Exam 16: Recording and Evaluating Capital Resource Process Activities: Investing

Match the following terms with the descriptions and definitions below.

An intangible asset representing the value assigned to a purchased company's ability to generate an above-average return on invested capital.

Leasehold

An intangible assets that gives its owner exclusive legal rights to a product or process.

An intangible asset representing the exclusive right to operate or sell a brand name product in a specified territory.

Capitalize

Correct Answer:

Verified

An intangible asset representing the value assigned to a purchased company's ability to generate an above-average return on invested capital.

An intangible assets that gives its owner exclusive legal rights to a product or process.

An intangible asset representing the exclusive right to operate or sell a brand name product in a specified territory.

An intangible asset representing the amounts paid by a lessee to make physical improvements that are an integral part of leased property.

An intangible asset that gives its owner the exclusive legal right to the reproduction and sale of a literary or artistic work.

An expenditure that improves the productive capacity of an asset or extends its useful life.

Nonrenewable assets such as coal deposits.

Tangible assets that make up the company's operating infrastructure.

An intangible asset that gives its owners the exclusive right to use of a sign or label that identifies its product or company.

To classify the cost of an expenditure as an asset.

An intangible asset conveyed by a lease to use equipment, land, and /or building for a specified period of time.

(Matching)

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Question 21

What is a company's primary objective when reporting depreciation in its annual financial statements? What is the primary objective for tax reporting purposes? Is depreciation expense always the same for tax and financial reporting purposes? Explain.

(Essay)

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Question 22

Oxford Enterprises acquired a delivery truck on January 4,2010.The total cost of the truck was $87,000.Oxford estimated that the truck would be used for 5 years before being sold for an estimated $16,500.Oxford uses the double-declining balance method of depreciation.The depreciation expense for the year ended December 31,2012 was:

(Multiple Choice)

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Question 23

Which of the following statements about interest costs is correct?

(Multiple Choice)

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Question 24

Carlton Company acquired a tract of land on June 30,2008.The total cost of the land was $90,000.Carlton estimated that the land would be used for 10 years and then sold.Assuming the company uses straight-line depreciation,the total depreciation taken on the land for the year ended December 31,2003should be:

(Multiple Choice)

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Question 25

Chippawa Industries acquired a delivery truck on January 4,2010.The total cost of the truck was $145,000.Chippawa estimated that the truck would be used for 8 years before being sold for an estimated $23,500.Chippawa uses the double-declining balance method of depreciation.The total depreciation expense for the year ended December 31,2010 was:

(Multiple Choice)

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Question 26

Abernethy Corporation is depreciating an asset using the double declining balance method and a 40 percent depreciation rate.What is the estimated economic life of the asset?

(Multiple Choice)

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Question 27

Manhattan Corporation owns a jet airplane with an original cost of $958,500 and accumulated depreciation of $644,800.The company exchanged the airplane for 50,000 shares of stock held by another company as an investment.The stock is valued at $5 per share.The gain or loss recognized on the exchange would be:

(Multiple Choice)

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Question 28

Offshore Oil Company owns oil reserves estimated to contain 6,500,000 barrels of oil.The oil reserves originally cost $75,000,000 with an estimated salvage value of $3,500,000.During the current period,1,200,000 barrels of oil were extracted.The depletion rate per barrel was:

(Multiple Choice)

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Question 29

Visonic Corporation purchased a delivery truck at a total cost of $65,000.The truck will be used for 5 years,during which time it is expected to be driven 100,000 miles,and then it will be sold for an estimated $7,000.During the first two years of the truck's life it was driven 16,000 miles and 21,500 miles,respectively.Calculate the depreciation expense for the first two years of the truck's life using the: ( A)straight-line method (b)units-of-production method (c)double-declining balance method

(Essay)

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Question 30

Wynn Distributing wants to trade in its old delivery truck for a new one.The old truck is on the books at a cost of $84,500,and it has a carrying value of $19,300.The new truck has a list price of $108,700.Determine the gain or loss to be recognized on the disposal of the delivery truck,as well as the dollar amount recorded on the books for the new truck under each of the following situations: ( A)the dealer has agreed to reduce the price of the new truck by $10,000 in exchange for the old truck (b)the dealer has agreed to reduce the price of the new truck by $30,000 in exchange for the old truck

(Essay)

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Question 31

Edcon Industries acquired a piece of equipment on January 3,2010.The total cost of the equipment was $43,700.Edcon estimated that the equipment would be used for 7 years before being sold for an estimated $5,200.Assuming the use of straight-line depreciation,the carrying value of the equipment on January 2,2015 will be:

(Multiple Choice)

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Question 32

The legal life of a patent is:

(Multiple Choice)

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Question 33

Which of the following statements is correct?

(Multiple Choice)

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Question 34

Which of the following describes "depreciable cost"?

(Multiple Choice)

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Question 35

Explain why gains and losses are not recorded when a noncash exchange as not economic substance.

(Essay)

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Question 36

Safeco,Inc.owns a jet airplane with an original cost of $958,500 and accumulated depreciation of $644,800.The company exchanged the airplane for 50,000 shares of stock held by another company as an investment.The stock is valued at $7 per share.The gain or loss recognized on the exchange would be:

(Multiple Choice)

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Question 37

Expenditures that create the expectation of future benefits applicable beyond the current period are called:

(Multiple Choice)

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Question 38

Which of the following would be considered a revenue expenditure?

(Multiple Choice)

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Question 39

Brookside Enterprises acquired a piece of machinery on January 3,2010.The total cost of the machinery was $138,600.Brookside estimated that the machinery would be used for 77,000 hours before being sold for an estimated $3,850.Brookside uses the units-of-production method of depreciation.Assuming the machine was used for 15,800 hours during 2010,18,300 hours during 2011,and 17,400 hours during 2012,the balance in the accumulated depreciation account on January 2,2013 would be:

(Multiple Choice)

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Question 40

Showing 21 - 40 of 89

What is a company's primary objective when reporting depreciation in its annual financial statements? What is the primary objective for tax reporting purposes? Is depreciation expense always the same for tax and financial reporting purposes? Explain.

Which of the following statements about interest costs is correct?

Abernethy Corporation is depreciating an asset using the double declining balance method and a 40 percent depreciation rate.What is the estimated economic life of the asset?

Offshore Oil Company owns oil reserves estimated to contain 6,500,000 barrels of oil.The oil reserves originally cost $75,000,000 with an estimated salvage value of $3,500,000.During the current period,1,200,000 barrels of oil were extracted.The depletion rate per barrel was:

The legal life of a patent is:

Which of the following statements is correct?

Which of the following describes "depreciable cost"?

Explain why gains and losses are not recorded when a noncash exchange as not economic substance.

Safeco,Inc.owns a jet airplane with an original cost of $958,500 and accumulated depreciation of $644,800.The company exchanged the airplane for 50,000 shares of stock held by another company as an investment.The stock is valued at $7 per share.The gain or loss recognized on the exchange would be:

Expenditures that create the expectation of future benefits applicable beyond the current period are called:

Which of the following would be considered a revenue expenditure?

Accounting and Business

Business Processes and Accounting Information

Operating Processes: Planning and Control

Short-Term Decision Making

Strategic Planning Regarding Operating Processes

Planning, The Balanced Scorecard, and Budgeting

Accounting Information Systems

Purchasinghuman Resourcespayment Process: Recording and Evaluating Expenditure Process Activities

Recording and Evaluating Conversion Process Activities

Recording and Evaluating Revenue Process Activities

Time Value of Money

Planning Investments: Capital Budgeting

Planning Equity Financing

Planning Debt Financing

Recording and Evaluating Capital Resource Process Activities: Financing

Company Performance: Profitability

Company Performance: Owners Equity and Financial Position

Company Performance: Cash Flows

Company Performance: Comprehensive Evaluation

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