Question 1

Land acquired as a speculation is reported under Investments on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 2

Fixed assets are ordinarily presented in the balance sheet

Accepted Answer

A)  at current market values 
B)  at replacement costs 
C)  at cost less accumulated depreciation 
D)  in a separate section along with intangible assets 
A)  at current market values 
B)  at replacement costs 
C)  at cost less accumulated depreciation 
D)  in a separate section along with intangible assets

Question 3

When cities give land or buildings to a company to locate in the community, no entry is made since there is no cost to the company.

Accepted Answer

A) True 
 B)False

Question 4

The accumulated depletion account is

Accepted Answer

A)  an expense account 
B)  an intangible asset account 
C)  reported on the income statement as other expense 
D)  reported on the balance sheet as a deduction from the cost of the mineral deposit 
A)  an expense account 
B)  an intangible asset account 
C)  reported on the income statement as other expense 
D)  reported on the balance sheet as a deduction from the cost of the mineral deposit

Question 5

The normal balance of the accumulated depreciation account is debit.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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 8

When exchanging equipment, if the trade-in allowance is greater than the book value a loss results.

Accepted Answer

A) True 
 B)False

Question 9

Assets may be grouped according to common traits and depreciated by using a single composite rate.

Accepted Answer

A) True 
 B)False

Question 10

It is necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

Accepted Answer

A) True 
 B)False

Question 11

Residual value is also known as all of the following except

Accepted Answer

A)  scrap value 
B)  trade in value 
C)  salvage value 
D)  net book value 
A)  scrap value 
B)  trade in value 
C)  salvage value 
D)  net book value

Question 12

Revising depreciation estimates does affect the amounts of depreciation expense recorded in past periods.

Accepted Answer

A) True 
 B)False

Question 13

Prepare the following journal entries and calculations:

Accepted Answer

The answer of Prepare the following journal entries and calculations:
...

Question 14

When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry

Accepted Answer

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

Question 15

Capital expenditures are costs that are charged to Stockholders' Equity accounts.

Accepted Answer

A) True 
 B)False

Question 16

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 17

A number of major structural repairs completed at the beginning of the current fiscal year at a cost of $1,000,000 are expected to extend the life of a building 10 years beyond the original estimate. The original cost of the building was $6,552,000, and it has been depreciated by the straight-line method for 25 years. Estimated residual value is negligible and has been ignored. The related accumulated depreciation account after the depreciation adjustment at the end of the preceding fiscal year is $4,550,000.

Accepted Answer

The answer of A number of major structural repairs completed...

Question 18

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

Accepted Answer

A) True 
 B)False

Question 19

Golden Sales has bought $135,000 in fixed assets on January 1st associated with sales equipment. The residual value of these assets is estimated at $10,000 after they service their 4 year service life. Golden Sales managers want to evaluate the options of depreciation.
(a) Compute the annual straight-line depreciation and provide the sample depreciation journal entry to be posted at the end of each of the years.
(b) Write the journal entries for each year of the service life for these assets using the double- declining balance method.

Accepted Answer

(a)
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Question 20

An estimate of the amount which an asset can be sold at the end of its useful life is called residual value.

Accepted Answer

A) True 
 B)False

Exam 10: Fixed Assets and Intangible Assets

Land acquired as a speculation is reported under Investments on the balance sheet.

Fixed assets are ordinarily presented in the balance sheet

When cities give land or buildings to a company to locate in the community, no entry is made since there is no cost to the company.

The accumulated depletion account is

The normal balance of the accumulated depreciation account is debit.

Expenditures for research and development are generally recorded as

When exchanging equipment, if the trade-in allowance is greater than the book value a loss results.

Assets may be grouped according to common traits and depreciated by using a single composite rate.

It is necessary for a company to use the same depreciation method for financial statements and for determining income taxes.

Residual value is also known as all of the following except

Revising depreciation estimates does affect the amounts of depreciation expense recorded in past periods.

Prepare the following journal entries and calculations:

When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry

Capital expenditures are costs that are charged to Stockholders' Equity accounts.

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):

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

An estimate of the amount which an asset can be sold at the end of its useful life is called residual value.

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

Filters