Question 1

All of the following statements regarding impairments are true except

Accepted Answer

A) an impairment is a permanent decline in an asset's market value. 
B) after an impairment write-down depreciation is generally lower in a subsequent periods. 
C) immediate recognition of impairment write-downs is now required. 
D) impairments are generally recorded when the book value falls below the market value. 
A) an impairment is a permanent decline in an asset's market value. 
B) after an impairment write-down depreciation is generally lower in a subsequent periods. 
C) immediate recognition of impairment write-downs is now required. 
D) impairments are generally recorded when the book value falls below the market value.

Question 2

Research and development costs that result in a successful product that is patentable are charged to the Patent account.

Accepted Answer

A) True 
 B)False

Question 3

When an entire business is purchased goodwill is the excess of cost over the book value of the net assets acquired.

Accepted Answer

A) True 
 B)False

Question 4

An asset was purchased for $400000.It had an estimated salvage value of $80000 and an estimated useful life of 10 years.After 5 years of use the estimated salvage value is revised to $64000 but the estimated useful life is unchanged.Assuming straight-line depreciation depreciation expense in Year 6 would be

Accepted Answer

A) $48000. 
B) $35200. 
C) $24000. 
D) $33600. 
A) $48000. 
B) $35200. 
C) $24000. 
D) $33600.

Question 5

The IRS does not require the taxpayer to use the same depreciation method on the tax return that is used in preparing financial statements.

Accepted Answer

A) True 
 B)False

Question 6

Ron's Quik Shop bought equipment for $140000 on January 1 2021.Ron estimated the useful life to be 5 years with no salvage value and the straight-line method of depreciation will be used.On January 1 2022 Ron decides that the business will use the equipment for a total of 6 years.What is the revised depreciation expense for 2022?

Accepted Answer

A) $22400. 
B) $11200. 
C) $18666. d $28000. 
A) $22400. 
B) $11200. 
C) $18666. d $28000.

Question 7

On January 1 a machine with a useful life of four years and a salvage value of $16000 was purchased for $80000.What is the depreciation expense for year 2 under straight-line depreciation?

Accepted Answer

A) $20000. 
B) $32000. 
C) $16000. 
D) $40000. 
A) $20000. 
B) $32000. 
C) $16000. 
D) $40000.

Question 8

Franchises are classified as a plant asset.

Accepted Answer

A) True 
 B)False

Question 9

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 10

On Oct 1 2021 Metro Company purchased equipment in exchange for a $77000 note payable.The equipment has an estimated salvage value of $17000 an estimated life of 4 years and is depreciated by the straight-line method.Use the following tabular analysis to determine the book value of the equipment at December 31 2022.

Accepted Answer

A) $56250. 
B) $58250. 
C) $31250. 
D) $27000. 
A) $56250. 
B) $58250. 
C) $31250. 
D) $27000.

Question 11

On January 2 2022 Niceville Corporation sold equipment for $40000 cash.The equipment had an original cost of $150000 and accumulated depreciation of $90000.Use the following tabular analysis to record the sale.

Accepted Answer

A) Increase Cash $40000 decrease Equipment $150000 decrease Accumulated Depreciation $90000 and increase Revenues $20000. 
B) Increase Cash $40000 decrease Equipment $60000 and decrease Revenues $20000. 
C) Increase Cash $40000 increase expenses (loss) $20000 decrease Equipment $150000 and decrease Accumulated Depreciation $90000. 
D) Increase Cash and decrease Equipment $40000. 
A) Increase Cash $40000 decrease Equipment $150000 decrease Accumulated Depreciation $90000 and increase Revenues $20000. 
B) Increase Cash $40000 decrease Equipment $60000 and decrease Revenues $20000. 
C) Increase Cash $40000 increase expenses (loss) $20000 decrease Equipment $150000 and decrease Accumulated Depreciation $90000. 
D) Increase Cash and decrease Equipment $40000.

Question 12

A truck costing $75000 and on which $65000 of accumulated depreciation has been re-corded was discarded as having no value.Recording this event would include a(n)

Accepted Answer

A) gain of $10000. 
B) loss of $10000. 
C) increase to Accumulated Depreciation for $65000. 
D) increase to Accumulated Depreciation for $75000. 
A) gain of $10000. 
B) loss of $10000. 
C) increase to Accumulated Depreciation for $65000. 
D) increase to Accumulated Depreciation for $75000.

Question 13

Equipment with a cost of $640000 has an estimated salvage value of $60000 and an estimated life of 4 years or 12000 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 3000 hours?

Accepted Answer

A) $160000. 
B) $175000. 
C) $165000. 
D) $145000. 
A) $160000. 
B) $175000. 
C) $165000. 
D) $145000.

Question 14

When an asset is sold a gain occurs when the

Accepted Answer

A) sale price exceeds the book value of the asset sold. 
B) sale price exceeds the original cost of the asset sold. 
C) book value exceeds the sale price of the asset sold. 
D) sale price exceeds the depreciable cost of the asset sold. 
A) sale price exceeds the book value of the asset sold. 
B) sale price exceeds the original cost of the asset sold. 
C) book value exceeds the sale price of the asset sold. 
D) sale price exceeds the depreciable cost of the asset sold.

Question 15

Cost allocation of an intangible asset is referred to as

Accepted Answer

A) amortization. 
B) depreciation. 
C) accretion. 
D) capitalization. 
A) amortization. 
B) depreciation. 
C) accretion. 
D) capitalization.

Question 16

On July 2 2022 equipment with a cost of $50000 was purchased for cash.The equipment has an estimated salvage value of $6000 and an estimated life of 4 years.It is to be depreciated by the straight-line method.Use the following tabular analysis to determine the adjustment that would be made for depreciation for 2022 assuming the company has a calendar year end.

Accepted Answer

A) Increase Accumulated Depreciation and decrease Depreciation Expense by $11000. 
B) Decrease Equipment and increase Depreciation Expense by $11000. 
C) Decrease Equipment and increase Depreciation Expense by $5500. 
D) Increase Accumulated Depreciation and Depreciation Expense by $5500. 
A) Increase Accumulated Depreciation and decrease Depreciation Expense by $11000. 
B) Decrease Equipment and increase Depreciation Expense by $11000. 
C) Decrease Equipment and increase Depreciation Expense by $5500. 
D) Increase Accumulated Depreciation and Depreciation Expense by $5500.

Question 17

The book value of a plant asset is the amount originally paid for the asset less anticipated salvage value.

Accepted Answer

A) True 
 B)False

Question 18

Mitchell Corporation bought equipment on January 1 2022.The equipment cost $300000 and had an expected salvage value of $50000.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) $300000. 
B) $250000. 
C) $216666. 
D) $83333. 
A) $300000. 
B) $250000. 
C) $216666. 
D) $83333.

Question 19

Mitchell Corporation bought equipment on January 1 2022.The equipment cost $300000 and had an expected salvage value of $50000.The life of the equipment was estimated to be 6 years.The depreciable cost of the equipment is

Accepted Answer

A) $300000. 
B) $250000. 
C) $50000. 
D) $41667. 
A) $300000. 
B) $250000. 
C) $50000. 
D) $41667.

Question 20

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

Accepted Answer

A) True 
 B)False

All of the following statements regarding impairments are true except

Research and development costs that result in a successful product that is patentable are charged to the Patent account.

When an entire business is purchased goodwill is the excess of cost over the book value of the net assets acquired.

The IRS does not require the taxpayer to use the same depreciation method on the tax return that is used in preparing financial statements.

On January 1 a machine with a useful life of four years and a salvage value of $16000 was purchased for $80000.What is the depreciation expense for year 2 under straight-line depreciation?

Franchises are classified as a plant asset.

The four subdivisions for plant assets are

On January 2 2022 Niceville Corporation sold equipment for $40000 cash.The equipment had an original cost of $150000 and accumulated depreciation of $90000.Use the following tabular analysis to record the sale.

A truck costing $75000 and on which $65000 of accumulated depreciation has been re-corded was discarded as having no value.Recording this event would include a(n)

Equipment with a cost of $640000 has an estimated salvage value of $60000 and an estimated life of 4 years or 12000 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 3000 hours?

When an asset is sold a gain occurs when the

Cost allocation of an intangible asset is referred to as

The book value of a plant asset is the amount originally paid for the asset less anticipated salvage value.

Mitchell Corporation bought equipment on January 1 2022.The equipment cost $300000 and had an expected salvage value of $50000.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

Mitchell Corporation bought equipment on January 1 2022.The equipment cost $300000 and had an expected salvage value of $50000.The life of the equipment was estimated to be 6 years.The depreciable cost of the equipment is

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

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

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Exam 7: Reporting and Analyzing Liabilities and Stockholders Equity

All of the following statements regarding impairments are true except

Research and development costs that result in a successful product that is patentable are charged to the Patent account.

When an entire business is purchased goodwill is the excess of cost over the book value of the net assets acquired.

The IRS does not require the taxpayer to use the same depreciation method on the tax return that is used in preparing financial statements.

On January 1 a machine with a useful life of four years and a salvage value of $16000 was purchased for $80000.What is the depreciation expense for year 2 under straight-line depreciation?

Franchises are classified as a plant asset.

The four subdivisions for plant assets are

On January 2 2022 Niceville Corporation sold equipment for $40000 cash.The equipment had an original cost of $150000 and accumulated depreciation of $90000.Use the following tabular analysis to record the sale.

A truck costing $75000 and on which $65000 of accumulated depreciation has been re-corded was discarded as having no value.Recording this event would include a(n)

Equipment with a cost of $640000 has an estimated salvage value of $60000 and an estimated life of 4 years or 12000 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 3000 hours?

When an asset is sold a gain occurs when the

Cost allocation of an intangible asset is referred to as

The book value of a plant asset is the amount originally paid for the asset less anticipated salvage value.

Mitchell Corporation bought equipment on January 1 2022.The equipment cost $300000 and had an expected salvage value of $50000.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

Mitchell Corporation bought equipment on January 1 2022.The equipment cost $300000 and had an expected salvage value of $50000.The life of the equipment was estimated to be 6 years.The depreciable cost of the equipment is

The Accumulated Depreciation account represents a cash fund available to replace plant assets.

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