Question 1

A characteristic of a fixed asset is that it is

Accepted Answer

A)  intangible 
B)  used in the operations of a business 
C)  held for sale in the ordinary course of the business 
D)  a short-term investment 
A)  intangible 
B)  used in the operations of a business 
C)  held for sale in the ordinary course of the business 
D)  a short-term investment

Question 2

An asset was purchased for $120,000 on January 1, 2010 and originally estimated to have a useful life of 10 years with a residual value of $10,000. At the beginning of 2012, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $2,000. Calculate the 2012 depreciation expense using the revised amounts and straight line method.

Accepted Answer

A)  $25,000 
B)  $11,000 
C)  $24,000 
D)  $24,500 
A)  $25,000 
B)  $11,000 
C)  $24,000 
D)  $24,500

Question 3

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000. Compute the depreciation for the first and second years of use by each of the following methods:
   (Round the answer to the nearest dollar.)

Accepted Answer

The answer of Equipment purchased at the beginning of the...

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

In a lease contract, the party who legally owns the asset is the

Accepted Answer

A)  lessee 
B)  lessor 
C)  operator 
D)  banker 
A)  lessee 
B)  lessor 
C)  operator 
D)  banker

Question 6

When depreciation estimates are revised, all years of the asset's life are affected.

Accepted Answer

A) True 
 B)False

Question 7

To a major resort, timeshare properties would be classified as property, plant and equipment.

Accepted Answer

A) True 
 B)False

Question 8

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 9

On July 1, 2010, Howard Co. acquired patents rights for $40,000. The patent has a useful life of 8 years and a legal life of 15 years. Journalize the adjusting entry on December 31, 2010 to recognize the amortization.
Journal

Accepted Answer

The answer of On July 1, 2010, Howard Co. acquired...

Question 10

XYZ Co. incurred the following costs related to the office building used in operating its sports supply company:
   Classify each of the costs as a capital expenditure or a revenue expenditure. For those costs identified as capital expenditures, classify each as an additional or replacement component.

Accepted Answer

a. Revenue expenditure
b. Capital expend

Question 11

Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. It is estimated that the machine has an estimated 1,000,000 copies. This year 315,000 copies were made. Determine the (a) depreciable cost, (b) depreciation rate, and (c) the units-of-production depreciation for the year.

Accepted Answer

The answer of Copy equipment was acquired at the beginning...

Question 12

When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following:

Accepted Answer

A)  debit Cash and Accumulated Depreciation; credit Machinery 
B)  debit Machinery; credit Cash and Accumulated Depreciation 
C)  debit Cash and Machinery; credit Accumulated Depreciation 
D)  debit Cash and Depreciation Expense; credit Accumulated Depreciation 
A)  debit Cash and Accumulated Depreciation; credit Machinery 
B)  debit Machinery; credit Cash and Accumulated Depreciation 
C)  debit Cash and Machinery; credit Accumulated Depreciation 
D)  debit Cash and Depreciation Expense; credit Accumulated Depreciation

Question 13

Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are betterments.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is true?

Accepted Answer

A)  If using the double-declining-balance the total amount of depreciation expense during the life of the asset will be the highest. 
B)  If using the units-of-production method, it is possible to depreciate more than the depreciable cost. 
C)  If using the straight line method, the amount of depreciation expense during the first year is higher than that of the double-declining-balance. 
D)  Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same. 
A)  If using the double-declining-balance the total amount of depreciation expense during the life of the asset will be the highest. 
B)  If using the units-of-production method, it is possible to depreciate more than the depreciable cost. 
C)  If using the straight line method, the amount of depreciation expense during the first year is higher than that of the double-declining-balance. 
D)  Regardless of the depreciation method, the amount of total depreciation expense during the life of the asset will be the same.

Question 15

Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,800 and an estimated useful life of 8 years. Determine the (a) depreciable cost, (b) straight-line rate, and (c) annual straight-line depreciation.

Accepted Answer

The answer of Computer equipment was acquired at the beginning...

Question 16

The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage.

Accepted Answer

(1) 50% (1/2)
(2) 12.5% (1/8)

Question 19

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 20

The journal entry for recording an operating lease payment would

Accepted Answer

A)  be a memo entry only 
B)  debit the fixed asset and credit Cash 
C)  debit an expense and credit Cash 
D)  debit a liability and credit Cash 
A)  be a memo entry only 
B)  debit the fixed asset and credit Cash 
C)  debit an expense and credit Cash 
D)  debit a liability and credit Cash

Exam 10: Fixed Assets and Intangible Assets

A characteristic of a fixed asset is that it is

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

In a lease contract, the party who legally owns the asset is the

When depreciation estimates are revised, all years of the asset's life are affected.

To a major resort, timeshare properties would be classified as property, plant and equipment.

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

On July 1, 2010, Howard Co. acquired patents rights for $40,000. The patent has a useful life of 8 years and a legal life of 15 years. Journalize the adjusting entry on December 31, 2010 to recognize the amortization. Journal

XYZ Co. incurred the following costs related to the office building used in operating its sports supply company: Classify each of the costs as a capital expenditure or a revenue expenditure. For those costs identified as capital expenditures, classify each as an additional or replacement component.

When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following:

Expenditures that increase operating efficiency or capacity for the remaining useful life of a fixed asset are betterments.

Which of the following is true?

Computer equipment was acquired at the beginning of the year at a cost of $65,000 that has an estimated residual value of $3,800 and an estimated useful life of 8 years. Determine the (a) depreciable cost, (b) straight-line rate, and (c) annual straight-line depreciation.

The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate.

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

Convert each of the following estimates of useful life to a straight-line depreciation rate, stated as a percentage.

Accumulated Depreciation

The journal entry for recording an operating lease payment would

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

Managerial Accounting Concepts and Principles

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

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