Question 1

Refer to Fabian Woodworks. What amount will be reported as depreciation expense over the 5-year life of the equipment?

Accepted Answer

A) $12,000 
B) $ 8,000 
C) $10,000 
D) $ 4,000 
A) $12,000 
B) $ 8,000 
C) $10,000 
D) $ 4,000 C

Question 2

The reason some major intangible assets are not in the financial statements is because they cannot be measured.

Accepted Answer

A) True 
 B)False  True

Question 3

Which of the following is an intangible asset?

Accepted Answer

A) oil 
B) goodwill 
C) retained Earnings 
D) accounts Receivable 
A) oil 
B) goodwill 
C) retained Earnings 
D) accounts Receivable B

Question 4

A company uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration. Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of this company's assets?

Accepted Answer

A) double-declining-balance 
B) revenue expenditure method 
C) straight-line 
D) units-of-production 
A) double-declining-balance 
B) revenue expenditure method 
C) straight-line 
D) units-of-production

Question 5

Fitness Depot purchased a building on a tract of land and allocated the entire cost of the purchase to building. Normally the company depreciates buildings over 40 years using the straight-line method with zero residual value and does not depreciate land. Because of the improper accounting treatment of the purchase, the company's income for the next 20 years will be

Accepted Answer

A) overstated. 
B) understated. 
C) unaffected. 
D) cannot be determined from the information provided. 
A) overstated. 
B) understated. 
C) unaffected. 
D) cannot be determined from the information provided.

Question 6

Match these terms with their correct definition.
a.Franchise
e.Organizational costs
b.Intangible operating assets
f.Property, plant, and equipment
c.Natural resources
g.Trademark
d.Operating assets
h.Voluntary disposal
-Assets such as coal deposits, oil reserves, and mineral deposits

Accepted Answer

The answer of Match these terms with their correct definition.
a.Franchise
e.Organizational...

Question 7

On January 1, 2013, a company sold a piece of equipment for $30,000 which it had used for several years. The equipment had cost $45,000, and its accumulated depreciation amounted to $20,000 at the time of the sale. What are the net effects on the accounting equation of selling the equipment?

Accepted Answer

A) Assets and Shareholders' Equity increase $30,000 
B) Assets decrease and Shareholders' Equity increases $5,000. 
C) Assets and Shareholders' Equity increase $5,000. 
D) Assets and Shareholders' Equity decrease $5,000. 
A) Assets and Shareholders' Equity increase $30,000 
B) Assets decrease and Shareholders' Equity increases $5,000. 
C) Assets and Shareholders' Equity increase $5,000. 
D) Assets and Shareholders' Equity decrease $5,000.

Question 8

Refer to Fernbank Farms. What is the truck's book value at December 31, 2013?

Accepted Answer

A) $68,000 
B) $98,000 
C) $80,000 
D) $62,000 
A) $68,000 
B) $98,000 
C) $80,000 
D) $62,000

Question 9

Goodwill can be recorded as an asset when a(n)

Accepted Answer

A) business has above normal profitability compared to other businesses in its industry. 
B) business can determine that it has created customer goodwill and name recognition. 
C) offer is received to purchase the business at a price in excess of the value of the assets. 
D) business is purchased and payment is made in excess of the value of the net assets. 
A) business has above normal profitability compared to other businesses in its industry. 
B) business can determine that it has created customer goodwill and name recognition. 
C) offer is received to purchase the business at a price in excess of the value of the assets. 
D) business is purchased and payment is made in excess of the value of the net assets.

Question 10

Furniture Barn and Furniture World purchased identical equipment having an estimated useful life of 5 years. Furniture Barn uses the straight-line depreciation method whereas Furniture World uses the double-declining-balance method of depreciation. Assuming the two entities are similar in all other respects, which of the following statements is correct concerning the equipment? Hint: Without worrying about amounts, graph depreciation expense over the 5 years.

Accepted Answer

A) Furniture Barn's depreciation expense will be greater in the second year. 
B) Furniture World's equipment book value will be greater at the end of year one. 
C) Furniture Barn's net income will be greater in year nine. 
D) Furniture World's equipment book value will be less at the end of year two. 
A) Furniture Barn's depreciation expense will be greater in the second year. 
B) Furniture World's equipment book value will be greater at the end of year one. 
C) Furniture Barn's net income will be greater in year nine. 
D) Furniture World's equipment book value will be less at the end of year two.

Question 11

A company determined that it had incorrectly estimated the useful life of equipment that it had purchased two years ago. It must now depreciate the asset's remaining book value over the current and future accounting periods.

Accepted Answer

A) True 
 B)False

Question 12

Two reasons why a company might choose an accelerated depreciation method are _______________, and ______________.

Accepted Answer

To minimize income and taxes
T

Question 13

-Refer to Fabulous Creations. Which items on the company's balance sheet could be considered intangible assets? Explain the nature of each of these.

Accepted Answer

Intangible assets are: music catalogues,

Question 14

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given. (Choices may be used more than once.)
a.Straight-line
b.Units-of-production
c.Double-declining-balance
d.MACRS
-This method is the best for management bonus plans.

Accepted Answer

The answer of Given the following list of methods of...

Question 15

Distinguish between current assets and operating assets.

Accepted Answer

Operating assets constitute the major pr

Question 16

If technology changes rapidly, a firm should

Accepted Answer

A) expense plant assets immediately because of the uncertainty of future benefits. 
B) depreciate plant assets over long periods of time. 
C) consider an accelerated rate of depreciation. 
D) use the straight-line method of depreciation as it is the easiest. 
A) expense plant assets immediately because of the uncertainty of future benefits. 
B) depreciate plant assets over long periods of time. 
C) consider an accelerated rate of depreciation. 
D) use the straight-line method of depreciation as it is the easiest.

Question 17

Fantasy Cruise Lines
On January 1, 2013, the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method.
-Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?

Accepted Answer

A) $200,000 
B) $400,000 
C) $ 0 
D) $100,000 
A) $200,000 
B) $400,000 
C) $ 0 
D) $100,000

Question 18

"You Decide" Essay
You are Chief Financial Officer for Five Star Resorts, Inc. You are reviewing the following transactions:
1. Adding a new patio deck to the resort's upscale restaurant, $180,000
2. Painting the ocean side beach houses, $75,000
3. Purchasing additional golf carts, $25,000
4. Rebuilding the engine in the resort's airport shuttle bus, $10,000
"5. Replacing the old air conditioning unit in the golf shop with a more efficient one, $20,000
Your accountant has capitalized all of these items and intends to depreciate them over the appropriate asset's remaining useful life as originally estimated.Indicate whether you agree or disagree with your accountant's treatment of each item. In those cases where you disagree, state the proper treatment of that expenditure. Use the following table:
   "

Accepted Answer

The answer of "You Decide" Essay
You are Chief Financial Officer...

Question 19

Refer to Falling Leaves Lawn Care. By what amount would double-declining-balance depreciation exceed straight-line depreciation over the 5-year life of the equipment?

Accepted Answer

A) the salvage value of $7,000 
B) cost less total depreciation. 
C) cost plus total depreciation 
D) total depreciation expenses under double-declining-balance and straight-line depreciation are equal 
A) the salvage value of $7,000 
B) cost less total depreciation. 
C) cost plus total depreciation 
D) total depreciation expenses under double-declining-balance and straight-line depreciation are equal

Question 20

Fresh n' Fit Cuisine purchased land and a building for $320,000 so that it could open a new restaurant. The building's fair market value at the time of purchase was $220,000. In addition, the following costs were incurred prior to the restaurant's opening:   How much will be recorded as land improvements?

Accepted Answer

A) $25,000 
B) $6,000 
C) $106,000 
D) $125,000 
A) $25,000 
B) $6,000 
C) $106,000 
D) $125,000

Refer to Fabian Woodworks. What amount will be reported as depreciation expense over the 5-year life of the equipment?

The reason some major intangible assets are not in the financial statements is because they cannot be measured.

Which of the following is an intangible asset?

A company uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration. Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of this company's assets?

Match these terms with their correct definition. a.Franchise e.Organizational costs b.Intangible operating assets f.Property, plant, and equipment c.Natural resources g.Trademark d.Operating assets h.Voluntary disposal -Assets such as coal deposits, oil reserves, and mineral deposits

On January 1, 2013, a company sold a piece of equipment for $30,000 which it had used for several years. The equipment had cost $45,000, and its accumulated depreciation amounted to $20,000 at the time of the sale. What are the net effects on the accounting equation of selling the equipment?

Refer to Fernbank Farms. What is the truck's book value at December 31, 2013?

Goodwill can be recorded as an asset when a(n)

A company determined that it had incorrectly estimated the useful life of equipment that it had purchased two years ago. It must now depreciate the asset's remaining book value over the current and future accounting periods.

Two reasons why a company might choose an accelerated depreciation method are _, and .

-Refer to Fabulous Creations. Which items on the company's balance sheet could be considered intangible assets? Explain the nature of each of these.

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given. (Choices may be used more than once.) a.Straight-line b.Units-of-production c.Double-declining-balance d.MACRS -This method is the best for management bonus plans.

Distinguish between current assets and operating assets.

If technology changes rapidly, a firm should

Fantasy Cruise Lines On January 1, 2013, the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method. -Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?

Refer to Falling Leaves Lawn Care. By what amount would double-declining-balance depreciation exceed straight-line depreciation over the 5-year life of the equipment?

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control and Cash

Sales and Receivables

Cost of Goods Sold and Inventory

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Exam 7: Operating Assets

Refer to Fabian Woodworks. What amount will be reported as depreciation expense over the 5-year life of the equipment?

The reason some major intangible assets are not in the financial statements is because they cannot be measured.

Which of the following is an intangible asset?

A company uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration. Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of this company's assets?

Match these terms with their correct definition. a.Franchise e.Organizational costs b.Intangible operating assets f.Property, plant, and equipment c.Natural resources g.Trademark d.Operating assets h.Voluntary disposal -Assets such as coal deposits, oil reserves, and mineral deposits

On January 1, 2013, a company sold a piece of equipment for $30,000 which it had used for several years. The equipment had cost $45,000, and its accumulated depreciation amounted to $20,000 at the time of the sale. What are the net effects on the accounting equation of selling the equipment?

Refer to Fernbank Farms. What is the truck's book value at December 31, 2013?

Goodwill can be recorded as an asset when a(n)

A company determined that it had incorrectly estimated the useful life of equipment that it had purchased two years ago. It must now depreciate the asset's remaining book value over the current and future accounting periods.

Two reasons why a company might choose an accelerated depreciation method are _______________, and ______________.

-Refer to Fabulous Creations. Which items on the company's balance sheet could be considered intangible assets? Explain the nature of each of these.

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given. (Choices may be used more than once.) a.Straight-line b.Units-of-production c.Double-declining-balance d.MACRS -This method is the best for management bonus plans.

Distinguish between current assets and operating assets.

If technology changes rapidly, a firm should

Fantasy Cruise Lines On January 1, 2013, the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method. -Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?

Refer to Falling Leaves Lawn Care. By what amount would double-declining-balance depreciation exceed straight-line depreciation over the 5-year life of the equipment?

Accounting and the Financial Statements

The Accounting Information System

Accrual Accounting

Internal Control and Cash

Sales and Receivables

Cost of Goods Sold and Inventory

Current and Contingent Liabilities

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

Investments

Time Value of Money

Filters

Two reasons why a company might choose an accelerated depreciation method are _, and .