Question 1

Betterments are a type of capital expenditure.

Accepted Answer

A) True 
 B)False

Question 2

Betterments are:

Accepted Answer

A) Expenditures making a plant asset more efficient or productive. 
B) Also called ordinary repairs. 
C) Always increase an asset's life. 
D) Revenue expenditures. 
E) Credited against the asset account when incurred. 
A) Expenditures making a plant asset more efficient or productive. 
B) Also called ordinary repairs. 
C) Always increase an asset's life. 
D) Revenue expenditures. 
E) Credited against the asset account when incurred.

Question 3

If a machine is damaged during unpacking, the repairs are added to its cost.

Accepted Answer

A) True 
 B)False

Question 4

Depreciation is higher in earlier years and income is lower in the later years when using straight-line versus accelerated methods.

Accepted Answer

A) True 
 B)False

Question 5

A company purchased a tract of land for its natural resources at a cost of $1,000,000. It expects to harvest 5,000,000 board feet of timber from this land. The salvage value of the land is expected to be $200,000. The depletion expense per board foot of timber is:

Accepted Answer

A) $0.75. 
B) $0.24. 
C) $0.20. 
D) $0.16. 
E) $0.04. 
A) $0.75. 
B) $0.24. 
C) $0.20. 
D) $0.16. 
E) $0.04.

Question 6

Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. Compute the depletion expense for the first year assuming 38,000 tons were removed.

Accepted Answer

A) $98,333. 
B) $93,158. 
C) $38,000. 
D) $12,881. 
E) $112,100. 
A) $98,333. 
B) $93,158. 
C) $38,000. 
D) $12,881. 
E) $112,100.

Question 7

The cost of land would not include:

Accepted Answer

A) Purchase price. 
B) Cost of parking lot lighting. 
C) Costs of removing existing structures. 
D) Fees for insuring the title. 
E) Government assessments. 
A) Purchase price. 
B) Cost of parking lot lighting. 
C) Costs of removing existing structures. 
D) Fees for insuring the title. 
E) Government assessments.

Question 8

A company purchased mining property for $1,837,500 containing an estimated 7,350,000 tons of ore. In Year 1, it mined and sold 857,000 tons of ore. Calculate the depletion expense for Year 1 and prepare the journal entry to record the depletion.

Accepted Answer

$1,837,500/7,350,000

Question 9

A company purchased a machine on January 1 of the current year for $750,000. Calculate the annual depreciation expense for each year of the machine's life (estimated at 5 years or 20,000 hours, with a salvage value of $75,000) using each of the below-mentioned methods. During the machine's 5-year life its hourly usage was: 3,000; 4,000; 5,000; 5,000; and 3,000 hours.

Accepted Answer

The answer of A company purchased a machine on January...

Question 10

Edmond reported average total assets of $9,965 million and net sales of $10,430 million. Its total asset turnover equals .96.
Total Asset Turnover = Net Sales/Average Total Assets
Total Asset Turnover = $10,430/$9,965 = 1.05

Accepted Answer

A) True 
 B)False

Question 11

A company purchased a weaving machine for $190,000. The machine has a useful life of 8 years and a salvage value of $10,000. It is estimated that the machine could produce 75,000 bolts of woven fabric over its useful life. In the first year, 15,000 bolts were produced. Using the units-of-production method, what is the book value of the machine at the end of the first year?

Accepted Answer

A) $36,000. 
B) $38,000. 
C) $144,000. 
D) $152,000. 
E) $154,000. 
A) $36,000. 
B) $38,000. 
C) $144,000. 
D) $152,000. 
E) $154,000.

Question 12

Minor Company installs a machine in its factory at the beginning of the year at a cost of $135,000. The machine's useful life is estimated to be 5 years, or 300,000 units of product, with a $15,000 salvage value. During its first year, the machine produces 64,500 units of product. Determine the machines' first year depreciation under the units-of-production method.

Accepted Answer

A) $27,000. 
B) $54,000. 
C) $24,000. 
D) $25,800. 
E) $48,000. 
A) $27,000. 
B) $54,000. 
C) $24,000. 
D) $25,800. 
E) $48,000.

Question 13

A company paid $150,000, plus a 7% commission and $5,000 in closing costs for a property. The property included land appraised at $87,500, land improvements appraised at $35,000, and a building appraised at $52,500. What should be the allocation of this property's costs in the company's accounting records?

Accepted Answer

A) Land $75,000; Land Improvements, $30,000; Building, $45,000. 
B) Land $75,000; Land Improvements, $30,800; Building, $46,200. 
C) Land $82,750; Land Improvements, $33,100; Building, $49,650. 
D) Land $80,250; Land Improvements, $32,100; Building, $48,150. 
E) Land $77,500; Land Improvements, $31,000; Building, $46,500. 
A) Land $75,000; Land Improvements, $30,000; Building, $45,000. 
B) Land $75,000; Land Improvements, $30,800; Building, $46,200. 
C) Land $82,750; Land Improvements, $33,100; Building, $49,650. 
D) Land $80,250; Land Improvements, $32,100; Building, $48,150. 
E) Land $77,500; Land Improvements, $31,000; Building, $46,500.

Question 14

A company purchased equipment on June 28 of the current year and placed it in service on August 1. The following costs were incurred in acquiring the equipment:   Determine the amount to be recorded as cost for the equipment.

Accepted Answer

The answer of A company purchased equipment on June 28...

Question 15

What are some of the variables that make a plant asset's useful life difficult to predict?

Accepted Answer

There are several factors that make it d

Question 16

On January 1, 2016, a company disposed of equipment for $16,200 cash that had cost $35,000, a salvage value of $5,000, and a useful life 10 years. The double-declining-balance depreciation method was used. On December 31, 2015, accumulated depreciation was $20,664. Prepare a journal entry to record the disposal of the equipment.

Accepted Answer

The answer of On January 1, 2016, a company disposed...

Question 17

Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000 and expected salvage value of zero. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. What journal entry would be needed to record the expense for the first year assuming 418,000 tons were mined?

Accepted Answer

A) Debit Depletion Expense $1,233,100; credit Accumulated Depletion $1,233,100. 
B) Debit Amortization Expense $1,358,500; credit Accumulated Amortization $1,358,500. 
C) Debit Depreciation Expense $1,358,500; credit Accumulated Depreciation $1,358,500. 
D) Debit Depletion Expense $1,358,500; credit Accumulated Depletion $1,358,500. 
E) Debit Depreciation Expense $1,233,100; credit Accumulated Depreciation $1,233,100. 
A) Debit Depletion Expense $1,233,100; credit Accumulated Depletion $1,233,100. 
B) Debit Amortization Expense $1,358,500; credit Accumulated Amortization $1,358,500. 
C) Debit Depreciation Expense $1,358,500; credit Accumulated Depreciation $1,358,500. 
D) Debit Depletion Expense $1,358,500; credit Accumulated Depletion $1,358,500. 
E) Debit Depreciation Expense $1,233,100; credit Accumulated Depreciation $1,233,100.

Question 18

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Accepted Answer

A) $680. 
B) $480. 
C) $544. 
D) $600. 
E) $300. 
A) $680. 
B) $480. 
C) $544. 
D) $600. 
E) $300.

Question 19

On April 1 of the current year, a company purchased and placed in service a machine with a cost of $240,000. The company estimated the machine's useful life to be four years or 60,000 units of output with an estimated salvage value of $60,000. During the current year, 12,000 units were produced.
Prepare the necessary December 31 adjusting journal entry to record depreciation for the current year assuming the company uses:
a. The straight-line method of depreciation
b. The units-of-production method of depreciation
c. The double-declining balance method of depreciation

Accepted Answer

The answer of On April 1 of the current year,...

Question 20

Intangible assets are nonphysical assets used in operations that confer on their owners' long-term rights, privileges, or competitive advantages.

Accepted Answer

A) True 
 B)False

Betterments are a type of capital expenditure.

Betterments are:

If a machine is damaged during unpacking, the repairs are added to its cost.

Depreciation is higher in earlier years and income is lower in the later years when using straight-line versus accelerated methods.

A company purchased a tract of land for its natural resources at a cost of $1,000,000. It expects to harvest 5,000,000 board feet of timber from this land. The salvage value of the land is expected to be $200,000. The depletion expense per board foot of timber is:

Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. Compute the depletion expense for the first year assuming 38,000 tons were removed.

The cost of land would not include:

A company purchased mining property for $1,837,500 containing an estimated 7,350,000 tons of ore. In Year 1, it mined and sold 857,000 tons of ore. Calculate the depletion expense for Year 1 and prepare the journal entry to record the depletion.

Edmond reported average total assets of $9,965 million and net sales of $10,430 million. Its total asset turnover equals .96. Total Asset Turnover = Net Sales/Average Total Assets Total Asset Turnover = $10,430/$9,965 = 1.05

A company purchased equipment on June 28 of the current year and placed it in service on August 1. The following costs were incurred in acquiring the equipment: Determine the amount to be recorded as cost for the equipment.

What are some of the variables that make a plant asset's useful life difficult to predict?

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Intangible assets are nonphysical assets used in operations that confer on their owners' long-term rights, privileges, or competitive advantages.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters

Exam 8: Reporting and Analyzing Long-Term Assets

Betterments are a type of capital expenditure.

Betterments are:

If a machine is damaged during unpacking, the repairs are added to its cost.

Depreciation is higher in earlier years and income is lower in the later years when using straight-line versus accelerated methods.

A company purchased a tract of land for its natural resources at a cost of $1,000,000. It expects to harvest 5,000,000 board feet of timber from this land. The salvage value of the land is expected to be $200,000. The depletion expense per board foot of timber is:

Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. Compute the depletion expense for the first year assuming 38,000 tons were removed.

The cost of land would not include:

A company purchased mining property for $1,837,500 containing an estimated 7,350,000 tons of ore. In Year 1, it mined and sold 857,000 tons of ore. Calculate the depletion expense for Year 1 and prepare the journal entry to record the depletion.

Edmond reported average total assets of $9,965 million and net sales of $10,430 million. Its total asset turnover equals .96. Total Asset Turnover = Net Sales/Average Total Assets Total Asset Turnover = $10,430/$9,965 = 1.05

A company purchased equipment on June 28 of the current year and placed it in service on August 1. The following costs were incurred in acquiring the equipment: Determine the amount to be recorded as cost for the equipment.

What are some of the variables that make a plant asset's useful life difficult to predict?

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the depreciation expense for the second year of its useful life using the double-declining-balance method?

Intangible assets are nonphysical assets used in operations that confer on their owners' long-term rights, privileges, or competitive advantages.

Introducing Financial Accounting

Accounting System and Financial Statements

Adjusting Accounts for Financial Statements

Reporting and Analyzing Merchandising Operations

Reporting and Analyzing Inventories

Reporting and Analyzing Cash and Internal Controls

Reporting and Analyzing Receivables

Reporting and Analyzing Current Liabilities

Reporting and Analyzing Long-Term Liabilities

Reporting and Analyzing Equity

Reporting and Analyzing Cash Flows

Analyzing and Interpreting Financial Statements

Applying Present and Future Values

Investments and International Operations

Reporting and Analyzing Partnerships

Filters