Question 1

Natural resources are first recorded as ________,then recorded as ________ when extracted,and lastly recorded as ________ when sold.

Accepted Answer

A) fixed assets;inventory;cost of goods sold 
B) goods available to sell;inventory;a loss 
C) inventory;revenue;cost of goods sold 
D) fixed assets;revenue;cost of goods sold 
A) fixed assets;inventory;cost of goods sold 
B) goods available to sell;inventory;a loss 
C) inventory;revenue;cost of goods sold 
D) fixed assets;revenue;cost of goods sold

Question 2

On January 1,2018,Ventura Co.bought a parcel of land for use in its operations by paying the seller $320,000 in cash and signing a five year,12% note payable in the amount of $80,000.In connection with the purchase of the land,Coopers incurred legal fees of $15,200,a real estate agent sales commission of $20,000,surveying fees of $800,and an appraisal fee of $4,000.
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 1,2018,Ventura Co.bought a parcel of...

Question 3

Which of the following statements is correct?

Accepted Answer

A) Depreciation allocates the cost of tangible assets over their useful lives. 
B) Depreciation allocates the cost of intangible assets over their useful lives. 
C) Amortization allocates the cost of tangible assets over their useful lives. 
D) The term "depreciation" relates to all long-lived assets whereas "amortization" relates only to intangible assets. 
A) Depreciation allocates the cost of tangible assets over their useful lives. 
B) Depreciation allocates the cost of intangible assets over their useful lives. 
C) Amortization allocates the cost of tangible assets over their useful lives. 
D) The term "depreciation" relates to all long-lived assets whereas "amortization" relates only to intangible assets.

Question 4

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

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 5

Goodwill:

Accepted Answer

A) is not amortized,but is tested annually for impairment. 
B) is amortized using the straight-line method. 
C) is amortized using the units-of-production method. 
D) is not amortized and is not tested for impairment. 
A) is not amortized,but is tested annually for impairment. 
B) is amortized using the straight-line method. 
C) is amortized using the units-of-production method. 
D) is not amortized and is not tested for impairment.

Question 6

Martin Company's building has a 20-year useful life and a residual value equal to 20% of the building's original cost.If the double-declining balance method is used,what depreciation rate would be used?

Accepted Answer

A) 4.5% 
B) 5% 
C) 9% 
D) 10% 
A) 4.5% 
B) 5% 
C) 9% 
D) 10%

Question 7

Under the cost principle,a company capitalizes:

Accepted Answer

A) all ordinary repair expenditures incurred in the use of an asset. 
B) any interest incurred in borrowing money to help pay for asset acquisitions. 
C) all reasonable and necessary costs of acquiring an asset and preparing it for use. 
D) the total market value of individual assets acquired in a 'basket purchase.' 
A) all ordinary repair expenditures incurred in the use of an asset. 
B) any interest incurred in borrowing money to help pay for asset acquisitions. 
C) all reasonable and necessary costs of acquiring an asset and preparing it for use. 
D) the total market value of individual assets acquired in a 'basket purchase.'

Question 8

If net sales revenue rises 5% while the average book value of fixed assets falls 5%,the:

Accepted Answer

A) fixed asset turnover ratio will rise. 
B) fixed asset turnover ratio will fall. 
C) fixed asset turnover ratio will stay the same. 
D) impact on the fixed asset turnover ratio cannot be determined since the beginning values are unknown. 
A) fixed asset turnover ratio will rise. 
B) fixed asset turnover ratio will fall. 
C) fixed asset turnover ratio will stay the same. 
D) impact on the fixed asset turnover ratio cannot be determined since the beginning values are unknown.

Question 9

Avalon Industries buys equipment for $24,000,expects to use it for ten years,and then sell it for $3,000.Using the straight-line method,the company should report annual depreciation for the equipment of:

Accepted Answer

A) $2,100. 
B) $4,200. 
C) $2,400. 
D) $4,800. 
A) $2,100. 
B) $4,200. 
C) $2,400. 
D) $4,800.

Question 10

Which of the following phrases best describes the interpretation of the fixed asset turnover ratio?

Accepted Answer

A) It measures how efficiently sales are generated with a given amount of fixed assets. 
B) It measures return on total assets. 
C) It measures the speed of cash collected on fixed assets. 
D) It measures how quickly fixed assets are bought and sold. 
A) It measures how efficiently sales are generated with a given amount of fixed assets. 
B) It measures return on total assets. 
C) It measures the speed of cash collected on fixed assets. 
D) It measures how quickly fixed assets are bought and sold.

Question 11

Which of the following items would not be considered a long-lived asset?

Accepted Answer

A) Buildings 
B) Land improvements 
C) Inventory 
D) Land 
A) Buildings 
B) Land improvements 
C) Inventory 
D) Land

Question 12

Impairment occurs when the estimated future cash flows from a long-lived asset are greater than the asset's book value.

Accepted Answer

A) True 
 B)False

Question 13

Marshall Company purchases a machine for $800,000.The machine has an estimated residual value of $40,000.The company expects the machine to produce two million units.The machine is used to make 400,000 units during the current period. If the units-of-production method is used,the depreciation expense for this period is:

Accepted Answer

A) $160,000. 
B) $800,000. 
C) $152,000. 
D) $760,000. 
A) $160,000. 
B) $800,000. 
C) $152,000. 
D) $760,000.

Question 14

On January 1,2018,Busy Beaver,Inc.signed a $315,000,5 year note payable to buy a new industrial veneer cutter.Busy Beaver plans to use the machine for 10 years and then sell it for its scrap value of $5,000.Using straight-line depreciation,depreciation expense for the year ended December 31,2018 equals:

Accepted Answer

A) $31,000. 
B) $31,500. 
C) $284,000. 
D) $283,500. 
A) $31,000. 
B) $31,500. 
C) $284,000. 
D) $283,500.

Question 15

A company acquired property that included land,building and equipment for a total cost of $163,000.The land was appraised at $87,500,the building at $35,000,and the equipment at $52,500.What should be the allocation of the total cost in the accounting records?

Accepted Answer

A) Land $75,000;Building $30,000;Equipment $45,000 
B) Land $75,000;Building $30,800;Equipment $46,200 
C) Land $87,500;Building $35,000;Equipment $52,500 
D) Land $81,500;Building $32,600;Equipment $48,900 
A) Land $75,000;Building $30,000;Equipment $45,000 
B) Land $75,000;Building $30,800;Equipment $46,200 
C) Land $87,500;Building $35,000;Equipment $52,500 
D) Land $81,500;Building $32,600;Equipment $48,900

Question 16

The allocation method used for natural resources is similar to which of the following depreciation methods?

Accepted Answer

A) Straight-line 
B) Units-of-production 
C) Double-declining balance 
D) MACRS 
A) Straight-line 
B) Units-of-production 
C) Double-declining balance 
D) MACRS

Question 17

Under what circumstances should a company record an asset impairment loss?

Accepted Answer

A) When residual value is greater than the repairs and maintenance expenses needed to keep up the asset. 
B) When book value is less than the residual value of the asset. 
C) When Accumulated Depreciation equals the purchase cost of the asset. 
D) When book value is greater than the fair value of the asset. 
A) When residual value is greater than the repairs and maintenance expenses needed to keep up the asset. 
B) When book value is less than the residual value of the asset. 
C) When Accumulated Depreciation equals the purchase cost of the asset. 
D) When book value is greater than the fair value of the asset.

Question 18

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 19

Tidy Limited purchased a new van on January 1,2018.The van cost $20,000.It has an estimated life of five years and the estimated residual value is $5,000.Tidy uses the double-declining-balance method to compute depreciation. What is the adjusted balance in the Accumulated Depreciation account at the end of 2019?

Accepted Answer

A) $3,200 
B) $4,800 
C) $9,600 
D) $12,800 
A) $3,200 
B) $4,800 
C) $9,600 
D) $12,800

Question 20

Tax accounting and financial accounting use the same depreciation calculations and there are no differences in the results between the two accounting systems.

Accepted Answer

A) True 
 B)False

Natural resources are first recorded as ,then recorded as when extracted,and lastly recorded as when sold.

Which of the following statements is correct?

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

Goodwill:

Martin Company's building has a 20-year useful life and a residual value equal to 20% of the building's original cost.If the double-declining balance method is used,what depreciation rate would be used?

Under the cost principle,a company capitalizes:

If net sales revenue rises 5% while the average book value of fixed assets falls 5%,the:

Avalon Industries buys equipment for $24,000,expects to use it for ten years,and then sell it for $3,000.Using the straight-line method,the company should report annual depreciation for the equipment of:

Which of the following phrases best describes the interpretation of the fixed asset turnover ratio?

Which of the following items would not be considered a long-lived asset?

Impairment occurs when the estimated future cash flows from a long-lived asset are greater than the asset's book value.

A company acquired property that included land,building and equipment for a total cost of $163,000.The land was appraised at $87,500,the building at $35,000,and the equipment at $52,500.What should be the allocation of the total cost in the accounting records?

The allocation method used for natural resources is similar to which of the following depreciation methods?

Under what circumstances should a company record an asset impairment loss?

The straight-line depreciation method:

Tax accounting and financial accounting use the same depreciation calculations and there are no differences in the results between the two accounting systems.

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

Natural resources are first recorded as ________,then recorded as ________ when extracted,and lastly recorded as ________ when sold.

Which of the following statements is correct?

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

Goodwill:

Martin Company's building has a 20-year useful life and a residual value equal to 20% of the building's original cost.If the double-declining balance method is used,what depreciation rate would be used?

Under the cost principle,a company capitalizes:

If net sales revenue rises 5% while the average book value of fixed assets falls 5%,the:

Avalon Industries buys equipment for $24,000,expects to use it for ten years,and then sell it for $3,000.Using the straight-line method,the company should report annual depreciation for the equipment of:

Which of the following phrases best describes the interpretation of the fixed asset turnover ratio?

Which of the following items would not be considered a long-lived asset?

Impairment occurs when the estimated future cash flows from a long-lived asset are greater than the asset's book value.

A company acquired property that included land,building and equipment for a total cost of $163,000.The land was appraised at $87,500,the building at $35,000,and the equipment at $52,500.What should be the allocation of the total cost in the accounting records?

The allocation method used for natural resources is similar to which of the following depreciation methods?

Under what circumstances should a company record an asset impairment loss?

The straight-line depreciation method:

Tax accounting and financial accounting use the same depreciation calculations and there are no differences in the results between the two accounting systems.

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

Natural resources are first recorded as ,then recorded as when extracted,and lastly recorded as when sold.