Question 1

Depletion:

Accepted Answer

A) Is the process of allocating the cost of natural resources to periods in which they are consumed. 
B) Is also called depreciation. 
C) Is also called amortization. 
D) Is an unrealized expense reported in equity. 
E) Is the process of allocating the cost of intangibles to periods in which they are used. 
A) Is the process of allocating the cost of natural resources to periods in which they are consumed. 
B) Is also called depreciation. 
C) Is also called amortization. 
D) Is an unrealized expense reported in equity. 
E) Is the process of allocating the cost of intangibles to periods in which they are used. A

Question 2

The formula for computing annual straight-line depreciation is:

Accepted Answer

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

Question 3

Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000.Cambria asks $35,000 for the equipment but sells the equipment for $33,000.The journal entry to record the disposal of the asset would involve all of the following except:

Accepted Answer

A) Debit Accumulated Depreciation $64,000. 
B) Credit Equipment $93,500. 
C) Debit Loss on Disposal of Equipment $3,500. 
D) Credit Gain on Disposal of Equipment $3,500. 
E) Debit Cash $33,000. 
A) Debit Accumulated Depreciation $64,000. 
B) Credit Equipment $93,500. 
C) Debit Loss on Disposal of Equipment $3,500. 
D) Credit Gain on Disposal of Equipment $3,500. 
E) Debit Cash $33,000. C

Question 4

A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1,Year 1.It has an estimated useful life of 5 years.Using the straight-line method,how much depreciation expense should the company recognize on December 31,Year 1?

Accepted Answer

A) $1,000. 
B) $1,333. 
C) $1,533. 
D) $4,000. 
E) $4,600. 
A) $1,000. 
B) $1,333. 
C) $1,533. 
D) $4,000. 
E) $4,600.

Question 5

_____________________ refers to the insufficient capacity of a company's plant asset to meet the company's productive demands.

Accepted Answer

The answer of _____________________ refers to the insufficient capacity of...

Question 6

Inadequacy refers to the insufficient capacity of a company's plant assets to meet the company's growing productive demands.

Accepted Answer

A) True 
 B)False

Question 7

On April 1,2013,a company disposed of equipment for $14,200 cash that had cost $35,000 on January 1,2009.The equipment had a salvage value of $5,000,and a useful life 10 years.The double-declining-balance depreciation method was used.On December 31,2012,accumulated depreciation was $20,664.Prepare a journal entry to record depreciation for 2013 up to the date of disposal of the equipment,and prepare a journal entry to record the disposal of the equipment.

Accepted Answer

Apr.1 Depreciation Expense 716.80
Accumu

Question 8

A company sold for $40,000 cash a machine that originally cost $90,000.The accumulated depreciation on this machine was $47,000 at the time of the sale.What was the company's gain or loss on this sale?

Accepted Answer

The answer of A company sold for $40,000 cash a...

Question 9

A total asset turnover ratio of 3.5 indicates that:

Accepted Answer

A) For every $1 in sales, the firm acquired $3.50 in assets during the period. 
B) For every $1 in assets, the firm produced $3.50 in net sales during the period. 
C) For every $1 in assets, the firm earned gross profit of $3.50 during the period. 
D) For every $1 in assets, the firm earned $3.50 in net income. 
E) For every $1 in assets, the firm paid $3.50 in expenses during the period. 
A) For every $1 in sales, the firm acquired $3.50 in assets during the period. 
B) For every $1 in assets, the firm produced $3.50 in net sales during the period. 
C) For every $1 in assets, the firm earned gross profit of $3.50 during the period. 
D) For every $1 in assets, the firm earned $3.50 in net income. 
E) For every $1 in assets, the firm paid $3.50 in expenses during the period.

Question 10

Salta Company installs a manufacturing machine in its factory 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.What journal entry would be needed to record the machines' second year depreciation under the units-of-production method?

Accepted Answer

A) Debit Depletion Expense $16,900; credit Accumulated Depletion $16,900. 
B) Debit Depletion Expense $16,000; credit Accumulated Depletion $16,000. 
C) Debit Depreciation Expense $16,900; credit Accumulated Depreciation $16,900. 
D) Debit Depreciation Expense $16,000; credit Accumulated Depreciation $16,000. 
E) Debit Amortization Expense $16,900; credit Accumulated Amortization $16,900. 
A) Debit Depletion Expense $16,900; credit Accumulated Depletion $16,900. 
B) Debit Depletion Expense $16,000; credit Accumulated Depletion $16,000. 
C) Debit Depreciation Expense $16,900; credit Accumulated Depreciation $16,900. 
D) Debit Depreciation Expense $16,000; credit Accumulated Depreciation $16,000. 
E) Debit Amortization Expense $16,900; credit Accumulated Amortization $16,900.

Question 11

A company had a building destroyed by fire.The building originally cost $650,000,and its accumulated depreciation as of the date of the fire was $300,000.The company received $400,000 cash from an insurance policy that covered the building and will use that money to help rebuild.Prepare the single journal entry to record the destruction of the building and the receipt of cash from the insurance company.

Accepted Answer

Cash ……………………………..400,000
Accu

Question 12

Match each of the following terms with the appropriate definitions.

-An exclusive right granted to its owner to manufacture and sell an item, or to use a process, for 20 years.

Accepted Answer

A) Obsolescence 
B) Amortization 
C) Depletion 
D) Salvage value 
E) Book value
F)Land improvements
G)Copyright
H)Inadequacy
I)Patent 
A) Obsolescence 
B) Amortization 
C) Depletion 
D) Salvage value 
E) Book value
F)Land improvements
G)Copyright
H)Inadequacy
I)Patent

Question 13

When a company constructs a building,the cost of the building includes materials and labor,design fees,building permits,and insurance during construction.

Accepted Answer

A) True 
 B)False

Question 14

Many companies use an accelerated depreciation method because:

Accepted Answer

A) It is required by the tax code. 
B) It is required by financial reporting rules. 
C) It yields larger depreciation expense in the early years of an asset's life. 
D) It yields a higher income in the early years of the asset's useful life. 
E) The results are identical to straight-line depreciation. 
A) It is required by the tax code. 
B) It is required by financial reporting rules. 
C) It yields larger depreciation expense in the early years of an asset's life. 
D) It yields a higher income in the early years of the asset's useful life. 
E) The results are identical to straight-line depreciation.

Question 15

The cost of an intangible asset is systematically allocated to depreciation expense over its estimated useful life.

Accepted Answer

A) True 
 B)False

Question 16

The total cost of an asset less its accumulated depreciation is called:

Accepted Answer

A) Historical cost. 
B) Book value. 
C) Present value. 
D) Current (market) value. 
E) Replacement cost. 
A) Historical cost. 
B) Book value. 
C) Present value. 
D) Current (market) value. 
E) Replacement cost.

Question 17

A company purchased a truck on October 1 of the current year at a cost of $40,000.The truck is expected to last six years and has a salvage value of $2,200.The company's annual accounting period ends on December 31.
1.What is the depreciation expense for the current year,assuming the straight-line method is used?
2.What is the depreciation expense for the current year,assuming the double-declining-balance method is used?

Accepted Answer

1.[($40,000 - $2,200)/6] * 3/1

Question 18

A new machine is expected to produce 600,000 units of product during its 8-year useful life.The machine cost $1,800,000 cash and it is estimated to have a $60,000 salvage value.
1.Calculate the depreciation if the machine produces 70,000 units of product during its first year,using the units-of-production method.
2.Calculate the depreciation on the machine using the double-declining-balance method.
3.Calculate the depreciation on the machine using the straight-line method.

Accepted Answer

1.($1,800,000 - $60,000)/600,0

Question 19

Match each of the following terms with the appropriate definitions.

-The total cost of a plant asset less its accumulated depreciation.

Accepted Answer

A) Obsolescence 
B) Amortization 
C) Depletion 
D) Salvage value 
E) Book value
F)Land improvements
G)Copyright
H)Inadequacy
I)Patent 
A) Obsolescence 
B) Amortization 
C) Depletion 
D) Salvage value 
E) Book value
F)Land improvements
G)Copyright
H)Inadequacy
I)Patent

Question 20

The useful life of a plant asset is:

Accepted Answer

A) The length of time it is productively used in a company's operations. 
B) Never related to its physical life. 
C) Its productive life, but not to exceed one year. 
D) Determined by the FASB. 
E) Determined by law. 
A) The length of time it is productively used in a company's operations. 
B) Never related to its physical life. 
C) Its productive life, but not to exceed one year. 
D) Determined by the FASB. 
E) Determined by law.

Exam 10: Plant Assets, natural Resources, and Intangibles

Depletion:

The formula for computing annual straight-line depreciation is:

Cambria owns equipment that cost $93,500 with accumulated depreciation of $64,000.Cambria asks $35,000 for the equipment but sells the equipment for $33,000.The journal entry to record the disposal of the asset would involve all of the following except:

A company purchased a delivery van for $23,000 with a salvage value of $3,000 on September 1,Year 1.It has an estimated useful life of 5 years.Using the straight-line method,how much depreciation expense should the company recognize on December 31,Year 1?

_____________________ refers to the insufficient capacity of a company's plant asset to meet the company's productive demands.

Inadequacy refers to the insufficient capacity of a company's plant assets to meet the company's growing productive demands.

A company sold for $40,000 cash a machine that originally cost $90,000.The accumulated depreciation on this machine was $47,000 at the time of the sale.What was the company's gain or loss on this sale?

A total asset turnover ratio of 3.5 indicates that:

Match each of the following terms with the appropriate definitions. -An exclusive right granted to its owner to manufacture and sell an item, or to use a process, for 20 years.

When a company constructs a building,the cost of the building includes materials and labor,design fees,building permits,and insurance during construction.

Many companies use an accelerated depreciation method because:

The cost of an intangible asset is systematically allocated to depreciation expense over its estimated useful life.

The total cost of an asset less its accumulated depreciation is called:

Match each of the following terms with the appropriate definitions. -The total cost of a plant asset less its accumulated depreciation.

The useful life of a plant asset is:

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

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

Managerial Accounting Concepts and Principles

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Performance Measurement and Responsibility Accounting

Capital Budgeting and Managerial Decisions

Time Value of Money B

Activity-Based Costing C

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