Question 1

Match between columns
                        Premises: An expenditure that makes a plant asset more efficient or productive.
Certain nonphysical assets used in operations that confer long-term rights, privileges, or competitive advantages on their owners.
A depreciation method that charges a varying amount to expense for each period of an asset's useful life depending on its usage.
The process of allocating the cost of a natural resource to the period when it are consumed.
A method of depreciation that yields larger expense during the early years of an asset's life and smaller expense in the later years.
A measure of a company's effectiveness in using its assets to generate sales.
A cost reported as an expense on the current income statement because it does not provide a material benefit in future periods.
Expenditures to keep a plant asset in normal, good operating condition.
The process of systematically allocating the cost of an intangible asset to expense over its estimated useful life.
The amount by which the company's value exceeds the value of its individual assets and liabilities.

Accepted Answer

The Answer of Amortization and Revenue expenditure and Goodwill and is...

Question 2

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Accepted Answer

Revenue expenditures do not materially i

Question 3

Wickland Company installs a manufacturing machine in its production facility at the beginning of the year at a cost of $87,000. The machine's useful life is estimated to be 5 years, or 400,000 units of product, with a $7,000 salvage value. During its second year, the machine produces 84,500 units of product. Determine the machines' second year depreciation under the units-of-production method.

Accepted Answer

A) $16,000. 
B) $20,880. 
C) $17,400. 
D) $18,379. 
E) $16,900. 
A) $16,000. 
B) $20,880. 
C) $17,400. 
D) $18,379. 
E) $16,900.

Question 4

An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record:

Accepted Answer

A) Neither a gain nor a loss is recognized on this transaction. 
B) A loss on sale of $3,000. 
C) A gain on sale of $3,000. 
D) A loss on sale of $12,000. 
E) A gain on sale of $12,000. 
A) Neither a gain nor a loss is recognized on this transaction. 
B) A loss on sale of $3,000. 
C) A gain on sale of $3,000. 
D) A loss on sale of $12,000. 
E) A gain on sale of $12,000.

Question 5

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the straight-line method.

Accepted Answer

A) $27,000. 
B) $23,779. 
C) $25,800. 
D) $29,025. 
E) $24,000. 
A) $27,000. 
B) $23,779. 
C) $25,800. 
D) $29,025. 
E) $24,000.

Question 6

An accelerated depreciation method yields larger depreciation expense in the early years of an asset's life and less depreciation expense in later years.

Accepted Answer

A) True 
 B)False

Question 7

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method?

Accepted Answer

A) $2,320. 
B) $680. 
C) $2,720. 
D) $300. 
E) $600. 
A) $2,320. 
B) $680. 
C) $2,720. 
D) $300. 
E) $600.

Question 8

Plant assets can be disposed of by discarding, selling, or exchanging them.

Accepted Answer

A) True 
 B)False

Question 9

The formula to compute annual straight-line depreciation is:

Accepted Answer

A) Cost divided by useful life in units. 
B) Depreciable cost divided by useful life in units. 
C) (Cost minus salvage value)divided by the useful life in years. 
D) Cost multiplied by useful life in years. 
E) (Cost plus salvage value)divided by the useful life in years. 
A) Cost divided by useful life in units. 
B) Depreciable cost divided by useful life in units. 
C) (Cost minus salvage value)divided by the useful life in years. 
D) Cost multiplied by useful life in years. 
E) (Cost plus salvage value)divided by the useful life in years.

Question 10

An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record:

Accepted Answer

A) A loss on sale of $2,000. 
B) A loss on sale of $1,000. 
C) Neither a gain or loss is recognized on this type of transaction. 
D) A gain on sale of $1,000. 
E) A gain on sale of $2,000. 
A) A loss on sale of $2,000. 
B) A loss on sale of $1,000. 
C) Neither a gain or loss is recognized on this type of transaction. 
D) A gain on sale of $1,000. 
E) A gain on sale of $2,000.

Question 11

Plant assets are defined as:

Accepted Answer

A) Current assets. 
B) Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business. 
C) Intangible assets used in the operations of a business that have a useful life of more than one accounting period. 
D) Tangible assets used in the operation of business that have a useful life of less than one accounting period. 
E) Held for sale. 
A) Current assets. 
B) Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business. 
C) Intangible assets used in the operations of a business that have a useful life of more than one accounting period. 
D) Tangible assets used in the operation of business that have a useful life of less than one accounting period. 
E) Held for sale.

Question 12

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

Accepted Answer

A) True 
 B)False

Question 13

A company purchased equipment valued at $66,000. It traded in old equipment for a $9,000 trade-in allowance and the company paid $57,000 cash with the trade-in. The old equipment cost $44,000 and had accumulated depreciation of $36,000. This transaction has commercial substance. What is the recorded value of the new equipment?

Accepted Answer

A) $66,000. 
B) $9,000. 
C) $65,000. 
D) $57,000. 
E) $8,000. 
A) $66,000. 
B) $9,000. 
C) $65,000. 
D) $57,000. 
E) $8,000.

Question 14

If land is purchased as a building site, the cost of removing existing structures is not charged to the Land account.

Accepted Answer

A) True 
 B)False

Question 15

A company used straight-line depreciation for an item of equipment that cost $12,000, had a salvage value of $2,000 and a five-year useful life. After depreciating the asset for three complete years, the salvage value was reduced to $1,200 but its total useful life remained the same. Determine the amount of depreciation to be charged against the equipment during each of the remaining years of its useful life:

Accepted Answer

A) $2,400 
B) $2,000 
C) $5,400 
D) $1,800 
E) $1,000 
A) $2,400 
B) $2,000 
C) $5,400 
D) $1,800 
E) $1,000

Question 16

Spears Co. had net sales of $35,400 million. Its average total assets for the period were $14,700 million. Spears' total asset turnover equals:

Accepted Answer

A) 3.54. 
B) 0.42. 
C) 1.48. 
D) 2.41. 
E) 0.35. 
A) 3.54. 
B) 0.42. 
C) 1.48. 
D) 2.41. 
E) 0.35.

Question 17

Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems.

Accepted Answer

A) True 
 B)False

Question 18

Flask Company reports net sales of $4,315 million; cost of goods sold of $2,808 million; net income of $283 million; and average total assets of $2,136. Compute its total asset turnover.

Accepted Answer

A) 2.02. 
B) 1.31. 
C) .76. 
D) .13. 
E) .50. 
A) 2.02. 
B) 1.31. 
C) .76. 
D) .13. 
E) .50.

Question 19

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Accepted Answer

A) $600. 
B) $680. 
C) $480. 
D) $544. 
E) $300. 
A) $600. 
B) $680. 
C) $480. 
D) $544. 
E) $300.

Question 20

Edmond reported average total assets of $9,965 million and net sales of $10,430 million. Its total asset turnover equals .96.

Accepted Answer

A) True 
 B)False

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record:

An accelerated depreciation method yields larger depreciation expense in the early years of an asset's life and less depreciation expense in later years.

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method?

Plant assets can be disposed of by discarding, selling, or exchanging them.

The formula to compute annual straight-line depreciation is:

An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record:

Plant assets are defined as:

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

If land is purchased as a building site, the cost of removing existing structures is not charged to the Land account.

Spears Co. had net sales of $35,400 million. Its average total assets for the period were $14,700 million. Spears' total asset turnover equals:

Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems.

Flask Company reports net sales of $4,315 million; cost of goods sold of $2,808 million; net income of $283 million; and average total assets of $2,136. Compute its total asset turnover.

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Edmond reported average total assets of $9,965 million and net sales of $10,430 million. Its total asset turnover equals .96.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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Exam 10: Plant Assets, Natural Resoures, and Intangibles

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

An asset's book value is $18,000 on December 31, Year 5. The asset has been depreciated at an annual rate of $3,000 on the straight-line method. Assuming the asset is sold on December 31, Year 5 for $15,000, the company should record:

An accelerated depreciation method yields larger depreciation expense in the early years of an asset's life and less depreciation expense in later years.

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the book value of the asset at the end of the first year of its useful life using the double-declining-balance method?

Plant assets can be disposed of by discarding, selling, or exchanging them.

The formula to compute annual straight-line depreciation is:

An asset's book value is $36,000 on January 1, Year 6. The asset is being depreciated $500 per month using the straight-line method. Assuming the asset is sold on July 1, Year 7 for $25,000, the company should record:

Plant assets are defined as:

An asset's cost includes all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use.

If land is purchased as a building site, the cost of removing existing structures is not charged to the Land account.

Spears Co. had net sales of $35,400 million. Its average total assets for the period were $14,700 million. Spears' total asset turnover equals:

Financial accounting and tax accounting require the same recordkeeping and there should be no difference in results between the two accounting systems.

Flask Company reports net sales of $4,315 million; cost of goods sold of $2,808 million; net income of $283 million; and average total assets of $2,136. Compute its total asset turnover.

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Edmond reported average total assets of $9,965 million and net sales of $10,430 million. Its total asset turnover equals .96.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

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