Question 1

Expected useful life is

Accepted Answer

A)  calculated when the asset is sold. 
B)  estimated at the time that the asset is placed in service. 
C)  determined each year that the depreciation calculation is made. 
D)  none of the answers are correct. 
A)  calculated when the asset is sold. 
B)  estimated at the time that the asset is placed in service. 
C)  determined each year that the depreciation calculation is made. 
D)  none of the answers are correct.

Question 2

Regardless of the depreciation method, the amount that will be depreciated during the life of the asset will be the same.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following below is an example of a capital expenditure?

Accepted Answer

A)  cleaning the carpet in the front room 
B)  tune-up for a company truck 
C)  replacing an engine in a company car 
D)  replacing all burned-out light bulbs in the factory 
A)  cleaning the carpet in the front room 
B)  tune-up for a company truck 
C)  replacing an engine in a company car 
D)  replacing all burned-out light bulbs in the factory

Question 4

When a company establishes an outstanding reputation and has a competitive advantage because of it, the company should record goodwill on its financial statements.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Minerals removed from the earth are classified as intangible assets.

Accepted Answer

A) True 
 B)False

Question 8

Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c) Buildings, (d) Machinery and Equipment, or (e) other account.

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 9

The cost of replacing an engine in a truck is an example of ordinary maintenance.

Accepted Answer

A) True 
 B)False

Question 10

An operating lease is accounted for as if the lessee has purchased the asset.

Accepted Answer

A) True 
 B)False

Question 11

On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated depreciation of $16,000.
Assume the transaction has commercial substance.

Accepted Answer

a)
 @#IMG-DLM&_TB208

Question 12

Equipment was acquired at the beginning of the year at a cost of $75,000. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,500.

Accepted Answer

a) $11,250
b) $6,500

Question 13

A copy machine acquired on March 1, 2011 with a cost of $705 has an estimated useful life of 4 years. Assuming that it will have a residual value of $125, determine the depreciation for the first year by the double-declining-balance method.
First year depreciation = $293.75 [$352.50 x (10 /12)]

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 14

The depreciable cost of a building is the same as its acquisition cost.

Accepted Answer

A) True 
 B)False

Question 15

If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, and a trade-in allowance of $15,000 is granted by the seller, if the transaction is deemed to have commercial substance, the buyer would report a gain on disposal of fixed assets of $5,000.

Accepted Answer

A) True 
 B)False

Question 16

Expenditures for research and development are generally recorded as

Accepted Answer

A)  current operating expenses 
B)  assets and amortized over their estimated useful life 
C)  assets and amortized over 40 years 
D)  current assets 
A)  current operating expenses 
B)  assets and amortized over their estimated useful life 
C)  assets and amortized over 40 years 
D)  current assets

Question 17

When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with the following entry (assuming the exchange was considered to have commercial substance):

Accepted Answer

A)  debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Disposal 
B)  debit Machinery and Accumulated Depreciation; credit Machinery and Cash 
C)  debit Cash and Machinery; credit Accumulated Depreciation 
D)  debit Cash and Machinery; credit Accumulated Depreciation and Machinery 
A)  debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain on Disposal 
B)  debit Machinery and Accumulated Depreciation; credit Machinery and Cash 
C)  debit Cash and Machinery; credit Accumulated Depreciation 
D)  debit Cash and Machinery; credit Accumulated Depreciation and Machinery

Question 18

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31.

Accepted Answer

@#IMG-DLM&_TB2085_00

Question 19

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 20

When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.

Accepted Answer

A) True 
 B)False

Expected useful life is

Regardless of the depreciation method, the amount that will be depreciated during the life of the asset will be the same.

Which of the following below is an example of a capital expenditure?

When a company establishes an outstanding reputation and has a competitive advantage because of it, the company should record goodwill on its financial statements.

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

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

Minerals removed from the earth are classified as intangible assets.

Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c) Buildings, (d) Machinery and Equipment, or (e) other account.

The cost of replacing an engine in a truck is an example of ordinary maintenance.

An operating lease is accounted for as if the lessee has purchased the asset.

On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated depreciation of $16,000. Assume the transaction has commercial substance.

Equipment was acquired at the beginning of the year at a cost of $75,000. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,500.

A copy machine acquired on March 1, 2011 with a cost of $705 has an estimated useful life of 4 years. Assuming that it will have a residual value of $125, determine the depreciation for the first year by the double-declining-balance method. First year depreciation = $293.75 [$352.50 x (10 /12)]

The depreciable cost of a building is the same as its acquisition cost.

If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, and a trade-in allowance of $15,000 is granted by the seller, if the transaction is deemed to have commercial substance, the buyer would report a gain on disposal of fixed assets of $5,000.

Expenditures for research and development are generally recorded as

When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with the following entry (assuming the exchange was considered to have commercial substance):

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31.

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

When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters

Exam 10: Fixed Assets and Intangible Assets

Expected useful life is

Regardless of the depreciation method, the amount that will be depreciated during the life of the asset will be the same.

Which of the following below is an example of a capital expenditure?

When a company establishes an outstanding reputation and has a competitive advantage because of it, the company should record goodwill on its financial statements.

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

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

Minerals removed from the earth are classified as intangible assets.

Identify each of the following expenditures as chargeable to (a) Land, (b) Land Improvements, (c) Buildings, (d) Machinery and Equipment, or (e) other account.

The cost of replacing an engine in a truck is an example of ordinary maintenance.

An operating lease is accounted for as if the lessee has purchased the asset.

On the first day of the fiscal year, a new walk-in cooler with a list price of $58,000 was acquired in exchange for an old cooler and $44,000 cash. The old cooler had a cost of $25,000 and accumulated depreciation of $16,000. Assume the transaction has commercial substance.

Equipment was acquired at the beginning of the year at a cost of $75,000. The equipment was depreciated using the straight-line method based upon an estimated useful life of 6 years and an estimated residual value of $7,500.

A copy machine acquired on March 1, 2011 with a cost of $705 has an estimated useful life of 4 years. Assuming that it will have a residual value of $125, determine the depreciation for the first year by the double-declining-balance method. First year depreciation = $293.75 [$352.50 x (10 /12)]

The depreciable cost of a building is the same as its acquisition cost.

If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, and a trade-in allowance of $15,000 is granted by the seller, if the transaction is deemed to have commercial substance, the buyer would report a gain on disposal of fixed assets of $5,000.

Expenditures for research and development are generally recorded as

When a company exchanges machinery and receives a trade-in allowance greater than the book value, this transaction would be recorded with the following entry (assuming the exchange was considered to have commercial substance):

Equipment costing $80,000 with a useful life of 10 years and a residual value of $8,000 has been depreciated for 6 years by the straight-line method. Assume a fiscal year ending December 31.

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

When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account.

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting Systems

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Current Liabilities and Payroll

Accounting for Partnerships and Limited Liability Companies

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Filters