which the equipment was used 2700 hours?

Expenditures to maintain the operating efficiency and expected productive life of a plant asset are

A machine was purchased for $180000 and it was estimated to have an $12000 salvage value at the end of its useful life.Monthly depreciation expense of $1750 was recorded using the straight-line method.The annual depreciation rate is

The book value of a plant asset is the difference between the

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

Which of the following methods of computing depreciation is production based?

On October 1 2022 Mann Company places a new asset into service.The cost of the asset is $120000 with an estimated 5-year life and $30000 salvage value at the end of its useful life.What is the depreciation expense for 2022 if Mann Company uses the straight-line method of depreciation?

During 2022 Hernandez Company incurred $1900000 of research and development costs in its laboratory to develop a new product and $220000 in legal fees to patent the product.Use the following tabular analysis to record these costs assuming that the payments were made in cash

A change in the estimated salvage value of a plant asset requires a restatement of prior years' depreciation.

On August 7 Gideon Ridge Restaurant purchased a building in exchange for a note with a face amount of $1660000.The cost of the land was $600000.The building cost $900000 and the parking lot was valued at $160000.Use the following tabular analysis to record the transaction.

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

When a change in estimate is made there is no correction of previously recorded depreciation expense.

The return on assets can be computed from the profit margin ratio and the asset turnover ratio.

Additions and improvements to a plant asset that increase the asset's operating efficiency productive capacity or expected useful life are generally expensed in the period incurred.

Intangible assets are rights privileges and competitive advantages that result from ownership of long-lived assets without physical substance.

Goodwill

The depreciable cost of a plant asset is its original cost minus obsolescence.

Equipment with a cost of $300000 has an estimated salvage value of $20000 and an estimated life of 4 years or 10000 hours.It is to be depreciated by the straight-line method.What is the amount of depreciation for the first full year during which the equipment was used 2700 hours?

Expenditures to maintain the operating efficiency and expected productive life of a plant asset are

A machine was purchased for $180000 and it was estimated to have an $12000 salvage value at the end of its useful life.Monthly depreciation expense of $1750 was recorded using the straight-line method.The annual depreciation rate is

The book value of a plant asset is the difference between the

Using the units-of-activity method of depreciating factory equipment will generally result in more depreciation expense being recorded over the life of the asset than if the straight-line method had been used.

Which of the following methods of computing depreciation is production based?

On October 1 2022 Mann Company places a new asset into service.The cost of the asset is $120000 with an estimated 5-year life and $30000 salvage value at the end of its useful life.What is the depreciation expense for 2022 if Mann Company uses the straight-line method of depreciation?

During 2022 Hernandez Company incurred $1900000 of research and development costs in its laboratory to develop a new product and $220000 in legal fees to patent the product.Use the following tabular analysis to record these costs assuming that the payments were made in cash

A change in the estimated salvage value of a plant asset requires a restatement of prior years' depreciation.

On August 7 Gideon Ridge Restaurant purchased a building in exchange for a note with a face amount of $1660000.The cost of the land was $600000.The building cost $900000 and the parking lot was valued at $160000.Use the following tabular analysis to record the transaction.

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