Question 1

Another name for a capital expenditure is:

Accepted Answer

A) Revenue expenditure 
B) Asset expenditure 
C) Long-term expenditure 
D) Contributed capital expenditure 
E) Balance sheet expenditure 
A) Revenue expenditure 
B) Asset expenditure 
C) Long-term expenditure 
D) Contributed capital expenditure 
E) Balance sheet expenditure

Question 2

_____________________ are revenue expenditures to keep an asset in normal,good operating condition; they are necessary if an asset is to perform to expectations over its useful life.

Accepted Answer

The answer of _____________________ are revenue expenditures to keep an...

Question 3

Explain the purpose of and method of depreciation for partial years.

Accepted Answer

Partial years' depreciation is often req

Question 4

Coors reported net sales of $2,463 million and average total assets of $1,546 million.Its total asset turnover is equal to 1.59.

Accepted Answer

A) True 
 B)False

Question 5

Cobb Corn Company purchases a large lot on which a building is located.The negotiated purchase price is $2,500,000 for the lot and the building.The company pays $71,500 in commissions and taxes.The appraisal values of each items is as follows: Land $650,000,Building $1,750,000,Land Improvements $120,000.What is the appropriate amount to be entered into the general journal for the building?

Accepted Answer

A)  $1,750,000 
B) $1,784,621 
C) $1,735,000 
D) $1,685,379 
E) $1,730,000 
A)  $1,750,000 
B) $1,784,621 
C) $1,735,000 
D) $1,685,379 
E) $1,730,000

Question 6

Assume HYPERLINK "http://www.sambazon.com/"Sambazon.com sold an acai processing machine for $172,000 cash.If accumulated depreciation on the sale date was $58,311 and a gain of $6,721 was recognized on the sale,what was the original cost of the asset?

Accepted Answer

A) $223,590 
B) $216,869 
C) $165,279 
D) $65,032 
E) $113,689 
A) $223,590 
B) $216,869 
C) $165,279 
D) $65,032 
E) $113,689

Question 7

Revising estimates of the useful life or salvage value of a plant asset is referred to as a ____________________________________________.

Accepted Answer

Change in

Question 8

A company purchased mining property for $1,560,000.The property was estimated to contain 13,000,000 tons of ore.In the current year,the company removed and sold 247,000 tons of ore.Calculate the depletion expense for the current year.

Accepted Answer

$1,560,000/13,000,00

Question 9

On January 2 of the current year,a company purchased a patent for $35,000 with a useful life of 10 years.Prepare the journal entry to amortize the patent at the end of the first year.

Accepted Answer

The answer of On January 2 of the current year,a...

Question 10

An ore deposit costing $800,000 is expected to produce 1,600,000 tons of ore.A total of 70,000 tons are mined and sold in the current year.The depletion expense for the current year is $35,000.

Accepted Answer

A) True 
 B)False

Question 11

Prepare journal entries to record the following transactions of a company during the current year:
 \(\begin{array}{|l|l|}
\hline \text { Mar. 1 } & \begin{array}{l}
\text { Purchased a truck for } \$ 30,000 \text { with a 5-year useful life and a } \$ 5,000 \text { salvage value. } \
\text { Also paid } 6 \% \text { sales tax, } \$ 350 \text { for the annual truck license, } \$ 500 \text { to paint the truck } \
\text { with the company's colors and name, and } \$ 1,500 \text { for spare parts. All payments } \
\text { were in cash. }
\end{array} \
\hline \text { May 10 } & \begin{array}{l}
\text { Purchased a garage from a neighboring business with a } 7 \%, 4-\text { year, } \$ 75,000 \text { note. } \
\text { The seller's book value for the garage was } \$ 42,750 . \text { The estimated remaining } \
\text { useful life of the garage is } 10 \text { years. }
\end{array} \
\hline \text { June 1 } & \text { Paid } \$ 1,000 \text { cash to replace (uninsured) garage windows broken during a storm. } \
\hline \text { Aug 25 } & \begin{array}{l}
\text { Purchased used office equipment for } \$ 14,700 \text { cash. Sales tax was } \$ 825, \text { freight } \
\text { costs } \$ 250, \text { and reconditioning costs } \$ 900, \text { all of which were paid in cash. The } \
\text { estimated useful life of the equipment is 3 years and salvage value is } \$ 500 .
\end{array} \
\hline \text { Oct. 5 } & \begin{array}{l}
\text { Purchased store equipment for } \$ 24,500 \text { cash. Paid } \$ 1,470 \text { in sales tax. } \$ 550 \text { for } \
\text { repairs incurred from an accident during installation, } \$ 3,200 \text { for a special base to } \
\text { house the equipment, and } \$ 2,600 \text { for supplies to be used during periodic preventive } \
\text { maintenance. The estimated useful life of the equipment is } 8 \text { years and salvage } \
\text { value is } \$ 1,200 .
\end{array} \
\hline
\end{array}\)

Accepted Answer

\[\begin{array} { | l | l | r | r | } 
\

Question 12

A company paid $150,000,plus a 6% commission and $4,000 in closing costs for a property.The property included land appraised at $87,500,land improvements appraised at $35,000 and a building appraised at $52,500.What should be the allocation of this property's costs in the company's accounting records?

Accepted Answer

A) Land $75,000; Land Improvements,$30,000; Building,$45,000 
B) Land $75,000; Land Improvements,$30,800; Building,$46,200 
C) Land $81,500; Land Improvements,$32,600; Building,$48,900 
D) Land $79,500; Land Improvements,$32,600; Building,$47,700 
E) Land $87,500; Land Improvements; $35,000; Building; $52,500 
A) Land $75,000; Land Improvements,$30,000; Building,$45,000 
B) Land $75,000; Land Improvements,$30,800; Building,$46,200 
C) Land $81,500; Land Improvements,$32,600; Building,$48,900 
D) Land $79,500; Land Improvements,$32,600; Building,$47,700 
E) Land $87,500; Land Improvements; $35,000; Building; $52,500

Question 13

A company purchased equipment for $325,000 on January 2,2010.The company expects the equipment to last for eight years or 60,000 hours of operation,with an estimated salvage value of $25,000.During 2010,the equipment was in operations for 8,000 hours,while in 2011 the equipment was in operations for 8,700 hours.Compute the depreciation expense relating to the equipment for 2010 and 2011 using the following depreciation methods:
a. Straight-line
b. Double-declining-balance
c. Units-of-production.

Accepted Answer

a.($325,000 - $25,000)/8 = $37,500 for b

Question 14

A company purchased a computer system on January 1,2009,for $1,600,000.Prepare the journal entries to record depreciation for the first 6 months of 2011 and the sale of the computer assuming it is sold on July 1,2011,for $1,000,000 cash.The straight-line method of depreciation was used based on an expected life of six years and a salvage value of $130,000.

Accepted Answer

None

Question 15

Obsolescence:

Accepted Answer

A) Occurs when an asset is at the end of its useful life 
B) Refers to a plant asset that is no longer useful in producing goods and services 
C) Refers to the insufficient capacity of a company's plant assets to meet the company's productive demands 
D) Occurs when an asset's salvage value is less than its replacement cost 
E) Does not affect plant assets 
A) Occurs when an asset is at the end of its useful life 
B) Refers to a plant asset that is no longer useful in producing goods and services 
C) Refers to the insufficient capacity of a company's plant assets to meet the company's productive demands 
D) Occurs when an asset's salvage value is less than its replacement cost 
E) Does not affect plant assets

Question 16

A company had net sales of $789,765 and average assets of $658,137.Calculate the company's total asset turnover.

Accepted Answer

$789,765/$

Question 17

January 2010,Giant Green Company pays $3,000,000 for a tract of land with two buildings on it.It plans to demolish Building 1 and build a new store in its place.Building 2 will be a company office; it is appraised at $742,000,with a useful life of 25 years and a $75,000 salvage value.A lighted parking lot near Building 1 has improvements (Land Improvements 1)valued at $400,500 that are expected to last another 18 years with no salvage value.Without the buildings and improvements,the tract of land is valued at $2,020,600.Giant Green also incurs the following additional costs:
$\begin{array}{llr}
  \text { Cost to demolish Building 1 } &\$400,200\
 \text {Cost of additional land grading  } &200,000\
 \text {Cost to construct new building (Building 3), having a useful life of 25  } &\
 \text {years and a  \$ 322,000 salvage value  } &3,851,000\
 \text { Cost of new land improvements (Land Improvements 2) near Building 2 } &\
 \text { having a 20 -year useful life and no salvage value } &122,000\
\end{array}$

What is the amount that should be recorded for Land?

Accepted Answer

A)  $2,516,600 
B) $2,020,600 
C) $3,851,000 
D) $1,916,400 
E) $3,000,000 
A)  $2,516,600 
B) $2,020,600 
C) $3,851,000 
D) $1,916,400 
E) $3,000,000

Question 18

A company purchased a truck on October 1 of the current year at a cost of $40,000.The truck is expected to last six years and have a salvage value of $2,200.The company's annual accounting period ends on December 31.
1.What is the depreciation expense for the current year,assuming the straight-line method is used?
2.What is the depreciation expense for the current year,assuming the double-declining-balance method is used?

Accepted Answer

1.[($40,000 - $2,200

Question 19

Total asset cost plus depreciation expense equals book value.

Accepted Answer

A) True 
 B)False

Question 20

On July 1 of the current year,a company purchased and placed in service a machine with a cost of $240,000.The company estimated the machine's useful life to be four years or 60,000 units of output with an estimated salvage value of $60,000.During the current year,15,000 units were produced.
Prepare the necessary December 31 adjusting journal entry to record depreciation for the current year assuming the company uses:

Accepted Answer

A)  The straight-line method of depreciation 
B)  The units-of-production method of depreciation 
C)  The double-declining balance method of depreciation 
A)  The straight-line method of depreciation 
B)  The units-of-production method of depreciation 
C)  The double-declining balance method of depreciation

Another name for a capital expenditure is:

_____________________ are revenue expenditures to keep an asset in normal,good operating condition; they are necessary if an asset is to perform to expectations over its useful life.

Explain the purpose of and method of depreciation for partial years.

Coors reported net sales of $2,463 million and average total assets of $1,546 million.Its total asset turnover is equal to 1.59.

Assume HYPERLINK "http://www.sambazon.com/"Sambazon.com sold an acai processing machine for $172,000 cash.If accumulated depreciation on the sale date was $58,311 and a gain of $6,721 was recognized on the sale,what was the original cost of the asset?

Revising estimates of the useful life or salvage value of a plant asset is referred to as a ____________________________________________.

A company purchased mining property for $1,560,000.The property was estimated to contain 13,000,000 tons of ore.In the current year,the company removed and sold 247,000 tons of ore.Calculate the depletion expense for the current year.

On January 2 of the current year,a company purchased a patent for $35,000 with a useful life of 10 years.Prepare the journal entry to amortize the patent at the end of the first year.

An ore deposit costing $800,000 is expected to produce 1,600,000 tons of ore.A total of 70,000 tons are mined and sold in the current year.The depletion expense for the current year is $35,000.

Obsolescence:

A company had net sales of $789,765 and average assets of $658,137.Calculate the company's total asset turnover.

Total asset cost plus depreciation expense equals book value.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters

Exam 8: Reporting and Analyzing Long-Term Assets

Another name for a capital expenditure is:

_____________________ are revenue expenditures to keep an asset in normal,good operating condition; they are necessary if an asset is to perform to expectations over its useful life.

Explain the purpose of and method of depreciation for partial years.

Coors reported net sales of $2,463 million and average total assets of $1,546 million.Its total asset turnover is equal to 1.59.

Assume HYPERLINK "http://www.sambazon.com/"Sambazon.com sold an acai processing machine for $172,000 cash.If accumulated depreciation on the sale date was $58,311 and a gain of $6,721 was recognized on the sale,what was the original cost of the asset?

Revising estimates of the useful life or salvage value of a plant asset is referred to as a ____________________________________________.

A company purchased mining property for $1,560,000.The property was estimated to contain 13,000,000 tons of ore.In the current year,the company removed and sold 247,000 tons of ore.Calculate the depletion expense for the current year.

On January 2 of the current year,a company purchased a patent for $35,000 with a useful life of 10 years.Prepare the journal entry to amortize the patent at the end of the first year.

An ore deposit costing $800,000 is expected to produce 1,600,000 tons of ore.A total of 70,000 tons are mined and sold in the current year.The depletion expense for the current year is $35,000.

Obsolescence:

A company had net sales of $789,765 and average assets of $658,137.Calculate the company's total asset turnover.

Total asset cost plus depreciation expense equals book value.

Introducing Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Investments and International Operations

Reporting and Analyzing Partnerships

Reporting and Preparing Special Journals

Filters