Question 1

Lenders are interested in the value of operating assets as collateral when making lending decisions.

Accepted Answer

A) True 
 B)False

Question 2

Cripple Creek Inc. Use the information presented below for Cripple Creek,Inc.for 2013 and 2012 to answer the questions that follow.Cripple Creek uses the straight-line depreciation method.
  Refer to the information for Cripple Creek,Inc.
Using the 2013 data,what is the average life of Cripple Creek's property,plant,and equipment (rounded to one decimal place)?

Accepted Answer

A) 1.6 years 
B) 2.5 years 
C) 4.0 years 
D) 10.0 years 
A) 1.6 years 
B) 2.5 years 
C) 4.0 years 
D) 10.0 years

Question 3

A company should choose a depreciation method that

Accepted Answer

A) best allocates the original cost of the asset to the periods benefited by the use of the asset. 
B) saves the most taxes. 
C) minimizes net income 
D) shows the highest amount of net income. 
A) best allocates the original cost of the asset to the periods benefited by the use of the asset. 
B) saves the most taxes. 
C) minimizes net income 
D) shows the highest amount of net income.

Question 4

A statement of cash flows reports property,plant,and equipment transactions.

Accepted Answer

The answer of A statement of cash flows reports property,plant,and...

Question 5

When plant assets are reported,the current period's depreciation expense is subtracted from the original cost on the balance sheet.

Accepted Answer

A) True 
 B)False

Question 6

On December 1,2014,Xeon Company bought land and an accompanying warehouse from Yen Company for $800,000.The fair market values of the land and the building at the time of purchase were $700,000 and $300,000,respectively.How much of the purchase price should Xeon Company allocate to the land and how much should be allocated to the building?

Accepted Answer

A) $457,143 and $342,857,respectively. 
B) $700,000 and $300,000,respectively. 
C) $560,000 and $240,000,respectively. 
D) $500,000 and $300,000,respectively 
A) $457,143 and $342,857,respectively. 
B) $700,000 and $300,000,respectively. 
C) $560,000 and $240,000,respectively. 
D) $500,000 and $300,000,respectively

Question 7

A building with an appraisal value of $167,000 is made available at an offer price of $162,000.The purchaser acquires the property for $25,000 in cash,a 90-day note payable for $75,000,and a mortgage amounting to $65,000.The cost basis recorded in the buyer's accounting records to recognize this purchase is

Accepted Answer

A) $167,000 
B) $162,000 
C) $165,000 
D) $140,000 
A) $167,000 
B) $162,000 
C) $165,000 
D) $140,000

Question 8

Cripple Creek Inc. Use the information presented below for Cripple Creek,Inc.for 2013 and 2012 to answer the questions that follow.Cripple Creek uses the straight-line depreciation method.
  Refer to the information for Cripple Creek Inc.
Using the 2013 data,what is the average age of Cripple Creek's property,plant,and equipment?

Accepted Answer

A) 1.60 years 
B) 2.50 years 
C) 4.00 years 
D) 10.00 years 
A) 1.60 years 
B) 2.50 years 
C) 4.00 years 
D) 10.00 years

Question 9

Barnhill,Inc.uses straight-line depreciation for its equipment with an estimated useful life of 10 years and zero residual value.The CEO points out that the equipment will last much longer than 10 years,perhaps up to 20 years.What is the impact on earnings per share and net income of depreciating equipment over 20 years rather than 10 years?

Accepted Answer

A) Both earnings per share and net income will decrease. 
B) Both earnings per share and net income will increase. 
C) Earnings per share will decrease and net income will increase. 
D) Earnings per share will increase and net income will decrease. 
A) Both earnings per share and net income will decrease. 
B) Both earnings per share and net income will increase. 
C) Earnings per share will decrease and net income will increase. 
D) Earnings per share will increase and net income will decrease.

Question 10

On January 1,2013,Petersen Corp.sold a piece of equipment for $3,000 which it had used for several years.The equipment had cost $13,000,and its accumulated depreciation amounted to $9,000 at the time of the sale.What are the net effects on the accounting equation of selling the equipment?

Accepted Answer

A) Assets and Stockholders' Equity increase $1,000. 
B) Assets decrease and Stockholders' Equity increases $3,000. 
C) Assets and Stockholders' Equity decrease $1,000. 
D) Assets and Stockholders' Equity decrease $3,000. 
A) Assets and Stockholders' Equity increase $1,000. 
B) Assets decrease and Stockholders' Equity increases $3,000. 
C) Assets and Stockholders' Equity decrease $1,000. 
D) Assets and Stockholders' Equity decrease $3,000.

Question 11

Grover,Inc. Grover,Inc.purchased a crane at a cost of $80,000.The crane has an estimated residual value of $5,000 and an estimated life of 8 years,or 12,500 hours of operation.The crane was purchased on January 1,2013 and was used 2,700 hours in 2013 and 2,600 hours in 2014.
Refer to the information about Grover,Inc.
If Grover uses the units-of-production method,what is the depreciation rate per hour for the equipment?

Accepted Answer

A) $4.00 
B) $5.00 
C) $6.00 
D) $7.50 
A) $4.00 
B) $5.00 
C) $6.00 
D) $7.50

Question 12

Several years ago,Fair Play Company purchased a patent and has since been amortizing it on a straight-line basis over its estimated useful life.The company's comparative balance sheets contain the following items:

Accepted Answer

The answer of Several years ago,Fair Play Company purchased a...

Question 13

At the end of 2013,Clock Products,Inc.determined that one of its patents was worthless.The patent had a cost of $300,000.The patent had been amortized for 5 years of its estimated 15-year legal life.Which of the following statements is correct?

Accepted Answer

A) Clock Products must continue to amortize the patent over its remaining 10 years of life. 
B) The patent must be reduced to 5/15,or 33.3% of its original cost and amortized over the remaining 10 years. 
C) The remaining unamortized cost must be removed from the accounting records and treated as a loss on the income statement. 
D) Clock Products must correct its financial statements for the past five years,so that the entire cost is allocated to that fie year period. 
A) Clock Products must continue to amortize the patent over its remaining 10 years of life. 
B) The patent must be reduced to 5/15,or 33.3% of its original cost and amortized over the remaining 10 years. 
C) The remaining unamortized cost must be removed from the accounting records and treated as a loss on the income statement. 
D) Clock Products must correct its financial statements for the past five years,so that the entire cost is allocated to that fie year period.

Question 14

Which statement is trueconcerning operating assets?

Accepted Answer

A) Operating assets have no physical properties. 
B) A company's operating assets are important to its short-term liquidity. 
C) Operating assets are used over two or more periods to generate revenues. 
D) All operating assets are reported on the balance sheet 
A) Operating assets have no physical properties. 
B) A company's operating assets are important to its short-term liquidity. 
C) Operating assets are used over two or more periods to generate revenues. 
D) All operating assets are reported on the balance sheet

Question 15

Wang Apartments purchased an apartment building to rent to university students on November 18,2013.The following costs were incurred during 2013,before the tenants moved in:   How much will Wang Apartments record as an asset?

Accepted Answer

A) $320,000 
B) $345,000 
C) $351,000 
D) $355,000 
A) $320,000 
B) $345,000 
C) $351,000 
D) $355,000

Question 16

Assets classified as property,plant,and equipment are reported at

Accepted Answer

A) each asset's estimated market value at the balance sheet date. 
B) each asset's estimated salvage value at the balance sheet date. 
C) the estimated depreciable cost at the balance sheet date. 
D) each asset's original cost less depreciation since acquisition. 
A) each asset's estimated market value at the balance sheet date. 
B) each asset's estimated salvage value at the balance sheet date. 
C) the estimated depreciable cost at the balance sheet date. 
D) each asset's original cost less depreciation since acquisition.

Question 17

Plant assets are depreciated because

Accepted Answer

A) the accrual basis of accounting requires matching of costs to revenues. 
B) some plant assets last longer than others. 
C) useful lives cannot be reasonably estimated. 
D) the replacement cost of plant assets may fluctuate over time. 
A) the accrual basis of accounting requires matching of costs to revenues. 
B) some plant assets last longer than others. 
C) useful lives cannot be reasonably estimated. 
D) the replacement cost of plant assets may fluctuate over time.

Question 18

Cripple Creek Inc. Use the information presented below for Cripple Creek,Inc.for 2013 and 2012 to answer the questions that follow.Cripple Creek uses the straight-line depreciation method.
  Refer to the information for Cripple Creek,Inc.
What is the asset turnover ratio for Cripple Creek for 2013?

Accepted Answer

A) 1.60 times 
B) 1.82 times 
C) 4.00 times 
D) 4.55 times 
A) 1.60 times 
B) 1.82 times 
C) 4.00 times 
D) 4.55 times

Question 19

Net income on a cash basis is arrived at by adding depreciation and amortization back to accrual net income.

Accepted Answer

A) True 
 B)False

Question 20

Borden Company incurred the following costs to acquire and prepare land for a new parking lot: purchase price for land,cost to clear the land,cost of paving,lighting for the parking lot,and landscaping for the parking lot.How should the company determine which costs should be recorded as Land Improvements and which cost should be recorded as Land?

Accepted Answer

A) The costs with an unlimited life will increase Land,and the costs with a limited useful life will increase Land Improvements. 
B) The costs with a limited life will increase Land,and the costs with an unlimited useful life will increase Land Improvements. 
C) The costs to be depreciated will increase Land,and the costs that will not be depreciated will increase Land Improvements 
D) Costs that are depreciable will increase Land Improvements,while other costs are expensed immediately because of a lack of definite life. 
A) The costs with an unlimited life will increase Land,and the costs with a limited useful life will increase Land Improvements. 
B) The costs with a limited life will increase Land,and the costs with an unlimited useful life will increase Land Improvements. 
C) The costs to be depreciated will increase Land,and the costs that will not be depreciated will increase Land Improvements 
D) Costs that are depreciable will increase Land Improvements,while other costs are expensed immediately because of a lack of definite life.

Lenders are interested in the value of operating assets as collateral when making lending decisions.

A company should choose a depreciation method that

A statement of cash flows reports property,plant,and equipment transactions.

When plant assets are reported,the current period's depreciation expense is subtracted from the original cost on the balance sheet.

On January 1,2013,Petersen Corp.sold a piece of equipment for $3,000 which it had used for several years.The equipment had cost $13,000,and its accumulated depreciation amounted to $9,000 at the time of the sale.What are the net effects on the accounting equation of selling the equipment?

Several years ago,Fair Play Company purchased a patent and has since been amortizing it on a straight-line basis over its estimated useful life.The company's comparative balance sheets contain the following items:

At the end of 2013,Clock Products,Inc.determined that one of its patents was worthless.The patent had a cost of $300,000.The patent had been amortized for 5 years of its estimated 15-year legal life.Which of the following statements is correct?

Which statement is trueconcerning operating assets?

Wang Apartments purchased an apartment building to rent to university students on November 18,2013.The following costs were incurred during 2013,before the tenants moved in: How much will Wang Apartments record as an asset?

Assets classified as property,plant,and equipment are reported at

Plant assets are depreciated because

Cripple Creek Inc. Use the information presented below for Cripple Creek,Inc.for 2013 and 2012 to answer the questions that follow.Cripple Creek uses the straight-line depreciation method. Refer to the information for Cripple Creek,Inc. What is the asset turnover ratio for Cripple Creek for 2013?

Net income on a cash basis is arrived at by adding depreciation and amortization back to accrual net income.

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

Lenders are interested in the value of operating assets as collateral when making lending decisions.

A company should choose a depreciation method that

A statement of cash flows reports property,plant,and equipment transactions.

When plant assets are reported,the current period's depreciation expense is subtracted from the original cost on the balance sheet.

On January 1,2013,Petersen Corp.sold a piece of equipment for $3,000 which it had used for several years.The equipment had cost $13,000,and its accumulated depreciation amounted to $9,000 at the time of the sale.What are the net effects on the accounting equation of selling the equipment?

Several years ago,Fair Play Company purchased a patent and has since been amortizing it on a straight-line basis over its estimated useful life.The company's comparative balance sheets contain the following items:

At the end of 2013,Clock Products,Inc.determined that one of its patents was worthless.The patent had a cost of $300,000.The patent had been amortized for 5 years of its estimated 15-year legal life.Which of the following statements is correct?

Which statement is trueconcerning operating assets?

Wang Apartments purchased an apartment building to rent to university students on November 18,2013.The following costs were incurred during 2013,before the tenants moved in: How much will Wang Apartments record as an asset?

Assets classified as property,plant,and equipment are reported at

Plant assets are depreciated because

Cripple Creek Inc. Use the information presented below for Cripple Creek,Inc.for 2013 and 2012 to answer the questions that follow.Cripple Creek uses the straight-line depreciation method. Refer to the information for Cripple Creek,Inc. What is the asset turnover ratio for Cripple Creek for 2013?

Net income on a cash basis is arrived at by adding depreciation and amortization back to accrual net income.

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