Question 1

Depletion expense is the portion of a natural resource's cost used up in a particular period.

Accepted Answer

A) True 
 B)False  True

Question 2

A loss on the sale of an item of property,plant and equipment is recorded when the sale price exceeds the carrying amount.

Accepted Answer

A) True 
 B)False  False

Question 3

Albatross Services scrapped a van.The van originally cost $40 000,had an estimated residual value of zero and an estimated life of 10 years.At the time it was scrapped,it had accumulated depreciation of $40 000.What was the effect of scrapping the van?

Accepted Answer

A) loss of $1 000 
B) loss of $2 000 
C) gain of $2 000 
D) no gain or loss 
A) loss of $1 000 
B) loss of $2 000 
C) gain of $2 000 
D) no gain or loss D

Question 4

Goodwill is NOT amortised-but evaluated-each year for a decline in value.

Accepted Answer

A) True 
 B)False

Question 5

Estimated residual value is the expected cash value of an asset at the end of its useful life.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is the expense resulting from a decline in the utility of a natural resource?

Accepted Answer

A) Depletion 
B) Obsolescence 
C) Amortisation 
D) Depreciation 
A) Depletion 
B) Obsolescence 
C) Amortisation 
D) Depreciation

Question 7

An item of property,plant and equipment is fully depreciated when the carrying amount is:

Accepted Answer

A) equal to the residual value. 
B) greater than the market value. 
C) equal to the market value. 
D) greater than the residual value. 
A) equal to the residual value. 
B) greater than the market value. 
C) equal to the market value. 
D) greater than the residual value.

Question 8

Which of the following accounting methods is usually used to calculate amortisation expense?

Accepted Answer

A) Reducing balance 
B) Straight line 
C) Units of production 
D) First-in,first-out 
A) Reducing balance 
B) Straight line 
C) Units of production 
D) First-in,first-out

Question 9

If an asset is fully depreciated,but it can continue to be used,the asset account and accumulated depreciation balance remain on the books and no further depreciation is recorded.

Accepted Answer

A) True 
 B)False

Question 10

Managers must choose from which of the following when recording non-current assets?

Accepted Answer

A) Current model or revaluation model 
B) Cost model or revaluation model 
C) Replacement model or cost model 
D) Present value model or replacement model 
A) Current model or revaluation model 
B) Cost model or revaluation model 
C) Replacement model or cost model 
D) Present value model or replacement model

Question 11

Iverycoast Ltd purchased a van on 1 January 2016 for $840,000.Estimated life of the van was five years,and its estimated residual value was $91,000.Iverycoast uses the straight-line method of depreciation.At the beginning of 2018,the company revised the total estimated life of the asset from five years to six years.The estimated residual value remained the same as estimated earlier.Calculate the depreciation expense for the year 2018.

Accepted Answer

A) $112,350 
B) $152,250 
C) $115,500 
D) $149,800 
A) $112,350 
B) $152,250 
C) $115,500 
D) $149,800

Question 12

Which of the following items is included in the journal entry if a company sells equipment at a price equal to its carrying amount?

Accepted Answer

A) A debit to Loss on sale of equipment 
B) A credit to Accumulated depreciation 
C) A debit to Equipment for its carrying amount 
D) A credit to Equipment for its original cost 
A) A debit to Loss on sale of equipment 
B) A credit to Accumulated depreciation 
C) A debit to Equipment for its carrying amount 
D) A credit to Equipment for its original cost

Question 13

A company's accountant capitalises a payment that should be recorded as an expense.Which of the following is TRUE?

Accepted Answer

A) Revenues are understated 
B) Profit is overstated. 
C) Liabilities are overstated. 
D) Assets are understated. 
A) Revenues are understated 
B) Profit is overstated. 
C) Liabilities are overstated. 
D) Assets are understated.

Question 14

Which of the following would be capitalised and depreciated,rather than expensed?

Accepted Answer

A) Replacement of tyres 
B) Paint job 
C) Modification for new use 
D) Normal repair of engine 
A) Replacement of tyres 
B) Paint job 
C) Modification for new use 
D) Normal repair of engine

Question 15

Which of the following is the proper accounting treatment for research and development costs?

Accepted Answer

A) Research and development costs must be capitalised and amortised over 20 years or less. 
B) Research and development costs must be capitalised and amortised over 70 years or less. 
C) Research and development costs must be capitalised and expensed each year to the extent that their value has declined. 
D) Research costs must be expensed and development costs may be capitalised in limited circumstances. 
A) Research and development costs must be capitalised and amortised over 20 years or less. 
B) Research and development costs must be capitalised and amortised over 70 years or less. 
C) Research and development costs must be capitalised and expensed each year to the extent that their value has declined. 
D) Research costs must be expensed and development costs may be capitalised in limited circumstances.

Question 16

Which of the following depreciation methods allocates a fixed amount of depreciation to kilometres driven,hours used or some other measure of the asset's utilisation?

Accepted Answer

A) Reducing-balance method 
B) Sum-of-digits method 
C) Units-of-production method 
D) Straight-line method 
A) Reducing-balance method 
B) Sum-of-digits method 
C) Units-of-production method 
D) Straight-line method

Question 17

Sterling Company wishes to revalue some equipment with an original cost of $200 000 and accumulated depreciation of $30 000.The equipment now has a fair value of $100 000.What revaluation will be recorded?

Accepted Answer

A) a decrement of $100 000 
B) a decrement of $30 000 
C) an increment of $100 000 
D) a decrement of $70 000 
A) a decrement of $100 000 
B) a decrement of $30 000 
C) an increment of $100 000 
D) a decrement of $70 000

Question 18

Treating a cost that should be an expense as a capital expenditure will make a company's net profit higher.

Accepted Answer

A) True 
 B)False

Question 19

Tangible assets are assets with no physical form that have value because of the special rights they carry.

Accepted Answer

A) True 
 B)False

Question 20

A loss on disposal of an asset is recorded when cash received is less than the carrying amount.

Accepted Answer

A) True 
 B)False

Depletion expense is the portion of a natural resource's cost used up in a particular period.

A loss on the sale of an item of property,plant and equipment is recorded when the sale price exceeds the carrying amount.

Albatross Services scrapped a van.The van originally cost $40 000,had an estimated residual value of zero and an estimated life of 10 years.At the time it was scrapped,it had accumulated depreciation of $40 000.What was the effect of scrapping the van?

Goodwill is NOT amortised-but evaluated-each year for a decline in value.

Estimated residual value is the expected cash value of an asset at the end of its useful life.

Which of the following is the expense resulting from a decline in the utility of a natural resource?

An item of property,plant and equipment is fully depreciated when the carrying amount is:

Which of the following accounting methods is usually used to calculate amortisation expense?

If an asset is fully depreciated,but it can continue to be used,the asset account and accumulated depreciation balance remain on the books and no further depreciation is recorded.

Managers must choose from which of the following when recording non-current assets?

Which of the following items is included in the journal entry if a company sells equipment at a price equal to its carrying amount?

A company's accountant capitalises a payment that should be recorded as an expense.Which of the following is TRUE?

Which of the following would be capitalised and depreciated,rather than expensed?

Which of the following is the proper accounting treatment for research and development costs?

Which of the following depreciation methods allocates a fixed amount of depreciation to kilometres driven,hours used or some other measure of the asset's utilisation?

Sterling Company wishes to revalue some equipment with an original cost of $200 000 and accumulated depreciation of $30 000.The equipment now has a fair value of $100 000.What revaluation will be recorded?

Treating a cost that should be an expense as a capital expenditure will make a company's net profit higher.

Tangible assets are assets with no physical form that have value because of the special rights they carry.

A loss on disposal of an asset is recorded when cash received is less than the carrying amount.

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Filters

Exam 10: Non-Current Assets: Property, Plant and Equipment, and Intangibles

Depletion expense is the portion of a natural resource's cost used up in a particular period.

A loss on the sale of an item of property,plant and equipment is recorded when the sale price exceeds the carrying amount.

Albatross Services scrapped a van.The van originally cost $40 000,had an estimated residual value of zero and an estimated life of 10 years.At the time it was scrapped,it had accumulated depreciation of $40 000.What was the effect of scrapping the van?

Goodwill is NOT amortised-but evaluated-each year for a decline in value.

Estimated residual value is the expected cash value of an asset at the end of its useful life.

Which of the following is the expense resulting from a decline in the utility of a natural resource?

An item of property,plant and equipment is fully depreciated when the carrying amount is:

Which of the following accounting methods is usually used to calculate amortisation expense?

If an asset is fully depreciated,but it can continue to be used,the asset account and accumulated depreciation balance remain on the books and no further depreciation is recorded.

Managers must choose from which of the following when recording non-current assets?

Which of the following items is included in the journal entry if a company sells equipment at a price equal to its carrying amount?

A company's accountant capitalises a payment that should be recorded as an expense.Which of the following is TRUE?

Which of the following would be capitalised and depreciated,rather than expensed?

Which of the following is the proper accounting treatment for research and development costs?

Which of the following depreciation methods allocates a fixed amount of depreciation to kilometres driven,hours used or some other measure of the asset's utilisation?

Sterling Company wishes to revalue some equipment with an original cost of $200 000 and accumulated depreciation of $30 000.The equipment now has a fair value of $100 000.What revaluation will be recorded?

Treating a cost that should be an expense as a capital expenditure will make a company's net profit higher.

Tangible assets are assets with no physical form that have value because of the special rights they carry.

A loss on disposal of an asset is recorded when cash received is less than the carrying amount.

The Role of Accounting in Decision Making

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Retailing Operations

Retail Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Current Liabilities and Payroll

Non-Current Liabilities, Debentures Payable and Classification of Liabilities on the Balance Sheet

Partnerships

Companies: Formation and Shareholders Equity

Companies: Capital Management and the Income Statement

The Cash Flow Statement

The Framework of Accounting

Financial Statement Analysis

Filters