Question 1

Which of the following assets will NOT be depreciated?

Accepted Answer

A) inventory 
B) buildings 
C) equipment 
D) computer 
A) inventory 
B) buildings 
C) equipment 
D) computer

Question 2

Describe how to account for a piece of factory equipment from the date of purchase to the end of its useful life.

Accepted Answer

Equipment is recorded at cost in accorda

Question 3

What basic information must be disclosed about long-term assets in the financial statements and accompanying footnotes?

Accepted Answer

Basic information that must be disclosed

Question 4

Which depreciation method is most similar to the method that is used to calculate amortization of intangible assets?

Accepted Answer

A) straight-line 
B) double-declining balance 
C) activity 
D) capitalization 
A) straight-line 
B) double-declining balance 
C) activity 
D) capitalization

Question 5

If an adjusting entry for depreciation is NOT made at the end of the accounting period,what is the effect on net income?

Accepted Answer

A) Net income will be too high. 
B) Net income will be too low. 
C) There will be no effect on net income. 
D) Net income will not be affected in the current period,but will be overstated in the next period. 
A) Net income will be too high. 
B) Net income will be too low. 
C) There will be no effect on net income. 
D) Net income will not be affected in the current period,but will be overstated in the next period.

Question 6

Cranberry Company purchased two pieces of equipment from a Canadian vendor for $400,000.If the assets had been purchased separately,the company would have paid $90,000 for the first piece of equipment and $360,000 for the second piece of equipment.What amount should be recorded for the SECOND piece of equipment?

Accepted Answer

A) $80,000 
B) $90,000 
C) $360,000 
D) $320,000 
A) $80,000 
B) $90,000 
C) $360,000 
D) $320,000

Question 7

Which of the following should be recorded as an expense in the period when the activity takes place?

Accepted Answer

A) Nationwise,Inc.routinely replaces the wiper blades on its fleet of delivery trucks. 
B) ResolCo paid $100,000 to buy a new piece of equipment. 
C) Revel,Inc.paid $10,000 to overhaul and improve a machine to make it last longer. 
D) Rondeaux Company paid $50,000 for the exclusive right to manufacture a product. 
A) Nationwise,Inc.routinely replaces the wiper blades on its fleet of delivery trucks. 
B) ResolCo paid $100,000 to buy a new piece of equipment. 
C) Revel,Inc.paid $10,000 to overhaul and improve a machine to make it last longer. 
D) Rondeaux Company paid $50,000 for the exclusive right to manufacture a product.

Question 8

The Internal Revenue Service requires that a corporation must use the same depreciation method on its tax return that it uses on its annual report.

Accepted Answer

A) True 
 B)False

Question 9

On January 1,2011,Tiler Company purchased equipment that cost $30,000.The equipment has an estimated useful life of 6 years and an estimated salvage value of $3,000.
Required:
1.Using the straight-line method,complete the chart below:
   2.Explain why long-term assets must be depreciated.
3.Explain why land is NOT depreciated while assets such as equipment are depreciated.

Accepted Answer

1.Depreciation expense for 12 months = (

Question 10

Describe the impact on the financial statements of buying a piece of factory equipment for cash,using it,and then selling it for cash.
On the balance sheet:
On the income statement:
On the statement of cash flows:

Accepted Answer

@#LAT-DLM& Buying the equipment will create an ass

Question 11

The management of Omega Co.has decided to sell some of its long-term assets in order to generate cash.The following events occurred during the current year.
a.Sold a truck with an historical cost of $20,000 and accumulated depreciation of $14,000 for $4,000 in cash
b.Sold land with an historical cost of $100,000 for $120,000 in cash
c.Purchased a new truck for $33,000 cash
d.Sold factory equipment with an historical cost of $90,000 and accumulated depreciation of $60,000 for $23,000
e.Sold an old office building with an historical cost of $500,000 and accumulated depreciation of $300,000 for $190,000 cash
Required:
1.Determine the net amount of cash generated by all of the transactions combined.
2.Determine the net gain or loss from each of the transactions.What is the total net gain or loss from all of the transactions combined?

Accepted Answer

1.$4K + 120K - 33K +

Question 12

The following information is provided for two companies in the same industry:
   Required:
1.Calculate the return on assets (ROA)for both companies.Show supporting calculations.Show your answer as a percentage with one decimal place.(For example,0.50000 = 50.0%).
   2.Calculate the asset turnover for both companies.Show supporting calculations.Round your answer to two decimal places.(For example,0.98765 = 0.99)
   3.Based on your calculations above,which company appears to be a better performer?

Accepted Answer

@#IMG-DLM&_TB5475_00 3.POD is

Question 13

On January 1,2011,Ace Electronics paid $400,000 cash for a computer that would be used to store and process its accounting information.The computer has a 5-year useful life,after which it will be worthless because it will be obsolete.Ace Electronics uses the straight-line method to depreciate its assets.The book value of the computer at December 31,2012 is ________.

Accepted Answer

A) $400,000 
B) $320,000 
C) $240,000 
D) $160,000 
A) $400,000 
B) $320,000 
C) $240,000 
D) $160,000

Question 14

A loss results when a long-term asset is sold for less than book value.

Accepted Answer

A) True 
 B)False

Question 15

Which statement about depreciation is TRUE?

Accepted Answer

A) Depreciation means loss in economic value. 
B) Depreciation means to capitalize a cost over several accounting periods. 
C) Depreciation refers to an allocation of an asset's cost to an expense account. 
D) Depreciation means to increase net income by transferring balances from shareholders' equity. 
A) Depreciation means loss in economic value. 
B) Depreciation means to capitalize a cost over several accounting periods. 
C) Depreciation refers to an allocation of an asset's cost to an expense account. 
D) Depreciation means to increase net income by transferring balances from shareholders' equity.

Question 16

The management of Zeta Co.has decided to sell some of its long-term assets in order to generate cash.The following events occurred during the current year:
a.Sold machinery with an historical cost of $100,000 and accumulated depreciation of $66,000 for $24,000 cash.
b.Sold land with an historical cost of $40,000 for $88,000 cash.
c.Purchased new equipment for $55,000 cash.
d.Sold factory equipment with an historical cost of $120,000 and accumulated depreciation of $80,000 for $53,000 cash.
e.Sold an old office building with an historical cost of $400,000 and accumulated depreciation of $380,000 for $390,000 cash.
Required:
1.Determine the net amount of cash generated by all of the transactions combined.
2.Determine the net gain or loss from each of the transactions.What is the total net gain or loss from all of the transactions combined?

Accepted Answer

1.$24K + 88K - 55 +

Question 17

Long-term assets,like factories and equipment,are purchased for resale to customers in the normal course of operations.

Accepted Answer

A) True 
 B)False

Which of the following assets will NOT be depreciated?

Describe how to account for a piece of factory equipment from the date of purchase to the end of its useful life.

What basic information must be disclosed about long-term assets in the financial statements and accompanying footnotes?

Which depreciation method is most similar to the method that is used to calculate amortization of intangible assets?

If an adjusting entry for depreciation is NOT made at the end of the accounting period,what is the effect on net income?

Which of the following should be recorded as an expense in the period when the activity takes place?

The Internal Revenue Service requires that a corporation must use the same depreciation method on its tax return that it uses on its annual report.

Describe the impact on the financial statements of buying a piece of factory equipment for cash,using it,and then selling it for cash. On the balance sheet: On the income statement: On the statement of cash flows:

A loss results when a long-term asset is sold for less than book value.

Which statement about depreciation is TRUE?

Long-term assets,like factories and equipment,are purchased for resale to customers in the normal course of operations.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters

Exam 6: Acquisition and Use of Long-Term Assets

Which of the following assets will NOT be depreciated?

Describe how to account for a piece of factory equipment from the date of purchase to the end of its useful life.

What basic information must be disclosed about long-term assets in the financial statements and accompanying footnotes?

Which depreciation method is most similar to the method that is used to calculate amortization of intangible assets?

If an adjusting entry for depreciation is NOT made at the end of the accounting period,what is the effect on net income?

Which of the following should be recorded as an expense in the period when the activity takes place?

The Internal Revenue Service requires that a corporation must use the same depreciation method on its tax return that it uses on its annual report.

Describe the impact on the financial statements of buying a piece of factory equipment for cash,using it,and then selling it for cash. On the balance sheet: On the income statement: On the statement of cash flows:

A loss results when a long-term asset is sold for less than book value.

Which statement about depreciation is TRUE?

Long-term assets,like factories and equipment,are purchased for resale to customers in the normal course of operations.

Business: Whats It All About

Qualities of Accounting Information

Accruals and Deferrals: Timing Is Everything in Accounting

Payment for Goods and Services: Cash and Accounts Receivable

The Purchase and Sale of Inventory

Accounting for Liabilities

Accounting for Shareholders Equity

Preparing and Analyzing the Statement of Cash Flows

Using Financial Statement Analysis to Evaluate Firm Performance

Quality of Earnings, corporate Governance, and Ifrs

Filters