Question 1

The method used to calculate the depletion of a natural resource is the straight line method.

Accepted Answer

A) True 
 B)False

Question 2

On December 31, Strike Company has decided to sell one of its batting cages. The initial cost of the equipment was $310,000 with an accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. The company found a company that is willing to buy the equipment for $55,000. What is the amount of the gain or loss on this transaction?

Accepted Answer

A)  Cannot be determined 
B)  No gain or loss 
C)  Gain of $ 5,000 
D)  Gain of $55,000 
A)  Cannot be determined 
B)  No gain or loss 
C)  Gain of $ 5,000 
D)  Gain of $55,000

Question 3

All property, plant, and equipment assets are depreciated over time.

Accepted Answer

A) True 
 B)False

Question 4

A capitalized asset will appear on the balance sheet as a long term asset.

Accepted Answer

A) True 
 B)False

Question 5

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1, 2015. Compute the yearly depreciation expense using straight-line depreciation.

Accepted Answer

$54,000 @#LAT-DLM&

Question 6

The calculation for annual depreciation using the units-of-production method is

Accepted Answer

A)  (initial cost/estimated output) * the actual yearly output 
B)  (depreciable cost / yearly output) * estimated output 
C)  depreciable cost / yearly output 
D)  (depreciable cost / estimated output) * the actual yearly output 
A)  (initial cost/estimated output) * the actual yearly output 
B)  (depreciable cost / yearly output) * estimated output 
C)  depreciable cost / yearly output 
D)  (depreciable cost / estimated output) * the actual yearly output

Question 7

The cost of repairing damage to a machine during installation is debited to a fixed asset account.

Accepted Answer

A) True 
 B)False

Question 8

A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset priced at $60,000 in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, the cost basis of the new asset is

Accepted Answer

A)  $54,000 
B)  $59,500 
C)  $60,000 
D)  $60,500 
A)  $54,000 
B)  $59,500 
C)  $60,000 
D)  $60,500

Question 9

The calculation for annual depreciation using the straight-line depreciation method is

Accepted Answer

A)  initial cost / estimated useful life 
B)  depreciable cost / estimated useful life 
C)  depreciable cost * estimated useful life 
D)  initial cost * estimated useful life 
A)  initial cost / estimated useful life 
B)  depreciable cost / estimated useful life 
C)  depreciable cost * estimated useful life 
D)  initial cost * estimated useful life

Question 10

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called

Accepted Answer

A)  depletion 
B)  deferral 
C)  amortization 
D)  depreciation 
A)  depletion 
B)  deferral 
C)  amortization 
D)  depreciation

Question 11

What is the cost of the land, based upon the following data?

Accepted Answer

The answer of What is the cost of the land,...

Question 12

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories

Accepted Answer

A)  salvage and functional 
B)  physical and functional 
C)  residual and salvage 
D)  functional and residual 
A)  salvage and functional 
B)  physical and functional 
C)  residual and salvage 
D)  functional and residual

Question 13

On December 31 it was estimated that goodwill of $65,000 was impaired. In addition, a patent with an estimated useful economic life of 10 years was acquired for $60,000 on July 1.

Accepted Answer

The answer of On December 31 it was estimated that...

Question 14

Accumulated Depreciation

Accepted Answer

A)  is used to show the amount of cost expiration of intangibles 
B)  is the same as Depreciation Expense 
C)  is a contra asset account 
D)  is used to show the amount of cost expiration of natural resources 
A)  is used to show the amount of cost expiration of intangibles 
B)  is the same as Depreciation Expense 
C)  is a contra asset account 
D)  is used to show the amount of cost expiration of natural resources

Question 15

All leases are classified as either

Accepted Answer

A)  capital leases or long-term leases 
B)  capital leases or operating leases 
C)  operating leases or current leases 
D)  long-term leases or current leases 
A)  capital leases or long-term leases 
B)  capital leases or operating leases 
C)  operating leases or current leases 
D)  long-term leases or current leases

Question 16

Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and equipment.

Accepted Answer

A) True 
 B)False

Question 17

On December 31, Strike Company has decided to trade-in one of its batting cages for another one that has a cost of $500,000. The seller of the batting cage is willing to allow a trade-in amount of $11,000. The initial cost of the old equipment was $215,000 with an accumulated depreciation of $185,000. Depreciation has been taken up to the end of the year. The difference will be paid in cash. What is the amount of the gain or loss on this transaction?

Accepted Answer

A)  Loss of $11,000 
B)  Gain of $11,000 
C)  Loss of $19,000 
D)  No loss or gain will be recorded. 
A)  Loss of $11,000 
B)  Gain of $11,000 
C)  Loss of $19,000 
D)  No loss or gain will be recorded.

Question 18

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

Accepted Answer

A)  $ 5,000 
B)  $35,000 
C)  $21,000 
D)  $45,000 
A)  $ 5,000 
B)  $35,000 
C)  $21,000 
D)  $45,000

Question 19

All of the following below are needed for the calculation of straight-line depreciation except

Accepted Answer

A)  cost 
B)  residual value 
C)  estimated life 
D)  units produced 
A)  cost 
B)  residual value 
C)  estimated life 
D)  units produced

Question 20

Residual value is  not incorporated in the initial calculations for double-declining-balance depreciation.

Accepted Answer

A) True 
 B)False

Exam 9: Fixed Assets and Intangible Assets

The method used to calculate the depletion of a natural resource is the straight line method.

All property, plant, and equipment assets are depreciated over time.

A capitalized asset will appear on the balance sheet as a long term asset.

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1, 2015. Compute the yearly depreciation expense using straight-line depreciation.

The calculation for annual depreciation using the units-of-production method is

The cost of repairing damage to a machine during installation is debited to a fixed asset account.

A fixed asset with a cost of $52,000 and accumulated depreciation of $47,500 is traded for a similar asset priced at $60,000 in a transaction with commercial substance. Assuming a trade-in allowance of $5,000, the cost basis of the new asset is

The calculation for annual depreciation using the straight-line depreciation method is

The process of transferring the cost of metal ores and other minerals removed from the earth to an expense account is called

What is the cost of the land, based upon the following data?

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories

On December 31 it was estimated that goodwill of $65,000 was impaired. In addition, a patent with an estimated useful economic life of 10 years was acquired for $60,000 on July 1.

Accumulated Depreciation

All leases are classified as either

Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant and equipment.

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

All of the following below are needed for the calculation of straight-line depreciation except

Residual value is not incorporated in the initial calculations for double-declining-balance depreciation.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

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