Question 1

In recording the acquisition cost of an entire business:

Accepted Answer

A) goodwill is recorded as the excess of cost over the fair market value of identifiable net assets. 
B) assets are recorded at the seller's book values. 
C) goodwill,if it exists,is never recorded. 
D) goodwill is recorded as the excess of cost over the book value of identifiable net assets. 
A) goodwill is recorded as the excess of cost over the fair market value of identifiable net assets. 
B) assets are recorded at the seller's book values. 
C) goodwill,if it exists,is never recorded. 
D) goodwill is recorded as the excess of cost over the book value of identifiable net assets.

Question 2

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the income statement.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 3

Your company has net sales revenue of $36 million during the year.At the beginning of the year,fixed assets are $8 million.At the end of the year,fixed assets are $10 million.What is the fixed asset turnover ratio?

Accepted Answer

A) 4.5 
B) 4.0 
C) 2.0 
D) 3.6 
A) 4.5 
B) 4.0 
C) 2.0 
D) 3.6

Question 4

If the double-declining balance method were used to amortize a building that has a 10-year useful life and a residual value equal to 10% of the building's original cost,what amortization rate would be used?

Accepted Answer

A) 9% 
B) 10% 
C) 18% 
D) 20% 
A) 9% 
B) 10% 
C) 18% 
D) 20%

Question 5

Your company buys a computer server,which it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

Accepted Answer

A) the total length of time the server is used to produce output for your company. 
B) eleven years. 
C) the total length of time until the server can no longer function. 
D) three years. 
A) the total length of time the server is used to produce output for your company. 
B) eleven years. 
C) the total length of time until the server can no longer function. 
D) three years.

Question 6

ABC Co.purchased land and building at a price of $480,000.ABC also incurred a real estate broker's fee of $5,000 and legal fees of $2,000 to complete the purchase.ABC paid $3,000 to obtain a real estate appraisal prior to the purchase.The appraisal indicated that,valued separately,the land was worth $260,000 and the building was worth $240,000.The land should be recorded in the accounting records for:

Accepted Answer

A) $249,600. 
B) $253,240. 
C) $254,800. 
D) $259,600. 
A) $249,600. 
B) $253,240. 
C) $254,800. 
D) $259,600.

Question 7

How does an asset impairment loss impact a company's financial statements?

Accepted Answer

A) Raise expenses and lower both revenue and net income. 
B) Lower assets,shareholders' equity,and net income. 
C) Raise expenses and lower net income with no effect on any other items. 
D) Raise liabilities and lower shareholders' equity. 
A) Raise expenses and lower both revenue and net income. 
B) Lower assets,shareholders' equity,and net income. 
C) Raise expenses and lower net income with no effect on any other items. 
D) Raise liabilities and lower shareholders' equity.

Question 8

Under the cost principle:

Accepted Answer

A) only reasonable and necessary costs of acquiring an asset should be recorded as a cost of the asset. 
B) costs of preparing an asset for use should never be recorded as part of the cost of the asset. 
C) all reasonable and necessary costs of acquiring an asset and preparing it for use should be recorded as a cost of the asset. 
D) only the actual purchase price of the asset is recorded as the cost of the asset. 
A) only reasonable and necessary costs of acquiring an asset should be recorded as a cost of the asset. 
B) costs of preparing an asset for use should never be recorded as part of the cost of the asset. 
C) all reasonable and necessary costs of acquiring an asset and preparing it for use should be recorded as a cost of the asset. 
D) only the actual purchase price of the asset is recorded as the cost of the asset.

Question 9

When a company sells a long-lived asset,shareholders' equity will change by the:

Accepted Answer

A) amount of the sale. 
B) amount of the asset's book value. 
C) amount of the asset's accumulated amortization. 
D) difference between the sale price and the asset's book value. 
A) amount of the sale. 
B) amount of the asset's book value. 
C) amount of the asset's accumulated amortization. 
D) difference between the sale price and the asset's book value.

Question 10

What is the adjusted balance in the Accumulated amortization account at the end of 2010?

Accepted Answer

A) $3,200 
B) $4,800 
C) $9,600. 
D) $12,800. 
A) $3,200 
B) $4,800 
C) $9,600. 
D) $12,800.

Question 11

If a company builds its own facility,only the cost of materials is capitalized.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 12

Match the term and the definition.Not all definitions will be used.
_____ Amortization
_____ Capitalized interest
_____ Licensing right
_____ Least and latest rule
_____ Voluntary disposal
_____ Fixed asset turnover ratio
_____ Copyright
_____ Amortization schedule
_____ Involuntary disposal
A.Allocating the cost of tangible assets over their limited useful life.
B.Generally accepted accounting principle that a company must report assets at the lower of their most recent market value or acquisition cost.
C.Asset cost minus residual value.
D.Net income divided by average total assets.
E.Allocating the cost of intangible assets over their limited useful life.
F.A method of calculating how a company will use different amortization methods for an asset.
G.When a company is no longer able to use an asset because of events beyond its control.
H.Grants the exclusive right to sell or use a creative work.
I.A cumulative record of amortization expense,accumulated amortization,and book value.
J.The cost of financing the self-construction of a tangible asset.
K.Net sales revenue divided by average net fixed assets.
L.The principle that companies wish to pay the lowest possible tax at the last possible time.
M.Also known as book value.
N.A contractual agreement that allows limited use of a property.
O.How interest payments are recorded as liabilities on the balance sheet.
P.When a company decides it no longer wants to hold an asset but sells,trades,or donates it instead.

Accepted Answer

The answer of Match the term and the definition.Not all...

Question 13

The main difference between ordinary repairs and extraordinary repairs is:

Accepted Answer

A) ordinary repairs cost less. 
B) ordinary repairs are expenditures for routine maintenance and upkeep,whereas extraordinary repairs increase an asset economic usefulness in the future through increased efficiency,capacity,or longer life. 
C) extraordinary repairs only maintain the asset for a short time,whereas ordinary repairs increase the usefulness of assets beyond their original condition. 
D) extraordinary repairs are expenses,not expenditures. 
A) ordinary repairs cost less. 
B) ordinary repairs are expenditures for routine maintenance and upkeep,whereas extraordinary repairs increase an asset economic usefulness in the future through increased efficiency,capacity,or longer life. 
C) extraordinary repairs only maintain the asset for a short time,whereas ordinary repairs increase the usefulness of assets beyond their original condition. 
D) extraordinary repairs are expenses,not expenditures.

Question 14

When a company records an asset impairment loss,it will reduce net income for that period.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 15

A company paid $500,000 to purchase equipment and $15,000 to have the equipment delivered to and installed in the company's production facilities.Commercial use of the equipment began on May 1,2009.The estimated residual value of the equipment is $5,000.The equipment is expected to be used a total of 28,000 hours throughout its estimated useful life of six years.The company has an October 31,year-end and had used the equipment a total of 11,200 hours prior to the year-end.Using the units-of-production method,what amount of amortization expense (to the nearest thousand)would the company report for this equipment in the income statement prepared for the year ended October 31,2009?

Accepted Answer

A) $102,000 
B) $198,000 
C) $204,000 
D) $206,000 
A) $102,000 
B) $198,000 
C) $204,000 
D) $206,000

Question 16

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 17

If a company produces the same number of units per period over an asset's useful life,straight-line amortization expense per period will be the same as the amortization expense recorded using the units-of-production method.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 18

A company purchases property that includes land,buildings,and equipment for $5.5 million.The company pays $180,000 in legal fees,$220,000 in commissions,and $100,000 in appraisal fees.The land is estimated at 25%,the buildings are at 40%,and the equipment at 35% of the property value.Prepare the journal entry that is required to record the purchase assuming that the company paid 50% of the amounts using cash and signed a note for the remainder.Explain how you derived your answer.

Accepted Answer

Costs associated with acquiring the prop

Question 19

If net sales revenue and the average book value of fixed assets both rise 5%:

Accepted Answer

A) the fixed asset turnover ratio will rise. 
B) the fixed asset turnover ratio will fall. 
C) the fixed asset turnover ratio will stay the same. 
D) the impact on the fixed asset turnover ratio cannot be determined since the beginning values are unknown. 
A) the fixed asset turnover ratio will rise. 
B) the fixed asset turnover ratio will fall. 
C) the fixed asset turnover ratio will stay the same. 
D) the impact on the fixed asset turnover ratio cannot be determined since the beginning values are unknown.

Question 20

A declining fixed asset turnover ratio suggests that a:

Accepted Answer

A) company is not as efficient in using its fixed assets as it was in previous periods. 
B) company's net sales must be increasing. 
C) company must have purchased some intangible assets. 
D) company's beginning fixed asset balance must be greater than its ending fixed asset balance. 
A) company is not as efficient in using its fixed assets as it was in previous periods. 
B) company's net sales must be increasing. 
C) company must have purchased some intangible assets. 
D) company's beginning fixed asset balance must be greater than its ending fixed asset balance.

In recording the acquisition cost of an entire business:

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the income statement. BT: Comprehension

Your company has net sales revenue of $36 million during the year.At the beginning of the year,fixed assets are $8 million.At the end of the year,fixed assets are $10 million.What is the fixed asset turnover ratio?

If the double-declining balance method were used to amortize a building that has a 10-year useful life and a residual value equal to 10% of the building's original cost,what amortization rate would be used?

Your company buys a computer server,which it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

How does an asset impairment loss impact a company's financial statements?

Under the cost principle:

When a company sells a long-lived asset,shareholders' equity will change by the:

What is the adjusted balance in the Accumulated amortization account at the end of 2010?

If a company builds its own facility,only the cost of materials is capitalized. BT: Comprehension

The main difference between ordinary repairs and extraordinary repairs is:

When a company records an asset impairment loss,it will reduce net income for that period. BT: Comprehension

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses. BT: Comprehension

If a company produces the same number of units per period over an asset's useful life,straight-line amortization expense per period will be the same as the amortization expense recorded using the units-of-production method. BT: Comprehension

If net sales revenue and the average book value of fixed assets both rise 5%:

A declining fixed asset turnover ratio suggests that a:

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,financial Statements,and Financial Results

Fraud,internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables, bad Debt Expense, and Interest Revenue

Liabilities

Stockholders Equity

Statement Cash Flows

Measuring and Evaluating Financial Performance

Filters

Exam 9: Long-Lived Tangible and Intangible Assets

In recording the acquisition cost of an entire business:

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the income statement. BT: Comprehension

Your company has net sales revenue of $36 million during the year.At the beginning of the year,fixed assets are $8 million.At the end of the year,fixed assets are $10 million.What is the fixed asset turnover ratio?

If the double-declining balance method were used to amortize a building that has a 10-year useful life and a residual value equal to 10% of the building's original cost,what amortization rate would be used?

Your company buys a computer server,which it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

How does an asset impairment loss impact a company's financial statements?

Under the cost principle:

When a company sells a long-lived asset,shareholders' equity will change by the:

What is the adjusted balance in the Accumulated amortization account at the end of 2010?

If a company builds its own facility,only the cost of materials is capitalized. BT: Comprehension

The main difference between ordinary repairs and extraordinary repairs is:

When a company records an asset impairment loss,it will reduce net income for that period. BT: Comprehension

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses. BT: Comprehension

If a company produces the same number of units per period over an asset's useful life,straight-line amortization expense per period will be the same as the amortization expense recorded using the units-of-production method. BT: Comprehension

If net sales revenue and the average book value of fixed assets both rise 5%:

A declining fixed asset turnover ratio suggests that a:

Business Decisions and Financial Accounting

The Balance Sheet

The Income Statement

Adjustments,financial Statements,and Financial Results

Fraud,internal Control,and Cash

Merchandising Operations and the Multistep Income Statement

Inventory and Cost of Goods Sold

Receivables, bad Debt Expense, and Interest Revenue

Liabilities

Stockholders Equity

Statement Cash Flows

Measuring and Evaluating Financial Performance

Filters