Question 1

Loss on Impairment is a(n):

Accepted Answer

A)  operating expense that appears on the balance sheet. 
B)  reduction to depreciation expense for the year. 
C)  contra-revenue account. 
D)  operating expense that appears on the income statement. 
A)  operating expense that appears on the balance sheet. 
B)  reduction to depreciation expense for the year. 
C)  contra-revenue account. 
D)  operating expense that appears on the income statement.

Question 2

Trademarks and goodwill are intangible assets that are not amortized.

Accepted Answer

A) True 
 B)False

Question 3

Recording depreciation is an application of the:

Accepted Answer

A)  expense recognition principle ("matching"). 
B)  cost principle. 
C)  separate entity assumption. 
D)  unit-of-measure assumption. 
A)  expense recognition principle ("matching"). 
B)  cost principle. 
C)  separate entity assumption. 
D)  unit-of-measure assumption.

Question 4

Urban Outsiders has a building that originally cost $375,000.The company expects to be able to sell the facility for $107,000 at the end of its useful life.The balance of the related Accumulated Depreciation account is $258,000.The depreciable cost of the facility is:

Accepted Answer

A)  $117,000. 
B)  $151,000. 
C)  $268,000. 
D)  $107,000. 
A)  $117,000. 
B)  $151,000. 
C)  $268,000. 
D)  $107,000.

Question 5

When estimated useful life of an asset is revised:

Accepted Answer

A)  depreciation will continue at the current rate. 
B)  depreciation expense reported in previous years would be changed retroactively. 
C)  the depreciation expense in subsequent years will be changed but previous calculations will not be changed. 
D)  generally accepted accounting principles have been violated. 
A)  depreciation will continue at the current rate. 
B)  depreciation expense reported in previous years would be changed retroactively. 
C)  the depreciation expense in subsequent years will be changed but previous calculations will not be changed. 
D)  generally accepted accounting principles have been violated.

Question 6

The formula for calculating depreciation expense using the double declining-balance method involves which of the following?

Accepted Answer

A)  Multiplying a declining percentage by a constant book value. 
B)  Multiplying a constant percentage by the previous year's depreciation expense. 
C)  An increasing amount of depreciation expense each period. 
D)  Not utilizing the residual value in calculating each year's depreciation expense. 
A)  Multiplying a declining percentage by a constant book value. 
B)  Multiplying a constant percentage by the previous year's depreciation expense. 
C)  An increasing amount of depreciation expense each period. 
D)  Not utilizing the residual value in calculating each year's depreciation expense.

Question 7

Why does the IRS allow larger depreciation amounts in the early years of an asset's life?

Accepted Answer

A)  The calculations are easier if you allow more depreciation in the early years of an asset's life. 
B)  The government wants to encourage companies to invest in assets to promote economic renewal and growth. 
C)  So that most income taxes are paid by average taxpayers, rather than by big corporations. 
D)  The calculations are more complicated, so it provides more jobs for accountants and thus stimulates the economy. 
A)  The calculations are easier if you allow more depreciation in the early years of an asset's life. 
B)  The government wants to encourage companies to invest in assets to promote economic renewal and growth. 
C)  So that most income taxes are paid by average taxpayers, rather than by big corporations. 
D)  The calculations are more complicated, so it provides more jobs for accountants and thus stimulates the economy.

Question 8

What is the effect of the sale on the balance sheet and income statement of Far Niente reported as of and for the year ended December 31,2016?

Accepted Answer

A)  No effect on assets; increase net income 
B)  Decrease assets; Increase net income 
C)  Increase assets; Increase net income 
D)  Decrease assets; Decrease net income 
A)  No effect on assets; increase net income 
B)  Decrease assets; Increase net income 
C)  Increase assets; Increase net income 
D)  Decrease assets; Decrease net income

Question 9

On January 1,2016,Coopers Industries bought a parcel of land for use in its operations by paying the seller $400,000 in cash and signing a five year,12% note payable in the amount of $100,000.In connection with the purchase of the land,Coopers incurred legal fees of $19,000,a real estate agent sales commission of $25,000,surveying fees of $1,000,and an appraisal fee of $5,000.
Required:
Part a.Compute the total acquisition cost of the parcel of land.
Part b.Prepare the journal entry to record the purchase of the parcel of the land.

Accepted Answer

The answer of On January 1,2016,Coopers Industries bought a parcel...

Question 10

Shenandoah Skies bought land to be used for a new ski resort.Which of the following costs should not be capitalized?

Accepted Answer

A)  $5,000,000 to purchase the land 
B)  $5,000 paid to Jack Mogul for a title search 
C)  $50,000 paid to cut down timber to make way for ski runs 
D)  $7,500 paid for a party to celebrate the grand opening 
A)  $5,000,000 to purchase the land 
B)  $5,000 paid to Jack Mogul for a title search 
C)  $50,000 paid to cut down timber to make way for ski runs 
D)  $7,500 paid for a party to celebrate the grand opening

Question 11

The fixed asset turnover ratio measures the:

Accepted Answer

A)  useful life of long-lived assets. 
B)  the average difference between book value and disposal value of fixed assets. 
C)  useful life of intangible assets. 
D)  efficiency with which the investment in fixed assets produces revenue. 
A)  useful life of long-lived assets. 
B)  the average difference between book value and disposal value of fixed assets. 
C)  useful life of intangible assets. 
D)  efficiency with which the investment in fixed assets produces revenue.

Question 12

A company purchased office equipment for $24,500 and paid $1,470 in sales tax,$550 for installation,$3,200 for a needed adjustment to the equipment,and $2,600 for supplies that will be used for periodic routine maintenance.How should the company record this transaction?

Accepted Answer

A)  Debit Equipment $24,500, debit Repairs and Maintenance Expense for $5,220, debit Supplies for $2,600, and credit Cash for $32,320 
B)  Debit Equipment for $29,720, debit Supplies for $2,600, and credit Cash for $32,320 
C)  Debit Equipment for $25,970, debit Repairs and Maintenance Expense $3,750, debit Supplies for $2,600, and credit Cash for $32,320 
D)  Debit Equipment and credit Cash for $32,320 
A)  Debit Equipment $24,500, debit Repairs and Maintenance Expense for $5,220, debit Supplies for $2,600, and credit Cash for $32,320 
B)  Debit Equipment for $29,720, debit Supplies for $2,600, and credit Cash for $32,320 
C)  Debit Equipment for $25,970, debit Repairs and Maintenance Expense $3,750, debit Supplies for $2,600, and credit Cash for $32,320 
D)  Debit Equipment and credit Cash for $32,320

Question 13

Which of these are natural resources that are depleted over time?

Accepted Answer

A)  Timber 
B)  Mining equipment 
C)  Cash 
D)  Inventory 
A)  Timber 
B)  Mining equipment 
C)  Cash 
D)  Inventory

Question 14

Which of the following accurately describes the treatment of ordinary and extraordinary repairs?

Accepted Answer

A)  Ordinary repairs are expensed as incurred; extraordinary repairs are expensed as incurred 
B)  Ordinary repairs are treated as a capital expenditure; extraordinary repairs are expensed as incurred 
C)  Ordinary repairs are expensed as incurred; extraordinary repairs are treated as a capital expenditure 
D)  Ordinary repairs are treated as a capital expenditure; extraordinary repairs are treated as a capital expenditure 
A)  Ordinary repairs are expensed as incurred; extraordinary repairs are expensed as incurred 
B)  Ordinary repairs are treated as a capital expenditure; extraordinary repairs are expensed as incurred 
C)  Ordinary repairs are expensed as incurred; extraordinary repairs are treated as a capital expenditure 
D)  Ordinary repairs are treated as a capital expenditure; extraordinary repairs are treated as a capital expenditure

Question 15

The straight-line depreciation method:

Accepted Answer

A)  reports an equal amount of depreciation expense each year. 
B)  reports a higher amount of depreciation expense in the early years of an asset's use. 
C)  reports more depreciation expense in a year when an asset is heavily used and less in a year when the asset is hardly used at all. 
D)  can be used only by small companies. 
A)  reports an equal amount of depreciation expense each year. 
B)  reports a higher amount of depreciation expense in the early years of an asset's use. 
C)  reports more depreciation expense in a year when an asset is heavily used and less in a year when the asset is hardly used at all. 
D)  can be used only by small companies.

Question 16

On October 21,2017,Xit Company bought a new delivery truck for $30,000.In calculating depreciation expense for the year ended December 31,2017,Xit's accountant will assume that the truck was purchased on:

Accepted Answer

A)  November 1, 2017 
B)  October 1, 2017 
C)  October 21, 2017 
D)  January 1, 2018 
A)  November 1, 2017 
B)  October 1, 2017 
C)  October 21, 2017 
D)  January 1, 2018

Question 17

On January 1,2016,Morris Minerals paid $300,000 for a mineral deposit in Morris,Illinois,and then spent $45,000 to develop the deposit for exploitation.It was estimated that 690,000 total cubic yards could be extracted economically.During 2016,69,000 cubic yards of minerals were extracted; the minerals have not yet been sold.
Required:
Part a.Compute the amount of depletion expense for 2016.
Part b.Prepare the journal entry to record the 2016 depletion.

Accepted Answer

Part a
Depletion expense = Cos

Question 18

Choose the letter to of the appropriate definition to match each term.Not all definitions will be used.
Term
1._____ Accelerated depreciation
2._____ Goodwill
3._____ Patent
4._____ EBITDA
5._____ Net book value
6._____ Fixed assets
7._____ Straight-line depreciation
8._____ Residual value
9._____ Trademark
Definition
A.Names or images that appear with a ® or TM.
B.A tax law dealing with how companies can depreciate their assets.
C.An intangible asset that represents the value of unidentifiable assets acquired.
D.Assets whose values do not change over time.
E.When a company expenses the cost of a long-lived asset by a constant annual amount.
F.The acquisition cost of an asset minus its accumulated depreciation.
G.The estimated total use a company expects to receive from an asset.
H.Net income plus interest,taxes,depreciation and amortization expenses.
I.What a company expects to receive when an asset is disposed of at the end of its useful life.
J.When a company expenses the entire cost of a long-lived asset in the first year of use.
K.Tangible long-lived assets.
L.When a company receives free publicity in return for charitable contributions.
M.When a company allocates the cost of a long-lived asset at a higher rate in the first years of use.
N.The exclusive right to sell or use a product or process that is granted to encourage innovation.

Accepted Answer

1.M
2.C
3.

Question 19

Tangible assets are first recorded at:

Accepted Answer

A)  all costs to acquire them and prepare them for use. 
B)  current market value or resale value. 
C)  the amount of cash paid for them. 
D)  cost minus residual (or salvage) value. 
A)  all costs to acquire them and prepare them for use. 
B)  current market value or resale value. 
C)  the amount of cash paid for them. 
D)  cost minus residual (or salvage) value.

Question 20

Which of the following statements about depreciation is correct? A company:

Accepted Answer

A)  must use the same depreciation method for all classes of assets consistently over time 
B)  may use different methods of depreciation for any class of asset and may change methods as it sees fit 
C)  must use straight-line depreciation for tax reporting 
D)  may use different depreciation methods for different classes of assets from one year to the next. 
A)  must use the same depreciation method for all classes of assets consistently over time 
B)  may use different methods of depreciation for any class of asset and may change methods as it sees fit 
C)  must use straight-line depreciation for tax reporting 
D)  may use different depreciation methods for different classes of assets from one year to the next.

Loss on Impairment is a(n):

Trademarks and goodwill are intangible assets that are not amortized.

Recording depreciation is an application of the:

Urban Outsiders has a building that originally cost $375,000.The company expects to be able to sell the facility for $107,000 at the end of its useful life.The balance of the related Accumulated Depreciation account is $258,000.The depreciable cost of the facility is:

When estimated useful life of an asset is revised:

The formula for calculating depreciation expense using the double declining-balance method involves which of the following?

Why does the IRS allow larger depreciation amounts in the early years of an asset's life?

What is the effect of the sale on the balance sheet and income statement of Far Niente reported as of and for the year ended December 31,2016?

Shenandoah Skies bought land to be used for a new ski resort.Which of the following costs should not be capitalized?

The fixed asset turnover ratio measures the:

A company purchased office equipment for $24,500 and paid $1,470 in sales tax,$550 for installation,$3,200 for a needed adjustment to the equipment,and $2,600 for supplies that will be used for periodic routine maintenance.How should the company record this transaction?

Which of these are natural resources that are depleted over time?

Which of the following accurately describes the treatment of ordinary and extraordinary repairs?

The straight-line depreciation method:

On October 21,2017,Xit Company bought a new delivery truck for $30,000.In calculating depreciation expense for the year ended December 31,2017,Xit's accountant will assume that the truck was purchased on:

Tangible assets are first recorded at:

Which of the following statements about depreciation is correct? A company:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Loss on Impairment is a(n):

Trademarks and goodwill are intangible assets that are not amortized.

Recording depreciation is an application of the:

Urban Outsiders has a building that originally cost $375,000.The company expects to be able to sell the facility for $107,000 at the end of its useful life.The balance of the related Accumulated Depreciation account is $258,000.The depreciable cost of the facility is:

When estimated useful life of an asset is revised:

The formula for calculating depreciation expense using the double declining-balance method involves which of the following?

Why does the IRS allow larger depreciation amounts in the early years of an asset's life?

What is the effect of the sale on the balance sheet and income statement of Far Niente reported as of and for the year ended December 31,2016?

Shenandoah Skies bought land to be used for a new ski resort.Which of the following costs should not be capitalized?

The fixed asset turnover ratio measures the:

A company purchased office equipment for $24,500 and paid $1,470 in sales tax,$550 for installation,$3,200 for a needed adjustment to the equipment,and $2,600 for supplies that will be used for periodic routine maintenance.How should the company record this transaction?

Which of these are natural resources that are depleted over time?

Which of the following accurately describes the treatment of ordinary and extraordinary repairs?

The straight-line depreciation method:

On October 21,2017,Xit Company bought a new delivery truck for $30,000.In calculating depreciation expense for the year ended December 31,2017,Xit's accountant will assume that the truck was purchased on:

Tangible assets are first recorded at:

Which of the following statements about depreciation is correct? A company:

Business Decisions and Financial Accounting

Reporting Investing and Financing Results on the Balance Sheet

Reporting Operating Results on the Income Statement

Adjustments,financial Statements,and Financial Results

Fraud, Internal Control, and Cash

Internal Control and Financial Reporting for Cash and Merchandising Operations

Reporting and Interpreting Inventories and Cost of Goods Sold

Reporting and Interpreting Receivables,bad Debt Expense,and Interest Revenue

Reporting and Interpreting Liabilities

Reporting and Interpreting Stockholders Equity

Reporting and Interpreting the Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters