Question 1

Which of the following statements about asset impairment is correct?

Accepted Answer

A) Asset impairment losses appear on a company's income statement every year. 
B) When a company records an asset impairment loss,it will increase net income for that period. 
C) Impairment occurs when an asset's book value is less than its current value. 
D) Asset impairment losses are reported on the income statement as an operating expense. 
A) Asset impairment losses appear on a company's income statement every year. 
B) When a company records an asset impairment loss,it will increase net income for that period. 
C) Impairment occurs when an asset's book value is less than its current value. 
D) Asset impairment losses are reported on the income statement as an operating expense.

Question 2

The cost of a new building that is currently under construction,not for sale but for a company's own use,is reported on the balance sheet:

Accepted Answer

A) as an asset called Work in Process. 
B) after construction is complete. 
C) as an asset called Construction in Progress. 
D) as a liability until construction is complete. 
A) as an asset called Work in Process. 
B) after construction is complete. 
C) as an asset called Construction in Progress. 
D) as a liability until construction is complete.

Question 3

Match each term with the appropriate definition.Not all definitions will be used.
-Least and latest rule

Accepted Answer

A) Net sales revenue divided by average net fixed assets. 
B) Costs that are expensed in the period incurred. 
C) A contractual agreement that allows limited permission for use of a property. 
D) Net income divided by average total assets. 
E) An estimate of how long a tangible asset will last before it physically wears out.
F)Asset cost minus residual value.
G)Costs that are recorded as revenues.
H)An estimate of how long a company will use a particular asset.
I)Allocating the cost of tangible assets over their limited useful life.
J)A cumulative record of depreciation expense,accumulated depreciation and book value.
K)Asset cost minus accumulated depreciation.
L)Grants the exclusive right to sell or use a creative work.
M)The method whereby different parts of an asset may be depreciated over different useful lives under IFRS.
N)The principle that companies wish to pay the lowest possible tax at the last possible time.
O)Allocating the cost of intangible assets over their limited useful life. 
A) Net sales revenue divided by average net fixed assets. 
B) Costs that are expensed in the period incurred. 
C) A contractual agreement that allows limited permission for use of a property. 
D) Net income divided by average total assets. 
E) An estimate of how long a tangible asset will last before it physically wears out.
F)Asset cost minus residual value.
G)Costs that are recorded as revenues.
H)An estimate of how long a company will use a particular asset.
I)Allocating the cost of tangible assets over their limited useful life.
J)A cumulative record of depreciation expense,accumulated depreciation and book value.
K)Asset cost minus accumulated depreciation.
L)Grants the exclusive right to sell or use a creative work.
M)The method whereby different parts of an asset may be depreciated over different useful lives under IFRS.
N)The principle that companies wish to pay the lowest possible tax at the last possible time.
O)Allocating the cost of intangible assets over their limited useful life.

Question 4

Permission to use something in accordance with specific terms and conditions are called:

Accepted Answer

A) licensing rights. 
B) trademarks. 
C) patents. 
D) copyrights. 
A) licensing rights. 
B) trademarks. 
C) patents. 
D) copyrights.

Question 5

A fixed asset turnover ratio of 4.3 indicates that for every:

Accepted Answer

A) $1 in sales revenue,the firm acquired $4.30 of assets. 
B) $1 in fixed assets,the firm earned $4.30 of net income. 
C) $1 in assets,the firm paid $4.30 of expenses. 
D) $1 in fixed assets,the firm generated $4.30 of net sales. 
A) $1 in sales revenue,the firm acquired $4.30 of assets. 
B) $1 in fixed assets,the firm earned $4.30 of net income. 
C) $1 in assets,the firm paid $4.30 of expenses. 
D) $1 in fixed assets,the firm generated $4.30 of net sales.

Question 6

Match each asset with the appropriate category.
-Production equipment

Accepted Answer

A) I - Intangible long-lived asset 
B) N - Not a long-lived asset 
C) T - Tangible long-lived asset 
A) I - Intangible long-lived asset 
B) N - Not a long-lived asset 
C) T - Tangible long-lived asset

Question 7

A gain on the disposal of an asset occurs when the:

Accepted Answer

A) asset's book value is greater than the selling price. 
B) asset's cost is greater than the asset's accumulated depreciation. 
C) selling price is greater than the asset's book value. 
D) accumulated depreciation is greater than the asset's book value. 
A) asset's book value is greater than the selling price. 
B) asset's cost is greater than the asset's accumulated depreciation. 
C) selling price is greater than the asset's book value. 
D) accumulated depreciation is greater than the asset's book value.

Question 8

The fixed asset turnover is the:

Accepted Answer

A) number of sales dollars generated by each dollar of total assets. 
B) rate at which inventories are being rotated. 
C) number of dollars in notes payable generated by each dollar in fixed assets. 
D) number of sales dollars generated by each dollar of fixed assets. 
A) number of sales dollars generated by each dollar of total assets. 
B) rate at which inventories are being rotated. 
C) number of dollars in notes payable generated by each dollar in fixed assets. 
D) number of sales dollars generated by each dollar of fixed assets.

Question 9

Why don't all companies use the same depreciation method?

Accepted Answer

A) US income tax regulations require that a company use the same depreciation method for both financial reporting and income taxes. 
B) Different depreciation methods might better reflect the pattern in which assets' economic benefits are used. 
C) All companies do use the same depreciation method. 
D) Only large companies are allowed to use some of the more complicated depreciation methods. 
A) US income tax regulations require that a company use the same depreciation method for both financial reporting and income taxes. 
B) Different depreciation methods might better reflect the pattern in which assets' economic benefits are used. 
C) All companies do use the same depreciation method. 
D) Only large companies are allowed to use some of the more complicated depreciation methods.

Question 10

Match each term with the appropriate definition.Not all definitions will be used.
-Goodwill

Accepted Answer

A) When a company expenses the entire cost of a long-lived asset in the first year of use. 
B) When a company receives free publicity in return for charitable contributions. 
C) A tax law dealing with how companies can depreciate their assets. 
D) The acquisition cost of an asset minus its accumulated depreciation. 
E) When a company expenses the cost of a long-lived asset by a constant annual amount.
F)The exclusive right to sell or use a product or process that is granted to encourage innovation.
G)Net income plus interest,taxes,depreciation and amortization expenses.
H)Tangible long-lived assets.
I)An intangible asset that represents the value of unidentifiable assets acquired.
J)Names or images that appear with a ® or TM.
K)What a company expects to receive when an asset is disposed of at the end of its useful life.
L)Assets whose values do not change over time.
M)When a company allocates the cost of a long-lived asset at a higher rate in the first years of use.
N)The estimated total use a company expects to receive from an asset. 
A) When a company expenses the entire cost of a long-lived asset in the first year of use. 
B) When a company receives free publicity in return for charitable contributions. 
C) A tax law dealing with how companies can depreciate their assets. 
D) The acquisition cost of an asset minus its accumulated depreciation. 
E) When a company expenses the cost of a long-lived asset by a constant annual amount.
F)The exclusive right to sell or use a product or process that is granted to encourage innovation.
G)Net income plus interest,taxes,depreciation and amortization expenses.
H)Tangible long-lived assets.
I)An intangible asset that represents the value of unidentifiable assets acquired.
J)Names or images that appear with a ® or TM.
K)What a company expects to receive when an asset is disposed of at the end of its useful life.
L)Assets whose values do not change over time.
M)When a company allocates the cost of a long-lived asset at a higher rate in the first years of use.
N)The estimated total use a company expects to receive from an asset.

Question 11

Goodwill may be attributable to all of the following except:

Accepted Answer

A) a significant amount of charitable contributions. 
B) a great reputation. 
C) an established customer base. 
D) successful business operations. 
A) a significant amount of charitable contributions. 
B) a great reputation. 
C) an established customer base. 
D) successful business operations.

Question 12

Match each term with the appropriate explanation.Not all explanations will be used.
-Units-of-production method

Accepted Answer

A) Assets that will be used for more than a year. 
B) When a company writes down the value of an asset when estimated future cash flows fall below the original level estimated. 
C) The numerator of the fixed asset turnover ratio. 
D) The cost of financing an asset. 
E) When costs are recorded as assets rather than expenses.
F)How expenses are reported in the income statement.
G)The denominator of the fixed asset turnover ratio.
H)The average proportion of a company's total assets that is long-lived.
I)A depreciation method that produces higher amounts of depreciation expense in the early years of an asset's life and lower amounts in the later years.
J)When a company writes down the value of an asset because estimated future cash flows fall below the book value.
K)Assets that have physical substance.
L)A depreciation method that spreads asset cost by use rather than time.
M)The process of transferring the cost of long-lived tangible assets to expenses.
N)Also known as book value. 
A) Assets that will be used for more than a year. 
B) When a company writes down the value of an asset when estimated future cash flows fall below the original level estimated. 
C) The numerator of the fixed asset turnover ratio. 
D) The cost of financing an asset. 
E) When costs are recorded as assets rather than expenses.
F)How expenses are reported in the income statement.
G)The denominator of the fixed asset turnover ratio.
H)The average proportion of a company's total assets that is long-lived.
I)A depreciation method that produces higher amounts of depreciation expense in the early years of an asset's life and lower amounts in the later years.
J)When a company writes down the value of an asset because estimated future cash flows fall below the book value.
K)Assets that have physical substance.
L)A depreciation method that spreads asset cost by use rather than time.
M)The process of transferring the cost of long-lived tangible assets to expenses.
N)Also known as book value.

Question 13

Accumulated Depreciation is classified as a contra-asset account on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 14

How does an asset impairment loss impact a company's financial statements?

Accepted Answer

A) It increases expenses and decreases both revenue and net income. 
B) It decreases assets,stockholders' equity,and net income. 
C) It increases expenses and decreases net income with no effect on any other items. 
D) It increases liabilities and decreases stockholders' equity. 
A) It increases expenses and decreases both revenue and net income. 
B) It decreases assets,stockholders' equity,and net income. 
C) It increases expenses and decreases net income with no effect on any other items. 
D) It increases liabilities and decreases stockholders' equity.

Question 15

Morten Co. ,which uses the double-declining-balance method of depreciation,purchased a new machine on January 1,2018.The machine cost $160,000,had an estimated useful life of 8 years and $20,000 residual value at the end of its useful life. What is the depreciation expense for 2018?

Accepted Answer

A) $20,000 
B) $40,000 
C) $10,000 
D) $30,000 
A) $20,000 
B) $40,000 
C) $10,000 
D) $30,000

Question 16

Assuming nothing else changes,an increase in average net fixed assets will cause the fixed asset turnover ratio to decrease.

Accepted Answer

A) True 
 B)False

Question 17

A company purchased land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The residual value of the land is estimated to be $250,000.What is the amount of depletion per ton of ore?

Accepted Answer

A) $0.75 
B) $0.875 
C) $1.14 
D) $0.625 
A) $0.75 
B) $0.875 
C) $1.14 
D) $0.625

Question 18

Which of the following will result in the recording of goodwill?

Accepted Answer

A) Company A purchases Company B and pays less than the net assets of Company B. 
B) Company A purchases Company B and pays more than the fair value of Company B's assets and liabilities. 
C) Company A discovers a new product or production process. 
D) Company A sells its patents at a gain. 
A) Company A purchases Company B and pays less than the net assets of Company B. 
B) Company A purchases Company B and pays more than the fair value of Company B's assets and liabilities. 
C) Company A discovers a new product or production process. 
D) Company A sells its patents at a gain.

Question 19

Match each term with the appropriate definition.Not all definitions will be used.
-Net book value

Accepted Answer

A) When a company expenses the entire cost of a long-lived asset in the first year of use. 
B) When a company receives free publicity in return for charitable contributions. 
C) A tax law dealing with how companies can depreciate their assets. 
D) The acquisition cost of an asset minus its accumulated depreciation. 
E) When a company expenses the cost of a long-lived asset by a constant annual amount.
F)The exclusive right to sell or use a product or process that is granted to encourage innovation.
G)Net income plus interest,taxes,depreciation and amortization expenses.
H)Tangible long-lived assets.
I)An intangible asset that represents the value of unidentifiable assets acquired.
J)Names or images that appear with a ® or TM.
K)What a company expects to receive when an asset is disposed of at the end of its useful life.
L)Assets whose values do not change over time.
M)When a company allocates the cost of a long-lived asset at a higher rate in the first years of use.
N)The estimated total use a company expects to receive from an asset. 
A) When a company expenses the entire cost of a long-lived asset in the first year of use. 
B) When a company receives free publicity in return for charitable contributions. 
C) A tax law dealing with how companies can depreciate their assets. 
D) The acquisition cost of an asset minus its accumulated depreciation. 
E) When a company expenses the cost of a long-lived asset by a constant annual amount.
F)The exclusive right to sell or use a product or process that is granted to encourage innovation.
G)Net income plus interest,taxes,depreciation and amortization expenses.
H)Tangible long-lived assets.
I)An intangible asset that represents the value of unidentifiable assets acquired.
J)Names or images that appear with a ® or TM.
K)What a company expects to receive when an asset is disposed of at the end of its useful life.
L)Assets whose values do not change over time.
M)When a company allocates the cost of a long-lived asset at a higher rate in the first years of use.
N)The estimated total use a company expects to receive from an asset.

Question 20

Which of the following statements about tangible long-lived assets is not correct?

Accepted Answer

A) Depreciation and maintenance are expenses associated with the use of tangible long-lived assets. 
B) Assuming no additions,replacements,or extraordinary repairs,the carrying value of a long-lived asset is never more than its original cost. 
C) The cost of a long-lived asset minus the Accumulated Depreciation is called the carrying value of the asset. 
D) All long-lived assets are depreciated as they are used in the business. 
A) Depreciation and maintenance are expenses associated with the use of tangible long-lived assets. 
B) Assuming no additions,replacements,or extraordinary repairs,the carrying value of a long-lived asset is never more than its original cost. 
C) The cost of a long-lived asset minus the Accumulated Depreciation is called the carrying value of the asset. 
D) All long-lived assets are depreciated as they are used in the business.

Which of the following statements about asset impairment is correct?

The cost of a new building that is currently under construction,not for sale but for a company's own use,is reported on the balance sheet:

Match each term with the appropriate definition.Not all definitions will be used. -Least and latest rule

Permission to use something in accordance with specific terms and conditions are called:

A fixed asset turnover ratio of 4.3 indicates that for every:

Match each asset with the appropriate category. -Production equipment

A gain on the disposal of an asset occurs when the:

The fixed asset turnover is the:

Why don't all companies use the same depreciation method?

Match each term with the appropriate definition.Not all definitions will be used. -Goodwill

Goodwill may be attributable to all of the following except:

Match each term with the appropriate explanation.Not all explanations will be used. -Units-of-production method

Accumulated Depreciation is classified as a contra-asset account on the balance sheet.

How does an asset impairment loss impact a company's financial statements?

Morten Co. ,which uses the double-declining-balance method of depreciation,purchased a new machine on January 1,2018.The machine cost $160,000,had an estimated useful life of 8 years and $20,000 residual value at the end of its useful life. What is the depreciation expense for 2018?

Assuming nothing else changes,an increase in average net fixed assets will cause the fixed asset turnover ratio to decrease.

A company purchased land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The residual value of the land is estimated to be $250,000.What is the amount of depletion per ton of ore?

Which of the following will result in the recording of goodwill?

Match each term with the appropriate definition.Not all definitions will be used. -Net book value

Which of the following statements about tangible long-lived assets is not correct?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 9: Long-Lived Tangible and Intangible Assets

Which of the following statements about asset impairment is correct?

The cost of a new building that is currently under construction,not for sale but for a company's own use,is reported on the balance sheet:

Match each term with the appropriate definition.Not all definitions will be used. -Least and latest rule

Permission to use something in accordance with specific terms and conditions are called:

A fixed asset turnover ratio of 4.3 indicates that for every:

Match each asset with the appropriate category. -Production equipment

A gain on the disposal of an asset occurs when the:

The fixed asset turnover is the:

Why don't all companies use the same depreciation method?

Match each term with the appropriate definition.Not all definitions will be used. -Goodwill

Goodwill may be attributable to all of the following except:

Match each term with the appropriate explanation.Not all explanations will be used. -Units-of-production method

Accumulated Depreciation is classified as a contra-asset account on the balance sheet.

How does an asset impairment loss impact a company's financial statements?

Morten Co. ,which uses the double-declining-balance method of depreciation,purchased a new machine on January 1,2018.The machine cost $160,000,had an estimated useful life of 8 years and $20,000 residual value at the end of its useful life. What is the depreciation expense for 2018?

Assuming nothing else changes,an increase in average net fixed assets will cause the fixed asset turnover ratio to decrease.

A company purchased land for its natural resources at a cost of $1,500,000.It expects to mine 2,000,000 tons of ore from this land.The residual value of the land is estimated to be $250,000.What is the amount of depletion per ton of ore?

Which of the following will result in the recording of goodwill?

Match each term with the appropriate definition.Not all definitions will be used. -Net book value

Which of the following statements about tangible long-lived assets is not correct?

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,Financial Statements,and Financial Results

Fraud,Internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables,Bad Debt Expense,and Interest Revenue

Liabilities

Stockholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters