Question 1

Long-lived assets are assets that are intended for resale.

Accepted Answer

A) True 
 B)False  False

Question 2

Identify the category to which each of the following assets belongs.
T - tangible long-lived asset
I - intangible long-lived asset
N - not a long-lived asset
______ Warehouse
______ Licensing rights
______ Supplies
______ Patents
______ Production equipment
______ Goodwill
______ Land
______ Office computer

Accepted Answer

T,I,N,I,T,I,T,T

Question 3

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things equal,during the first few years of the asset's use,Company A will show which of the following compared to Company B?

Accepted Answer

A) Higher asset values and higher net income. 
B) Lower asset values and higher net income. 
C) Higher asset values and lower net income. 
D) Lower asset values and lower net income. 
A) Higher asset values and higher net income. 
B) Lower asset values and higher net income. 
C) Higher asset values and lower net income. 
D) Lower asset values and lower net income. D

Question 4

Which of the following statements most appropriately describes the purpose of depreciation of a long-lived tangible asset?

Accepted Answer

A) To indicate how the asset has physically deteriorated. 
B) To show that the asset will eventually and gradually become obsolete. 
C) To record that the asset's market value declines over time. 
D) To match the cost of the asset to the period in which it generates revenue. 
A) To indicate how the asset has physically deteriorated. 
B) To show that the asset will eventually and gradually become obsolete. 
C) To record that the asset's market value declines over time. 
D) To match the cost of the asset to the period in which it generates revenue.

Question 5

Amazon's website is an example of a:

Accepted Answer

A) patented intangible asset. 
B) technology intangible asset. 
C) current tangible asset. 
D) copyright tangible asset. 
A) patented intangible asset. 
B) technology intangible asset. 
C) current tangible asset. 
D) copyright tangible asset.

Question 6

The purpose of depreciation is to correctly value assets.

Accepted Answer

A) True 
 B)False

Question 7

How will the costs of an intangible asset being develop internally or self-constructed be reported?

Accepted Answer

A) As capital expenditure 
B) As research and development expenses 
C) As marketing expenses 
D) As a liability 
A) As capital expenditure 
B) As research and development expenses 
C) As marketing expenses 
D) As a liability

Question 8

According to IFRS and ASPE intangible assets cannot be considered long-lived.

Accepted Answer

A) True 
 B)False

Question 9

The Buddy Burger Corporation has $3.5 million in long-lived assets and has an accumulated depreciation account of $1.1 million.Which of the following statements is true?

Accepted Answer

A) The book value of long-lived assets is $2.4 million. 
B) The market value of long-lived assets is $3.5 million. 
C) The carrying value of long-lived assets is $3.5 million. 
D) The resale value of long-lived assets is $2.4 million. 
A) The book value of long-lived assets is $2.4 million. 
B) The market value of long-lived assets is $3.5 million. 
C) The carrying value of long-lived assets is $3.5 million. 
D) The resale value of long-lived assets is $2.4 million.

Question 10

Under what circumstance 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 the asset. 
B) When net book value is less than the residual value of the asset. 
C) When accumulated depreciation equals the purchase cost of the asset. 
D) When net book value is greater than expected future cash flows for the asset. 
A) When residual value is greater than the repairs and maintenance expenses needed to keep the asset. 
B) When net book value is less than the residual value of the asset. 
C) When accumulated depreciation equals the purchase cost of the asset. 
D) When net book value is greater than expected future cash flows for the asset.

Question 11

Ordinary repairs and maintenance always:

Accepted Answer

A) are part of the asset cost of equipment and facilities. 
B) are recorded as expenses. 
C) are recorded as liabilities. 
D) improve the asset beyond the current accounting period. 
A) are part of the asset cost of equipment and facilities. 
B) are recorded as expenses. 
C) are recorded as liabilities. 
D) improve the asset beyond the current accounting period.

Question 12

When a company records depreciation expense it debits:

Accepted Answer

A) liabilities and credits expenses. 
B) expenses and credits cash. 
C) expenses and credits a contra-asset account. 
D) long-lived assets and credits expenses. 
A) liabilities and credits expenses. 
B) expenses and credits cash. 
C) expenses and credits a contra-asset account. 
D) long-lived assets and credits expenses.

Question 13

Asset impairment losses are a regular operating expense of most businesses.

Accepted Answer

A) True 
 B)False

Question 14

ABC Co.purchased land and building at a price of $480,000.ABC also incurred a real estate broker's fee of $5,000 and legal fees of $2,000 to complete the purchase.ABC paid $3,000 to obtain a real estate appraisal prior to the purchase.The appraisal indicated that,valued separately,the land was worth $260,000 and the building was worth $240,000.The land should be recorded in the accounting records for:

Accepted Answer

A) $249,600. 
B) $253,240. 
C) $254,800. 
D) $259,600. 
A) $249,600. 
B) $253,240. 
C) $254,800. 
D) $259,600.

Question 15

Decorama Corp.bought a delivery van for $65,000 with a estimated residual value of $6,000.The van is expected to be used for the next 10 years.The company estimates it will be used to drive a total of 225,000,000 km (30,000 km in the first year,25,000 in the second,third and fourth years and 20,000 in the next six years. What would be the amount of depreciation expense in year 2 using the double-declining-balance method of depreciation?

Accepted Answer

A) $6,500.00 
B) $5,900.00 
C) $10,400.00 
D) $6,555.55 
A) $6,500.00 
B) $5,900.00 
C) $10,400.00 
D) $6,555.55

Question 16

Purchase cost minus residual value is equivalent to depreciable cost.

Accepted Answer

A) True 
 B)False

Question 17

A company paid $500,000 to purchase equipment and $15,000 to have the equipment delivered to and installed in the company's production facilities.Commercial use of the equipment began on May 1,2019.The estimated residual value of the equipment is $5,000.The equipment is expected to be used a total of 28,000 hours throughout its estimated useful life of six years.The company has an October 31,year-end and had used the equipment a total of 11,200 hours prior to the year-end.Using the units-of-production method,what amount of depreciation expense (to the nearest thousand)would the company report for this equipment in the income statement prepared for the year ended October 31,2019?

Accepted Answer

A) $102,000 
B) $198,000 
C) $204,000 
D) $206,000 
A) $102,000 
B) $198,000 
C) $204,000 
D) $206,000

Question 18

The company has net sales revenue of $3.6 million during 2018.The company's records also included the following information: $\begin{array}{|l|r|r|}
\hline \text { Assets } & \mathbf{1 2 / 3 1 / 1 7} & \mathbf{1 2 / 3 1 / 1 8} \
\hline \text { Property, plant, and equipment } & \$ 2.3 \text { million } & \$ 2.5 \text { million } \
\hline \text { Licensing agreements } & \$ 0.5 \text { million } & \$ 0.4 \text { million } \
\hline \text { Goodwill } & \$ 0.3 \text { million } & \$ 0.3 \text { million } \
\hline \text { Investments } & \$ 0.4 \text { million } & \$ 0.5 \text { million } \
\hline
\end{array}$
 What is the company's fixed asset turnover ratio for 2018?

Accepted Answer

A) 18.00 
B) 1.33 
C) 1.00 
D) 1.50 
A) 18.00 
B) 1.33 
C) 1.00 
D) 1.50

Question 19

An asset is purchased on January 1 for $40,000.It is expected to have a useful life of five years after which it will have an expected salvage value of $5,000.The company uses the straight-line method.If it is sold for $30,000 exactly two years after its purchase,the company will record a:

Accepted Answer

A) gain of $6,000. 
B) gain of $4,000. 
C) loss of $4,000. 
D) loss of $6,000. 
A) gain of $6,000. 
B) gain of $4,000. 
C) loss of $4,000. 
D) loss of $6,000.

Question 20

Decorama Corp.bought a delivery van for $65,000 with a estimated residual value of $6,000.The van is expected to be used for the next 10 years.The company estimates it will be used to drive a total of 225,000,000 km (30,000 km in the first year,25,000 in the second,third and fourth years and 20,000 in the next six years. What would be the amount of depreciation expense in year 2 using the straight line depreciation method?

Accepted Answer

A) $6,500.00 
B) $5,900.00 
C) $10,400.00 
D) $6,555.55 
A) $6,500.00 
B) $5,900.00 
C) $10,400.00 
D) $6,555.55

Long-lived assets are assets that are intended for resale.

Identify the category to which each of the following assets belongs. T - tangible long-lived asset I - intangible long-lived asset N - not a long-lived asset Warehouse Licensing rights Supplies Patents Production equipment Goodwill Land Office computer

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things equal,during the first few years of the asset's use,Company A will show which of the following compared to Company B?

Which of the following statements most appropriately describes the purpose of depreciation of a long-lived tangible asset?

Amazon's website is an example of a:

The purpose of depreciation is to correctly value assets.

How will the costs of an intangible asset being develop internally or self-constructed be reported?

According to IFRS and ASPE intangible assets cannot be considered long-lived.

The Buddy Burger Corporation has $3.5 million in long-lived assets and has an accumulated depreciation account of $1.1 million.Which of the following statements is true?

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

Ordinary repairs and maintenance always:

When a company records depreciation expense it debits:

Asset impairment losses are a regular operating expense of most businesses.

Purchase cost minus residual value is equivalent to depreciable cost.

An asset is purchased on January 1 for $40,000.It is expected to have a useful life of five years after which it will have an expected salvage value of $5,000.The company uses the straight-line method.If it is sold for $30,000 exactly two years after its purchase,the company will record a:

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 Multi-Step Income Statement

Inventory and Cost of Goods Sold

Receivables, bad Debt Expense, and Interest Revenue

Liabilities

Shareholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 9: Long-Lived Tangible and Intangible Assets

Long-lived assets are assets that are intended for resale.

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things equal,during the first few years of the asset's use,Company A will show which of the following compared to Company B?

Which of the following statements most appropriately describes the purpose of depreciation of a long-lived tangible asset?

Amazon's website is an example of a:

The purpose of depreciation is to correctly value assets.

How will the costs of an intangible asset being develop internally or self-constructed be reported?

According to IFRS and ASPE intangible assets cannot be considered long-lived.

The Buddy Burger Corporation has $3.5 million in long-lived assets and has an accumulated depreciation account of $1.1 million.Which of the following statements is true?

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

Ordinary repairs and maintenance always:

When a company records depreciation expense it debits:

Asset impairment losses are a regular operating expense of most businesses.

Purchase cost minus residual value is equivalent to depreciable cost.

An asset is purchased on January 1 for $40,000.It is expected to have a useful life of five years after which it will have an expected salvage value of $5,000.The company uses the straight-line method.If it is sold for $30,000 exactly two years after its purchase,the company will record a:

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 Multi-Step Income Statement

Inventory and Cost of Goods Sold

Receivables, bad Debt Expense, and Interest Revenue

Liabilities

Shareholders Equity

Statement of Cash Flows

Measuring and Evaluating Financial Performance

Filters