Question 1

When a company determines that estimated future cash flows from an asset are different from the book value of the asset,it records:

Accepted Answer

A) an asset impairment gain,if the value of the cash flows exceeds the asset's book value. 
B) an asset impairment loss,if the value of the cash flows exceeds the asset's book value. 
C) an asset impairment gain,if the asset's book value exceeds the value of the cash flows. 
D) an asset impairment loss,if the asset's book value exceeds the value of the cash flows. 
A) an asset impairment gain,if the value of the cash flows exceeds the asset's book value. 
B) an asset impairment loss,if the value of the cash flows exceeds the asset's book value. 
C) an asset impairment gain,if the asset's book value exceeds the value of the cash flows. 
D) an asset impairment loss,if the asset's book value exceeds the value of the cash flows.

Question 2

Which of the following statements is true when the straight-line method is used to compute depreciation?

Accepted Answer

A) The carrying value of an asset is a constant amount during the asset's useful life. 
B) Accumulated depreciation is a constant amount during the asset's estimated useful life. 
C) Depreciation expense per period is the depreciable cost divided by the number of periods in the asset's useful life. 
D) None of the answers are acceptable. 
A) The carrying value of an asset is a constant amount during the asset's useful life. 
B) Accumulated depreciation is a constant amount during the asset's estimated useful life. 
C) Depreciation expense per period is the depreciable cost divided by the number of periods in the asset's useful life. 
D) None of the answers are acceptable.

Question 3

Shaggy Limited purchased a new van on January 1,2018.The van cost $20,000.It has an estimated life of five years and the estimated residual value is $5,000.Shaggy uses the double-declining-balance method to compute depreciation. What is the depreciation expense for 2018?

Accepted Answer

A) $4,000. 
B) $3,000. 
C) $6,000. 
D) $8,000. 
A) $4,000. 
B) $3,000. 
C) $6,000. 
D) $8,000.

Question 4

The intangible asset most frequently reported by Canadian businesses is:

Accepted Answer

A) goodwill. 
B) trademarks. 
C) patents. 
D) licensing rights. 
A) goodwill. 
B) trademarks. 
C) patents. 
D) licensing rights.

Question 5

Expenditures on self-created intangible assets are accounted for in the same way as expenditures on self-constructed tangible assets.

Accepted Answer

A) True 
 B)False

Question 6

If the double-declining balance method were used to depreciate a building that has a 10-year useful life and a residual value equal to 10% of the building's original cost,what depreciation rate would be used?

Accepted Answer

A) 9% 
B) 10% 
C) 18% 
D) 20% 
A) 9% 
B) 10% 
C) 18% 
D) 20%

Question 7

The book or carrying value of an asset is:

Accepted Answer

A) its acquisition cost less the accumulated depreciation from the acquisition date to the balance sheet date. 
B) its acquisition cost plus accumulated depreciation from the acquisition date to the balance sheet date. 
C) the amount that could be obtained for the asset on the balance sheet date if it were sold. 
D) the annual cost of carrying the asset in inventory. 
A) its acquisition cost less the accumulated depreciation from the acquisition date to the balance sheet date. 
B) its acquisition cost plus accumulated depreciation from the acquisition date to the balance sheet date. 
C) the amount that could be obtained for the asset on the balance sheet date if it were sold. 
D) the annual cost of carrying the asset in inventory.

Question 8

A real estate management company buys an apartment complex for $4.8 million.An appraiser values the land at $1.1 million,the building at $3.4 million,and the equipment at $0.3 million.In addition,the company pays a 5% commission to a broker for arranging the sale.Which of the following statements is true?

Accepted Answer

A) The company would record $3.57 million as the acquisition cost of the building. 
B) The company would record $1.1 million as the acquisition cost of the land. 
C) The company would record $3.7 million as the acquisition cost of the building. 
D) The company would record $0.24 million as an expense and $4.8 million as an asset. 
A) The company would record $3.57 million as the acquisition cost of the building. 
B) The company would record $1.1 million as the acquisition cost of the land. 
C) The company would record $3.7 million as the acquisition cost of the building. 
D) The company would record $0.24 million as an expense and $4.8 million as an asset.

Question 9

A loss on disposal of an asset is reported:

Accepted Answer

A) in the Other Revenues section of the income statement. 
B) in the Other Expenses section of the income statement. 
C) as a direct increase to the asset account on the balance sheet. 
D) as a direct decrease to the asset account on the balance sheet. 
A) in the Other Revenues section of the income statement. 
B) in the Other Expenses section of the income statement. 
C) as a direct increase to the asset account on the balance sheet. 
D) as a direct decrease to the asset account on the balance sheet.

Question 10

If a fully depreciated asset with no residual value is retired without receiving any cash on retirement:

Accepted Answer

A) a gain on disposal will be recorded. 
B) depreciation must be recorded as though the asset were still on the books. 
C) a loss on disposal will be recorded. 
D) no gain or loss on disposal will be recorded. 
A) a gain on disposal will be recorded. 
B) depreciation must be recorded as though the asset were still on the books. 
C) a loss on disposal will be recorded. 
D) no gain or loss on disposal will be recorded.

Question 11

The useful life of an asset is always measured in years.

Accepted Answer

A) True 
 B)False

Question 12

Depreciation and maintenance are expenses associated with the use of long-lived assets.

Accepted Answer

A) True 
 B)False

Question 13

The declining-balance method applies a depreciation rate to the book value of the asset at the beginning of each accounting period.

Accepted Answer

A) True 
 B)False

Question 14

The amount of depreciation expense over the life of an asset will be the same in all of the different methods of depreciation.

Accepted Answer

A) True 
 B)False

Question 15

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

Accepted Answer

A) True 
 B)False

Question 16

All things being equal,if average net fixed assets decrease,then the fixed asset turnover ratio will increase.

Accepted Answer

A) True 
 B)False

Question 17

Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

Accepted Answer

A) has a greater amount invested in fixed assets than a company with a lower fixed asset turnover ratio. 
B) has less invested in fixed assets than a company with a lower fixed asset turnover ratio. 
C) generates less sales revenue than a company with a lower fixed asset turnover ratio. 
D) makes better use of its fixed assets to generate revenues than a company with a lower fixed asset turnover ratio. 
A) has a greater amount invested in fixed assets than a company with a lower fixed asset turnover ratio. 
B) has less invested in fixed assets than a company with a lower fixed asset turnover ratio. 
C) generates less sales revenue than a company with a lower fixed asset turnover ratio. 
D) makes better use of its fixed assets to generate revenues than a company with a lower fixed asset turnover ratio.

Question 18

Which of the following methods would be a typical choice for assets that are most productive when they are new but lose their utility quickly as they get older?

Accepted Answer

A) Straight line method 
B) Double declining method 
C) Units of production method 
D) Depletion 
A) Straight line method 
B) Double declining method 
C) Units of production method 
D) Depletion

Question 19

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the income statement.

Accepted Answer

A) True 
 B)False

Question 20

All of the following costs should be capitalized when land is acquired,except,

Accepted Answer

A) Purchase cost. 
B) Sales taxes. 
C) Survey fees. 
D) Legal fees. 
A) Purchase cost. 
B) Sales taxes. 
C) Survey fees. 
D) Legal fees.

When a company determines that estimated future cash flows from an asset are different from the book value of the asset,it records:

Which of the following statements is true when the straight-line method is used to compute depreciation?

Shaggy Limited purchased a new van on January 1,2018.The van cost $20,000.It has an estimated life of five years and the estimated residual value is $5,000.Shaggy uses the double-declining-balance method to compute depreciation. What is the depreciation expense for 2018?

The intangible asset most frequently reported by Canadian businesses is:

Expenditures on self-created intangible assets are accounted for in the same way as expenditures on self-constructed tangible assets.

If the double-declining balance method were used to depreciate a building that has a 10-year useful life and a residual value equal to 10% of the building's original cost,what depreciation rate would be used?

The book or carrying value of an asset is:

A loss on disposal of an asset is reported:

If a fully depreciated asset with no residual value is retired without receiving any cash on retirement:

The useful life of an asset is always measured in years.

Depreciation and maintenance are expenses associated with the use of long-lived assets.

The declining-balance method applies a depreciation rate to the book value of the asset at the beginning of each accounting period.

The amount of depreciation expense over the life of an asset will be the same in all of the different methods of depreciation.

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

All things being equal,if average net fixed assets decrease,then the fixed asset turnover ratio will increase.

Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

Which of the following methods would be a typical choice for assets that are most productive when they are new but lose their utility quickly as they get older?

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the income statement.

All of the following costs should be capitalized when land is acquired,except,

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

When a company determines that estimated future cash flows from an asset are different from the book value of the asset,it records:

Which of the following statements is true when the straight-line method is used to compute depreciation?

Shaggy Limited purchased a new van on January 1,2018.The van cost $20,000.It has an estimated life of five years and the estimated residual value is $5,000.Shaggy uses the double-declining-balance method to compute depreciation. What is the depreciation expense for 2018?

The intangible asset most frequently reported by Canadian businesses is:

Expenditures on self-created intangible assets are accounted for in the same way as expenditures on self-constructed tangible assets.

If the double-declining balance method were used to depreciate a building that has a 10-year useful life and a residual value equal to 10% of the building's original cost,what depreciation rate would be used?

The book or carrying value of an asset is:

A loss on disposal of an asset is reported:

If a fully depreciated asset with no residual value is retired without receiving any cash on retirement:

The useful life of an asset is always measured in years.

Depreciation and maintenance are expenses associated with the use of long-lived assets.

The declining-balance method applies a depreciation rate to the book value of the asset at the beginning of each accounting period.

The amount of depreciation expense over the life of an asset will be the same in all of the different methods of depreciation.

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

All things being equal,if average net fixed assets decrease,then the fixed asset turnover ratio will increase.

Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

Which of the following methods would be a typical choice for assets that are most productive when they are new but lose their utility quickly as they get older?

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the income statement.

All of the following costs should be capitalized when land is acquired,except,

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