Question 1

Acquisition cost is also referred to as: ________________.

Accepted Answer

historical cost

Question 2

Please answer the following questions regarding depreciation:
If a company has a concern about reporting to its stockholders,the depreciation method _________________________ would be used?

Accepted Answer

Straight-line

Question 3

Using the straight-line depreciation method will cause a company to incur ____ tax expense in the early years of an asset's life than they would experience using an accelerated method of depreciation.

Accepted Answer

A) more 
B) less 
C) equal 
D) This cannot be determined from the information given. 
A) more 
B) less 
C) equal 
D) This cannot be determined from the information given. A

Question 4

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

Accepted Answer

A) Reduces working capital 
B) Increases working capital 
C) Has no effect on working capital 
D) The increases offsets the decrease. 
A) Reduces working capital 
B) Increases working capital 
C) Has no effect on working capital 
D) The increases offsets the decrease.

Question 5

Braggert,Inc.purchased a truck at the beginning of 2012 for $32,500.Braggert decided to depreciate the truck over an 8-year period using the straight-line method,and estimated its residual value to be $4,500.At the beginning of 2013,Braggert determined that a 5-year life should have been used to depreciate the truck.The estimated residual value was not affected by the revision in the asset's life.

Accepted Answer

The answer of Braggert,Inc.purchased a truck at the beginning of...

Question 6

If a company constructs an asset over a period of time and borrows money,the amount of interest incurred during construction on the borrowed money is

Accepted Answer

A) capitalized as part of the cost of the plant asset. 
B) amortized over the construction period. 
C) reported as interest expense on the income statement. 
D) reported as depletion on the income statement. 
A) capitalized as part of the cost of the plant asset. 
B) amortized over the construction period. 
C) reported as interest expense on the income statement. 
D) reported as depletion on the income statement.

Question 7

Wen's Export Co. Wen's Export Co.purchased a new delivery truck at the beginning of 2013.The truck has a cost of $37,000,an estimated life of 5 years,and an estimated residual value of $7,000.A full year's depreciation expense is to be recorded in 2013.The truck was driven 20,000 miles during 2013 and 24,000 miles during 2014.The number of expected miles over five years is 100,000.
Refer to information about Wen's Export Co.
Wen's Export Co.wants to use the depreciation method that will result in the highest depreciation expense for 2013.Which method should be used?

Accepted Answer

A) straight-line 
B) units-of-production 
C) double-declining-balance 
D) all methods create the same income in 2013 
A) straight-line 
B) units-of-production 
C) double-declining-balance 
D) all methods create the same income in 2013

Question 8

Because plant and equipment are reported as long-term assets on the balance sheet,they have no impact on net income for the period until they are sold.

Accepted Answer

A) True 
 B)False

Question 9

Glidewell Company purchased a car for a salesman for $23,500 at the beginning of 2012.The car had an estimated life of 5 years,and an estimated residual value of $3,500.Glidewell used the straight-line depreciation method.At the beginning of 2013,Glidewell incurred $2,500 to replace the car's transmission.This resulted in a 2-year extension of the car's useful life,but no change in the residual value.

Accepted Answer

The answer of Glidewell Company purchased a car for a...

Question 10

Blanton Company bought equipment on January 1,2012 with a cost of $160,000,an estimated residual value of $40,000,and an estimated life of 15 years was depreciated by the straight-line method for 4 years.Due to obsolescence,it was determined at the beginning of 2014 that the useful life should be shortened by 3 years and the residual value changed to zero.What is the accumulated depreciation at the end of 2015?

Accepted Answer

A) $42,667 
B) $32,000 
C) $40,000 
D) $8,000 
A) $42,667 
B) $32,000 
C) $40,000 
D) $8,000

Question 11

Assume that Deane Company purchased factory equipment on January 1,2012,for $75,000.The equipment has an estimated life of five years and an estimated residual value of $6,000.Deane's accountant is considering whether to use the straight-line or the units-of-production method to depreciate the asset.Because the company is beginning a new production process,the equipment will be used to produce 5,000 units in 2012,but production subsequent to 2012 will increase by 5,000 units each year.
REQUIRED:
Calculate the depreciation expense,accumulated depreciation,and book value of the
equipment under both methods for each of the five years of its life.Would the units-of production method yield reasonable results in this situation? Explain.

Accepted Answer

Depreciation,accumulated depreciation,an

Question 12

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

Accepted Answer

A) True 
 B)False

Question 13

Sharp purchased equipment at the beginning of 2013 for $11,000.Sharp decided to depreciate the equipment over a 5-year period using the straight-line method.Sharp estimated the equipment's residual value at $1,000.The estimated fair market value at the end of 2013 was $10,000.Which of the following statements is correct concerning Sharp's financial statements at December 31,2013?

Accepted Answer

A) The book value of the equipment is $7,200. 
B) The book value of the equipment is $9,000. 
C) The total accumulated depreciation is $2,200. 
D) The equipment will be reported on the balance sheet at it fair market value of $10,000. 
A) The book value of the equipment is $7,200. 
B) The book value of the equipment is $9,000. 
C) The total accumulated depreciation is $2,200. 
D) The equipment will be reported on the balance sheet at it fair market value of $10,000.

Question 14

How should intangible assets be disclosed on the balance sheet?

Accepted Answer

A) As a reduction of stockholders' equity 
B) At cost in the current assets section 
C) at the estimated market value at the balance sheet date 
D) Net of the costs already amortized 
A) As a reduction of stockholders' equity 
B) At cost in the current assets section 
C) at the estimated market value at the balance sheet date 
D) Net of the costs already amortized

Question 15

Costs incurred to keep assets in normal operating condition are called revenue expenditures.

Accepted Answer

A) True 
 B)False

Question 16

Wen's Export Co. Wen's Export Co.purchased a new delivery truck at the beginning of 2013.The truck has a cost of $37,000,an estimated life of 5 years,and an estimated residual value of $7,000.A full year's depreciation expense is to be recorded in 2013.The truck was driven 20,000 miles during 2013 and 24,000 miles during 2014.The number of expected miles over five years is 100,000.
Refer to information for Wen's Export Co.
Wen's is comparing the straight-line and double-declining-balance depreciation methods.Of these two methods,which method creates the larger expense and larger tax savings in 2013?

Accepted Answer

A) Straight-line depreciation creates the larger expense,while double-declining-balance depreciation creates the larger tax savings. 
B) Straight-line depreciation creates both the larger expense and the larger tax savings. 
C) Double-declining-balance depreciation creates both the larger expense and the larger tax savings. 
D) Double-declining-balance depreciation creates the larger expense,while straight-line depreciation creates the larger tax savings. 
A) Straight-line depreciation creates the larger expense,while double-declining-balance depreciation creates the larger tax savings. 
B) Straight-line depreciation creates both the larger expense and the larger tax savings. 
C) Double-declining-balance depreciation creates both the larger expense and the larger tax savings. 
D) Double-declining-balance depreciation creates the larger expense,while straight-line depreciation creates the larger tax savings.

Question 17

Oakland Corp.purchased land and a building for a combined cost of $500,000.Oakland must

Accepted Answer

A) record the $500,000 acquisition cost in an account called Land and Buildings. 
B) depreciate the $500,000 acquisition cost,less any residual value,over the expected useful life of the building. 
C) because part of the purchase involved land,record all of the cost in the Land account. 
D) allocate the $500,000 acquisition cost to separate Land and Buildings accounts based on their respective fair market values. 
A) record the $500,000 acquisition cost in an account called Land and Buildings. 
B) depreciate the $500,000 acquisition cost,less any residual value,over the expected useful life of the building. 
C) because part of the purchase involved land,record all of the cost in the Land account. 
D) allocate the $500,000 acquisition cost to separate Land and Buildings accounts based on their respective fair market values.

Question 18

Duggard Transport Company On January 1,2013,Duggard Transport Company purchased a ship for $2,000,000.It has a ten-year useful life and a residual value of $50,000.The company uses the double-declining-balance method.
If Duggard Transport continues to use the ship in its eleventh year,what is the correct accounting procedure?

Accepted Answer

A) Take the asset off the books and record a gain on the disposal 
B) Continue to depreciate it 
C) The company may not use it any longer 
D) No longer depreciate it but leave it on the records at its book value at the end of its useful life 
A) Take the asset off the books and record a gain on the disposal 
B) Continue to depreciate it 
C) The company may not use it any longer 
D) No longer depreciate it but leave it on the records at its book value at the end of its useful life

Question 19

All intangible assets should be amortized.

Accepted Answer

A) True 
 B)False

Question 20

All operating assets,except land,are subject to depreciation,amortization,or depletion.

Accepted Answer

A) True 
 B)False

Acquisition cost is also referred to as: ________________.

Please answer the following questions regarding depreciation: If a company has a concern about reporting to its stockholders,the depreciation method _________________________ would be used?

Using the straight-line depreciation method will cause a company to incur ____ tax expense in the early years of an asset's life than they would experience using an accelerated method of depreciation.

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

If a company constructs an asset over a period of time and borrows money,the amount of interest incurred during construction on the borrowed money is

Because plant and equipment are reported as long-term assets on the balance sheet,they have no impact on net income for the period until they are sold.

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

How should intangible assets be disclosed on the balance sheet?

Costs incurred to keep assets in normal operating condition are called revenue expenditures.

Oakland Corp.purchased land and a building for a combined cost of $500,000.Oakland must

All intangible assets should be amortized.

All operating assets,except land,are subject to depreciation,amortization,or depletion.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

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Exam 8: Operating Assets: Property, plant, and Equipment, and Intangibles

Acquisition cost is also referred to as: ________________.

Please answer the following questions regarding depreciation: If a company has a concern about reporting to its stockholders,the depreciation method _________________________ would be used?

Using the straight-line depreciation method will cause a company to incur ____ tax expense in the early years of an asset's life than they would experience using an accelerated method of depreciation.

Eagle's Nest sold equipment for $4,000 cash.This resulted in a $1,500 loss.What is the impact of this sale on the working capital?

If a company constructs an asset over a period of time and borrows money,the amount of interest incurred during construction on the borrowed money is

Because plant and equipment are reported as long-term assets on the balance sheet,they have no impact on net income for the period until they are sold.

Costs incurred related to plant assets that are already in use are called revenue expenditures if the cost increases the useful life or the asset's productivity.

How should intangible assets be disclosed on the balance sheet?

Costs incurred to keep assets in normal operating condition are called revenue expenditures.

Oakland Corp.purchased land and a building for a combined cost of $500,000.Oakland must

All intangible assets should be amortized.

All operating assets,except land,are subject to depreciation,amortization,or depletion.

Accounting As a Form of Communication

Financial Statements and the Annual Report

Processing Accounting Information

Income Measurement and Accrual Accounting

Inventories and Cost of Goods Sold

Cash and Internal Control

Receivables and Investments

Current Liabilities, contingencies, and the Time Value of Money

Long-Term Liabilities

Stockholders Equity

The Statement of Cash Flows

Financial Statement Analysis

International Financial Reporting Standards

Filters