Deck 8: Long-Term and Other Assets

Question 1

Whether a building is purchased or constructed,the same items are used to compute the price of the building.

Answer 1

False

Question 2

The cost of long-term assets must be allocated to an expense as the asset is used up.

Answer 2

True

Question 3

Neither land nor land improvements are depreciated.

Answer 3

False

Question 4

Timber,coal,and other minerals are long-term assets called natural resources.

Question 5

Which of the following matches the correct cost allocation terms with the given assets?

A)

B)

C)

D)

Question 6

Patents and copyrights can be seen,held or touched.

Question 7

Assets that CANNOT be seen,touched,or held are called:

A)intangible assets.
B)natural resources.
C)plant assets.
D)tangible assets.

Question 8

Which of the following would NOT be considered an intangible asset?

A)Goodwill
B)Franchise
C)Land
D)Copyright

Question 9

Which of the following would be considered a natural resource?

A)Corn
B)Livestock
C)Timber
D)Wheat

Question 10

Which of the following would NOT be considered a fixed asset?

A)office equipment
B)company car
C)oil
D)office building

Question 11

Patents,copyrights,and trademarks are:

A)amortized.
B)depleted.
C)depreciated.
D)expensed.

Question 12

Plant assets can be called fixed assets,physical assets,or tangible assets.

Question 13

Coal,oil,and timber are:

A)amortized.
B)depleted.
C)depreciated.
D)expensed.

Question 14

An example of an other asset would be a trademark.

Question 15

When a company pays a single price for a group of assets,the purchase is referred to as a basket purchase.

Question 16

When determining the cost of a plant asset,GAAP requires the use of the market value principle.

Question 17

Long-term investments (assets)by a corporation are:

A)amortized.
B)depleted.
C)depreciated.
D)not treated as fixed assets.

Question 18

Assets that are NOT expected to provide benefits for more than 12 months after the presentation of the financial statements are called:

A)property,plant,and equipment.
B)long-term assets.
C)natural resources.
D)current assets.

Question 19

Buildings,vehicles,and desks are:

A)amortized.
B)depleted.
C)depreciated.
D)expensed.

Question 20

Which of the following would be considered a fixed asset?

A)land
B)patents
C)timber
D)both A and C are fixed assets

Question 21

Which of the following would NOT be considered as part of the cost of a constructed building?

A)Building permit fees
B)Contractor charges
C)Realtor commissions
D)Architectural fees

Question 22

Which of the following would be considered part of the cost of machinery and equipment?

A)Sales taxes
B)Repairs after start-up
C)Maintenance
D)Insurance after purchase

Question 23

Which of the following would be considered as part of the cost of purchasing an existing building?

A)Architectural fees
B)Contractor charges
C)Title transfer fees
D)Payment for materials

Question 24

Which of the following would NOT be considered part of the cost of machinery and equipment?

A)Repairs and maintenance after start-up
B)Delivery charges
C)Installation costs
D)In-transit insurance costs

Question 25

Which would NOT be considered part of land improvements?

A)Removing unwanted buildings from the land
B)Signs
C)In-ground sprinkler systems
D)Fencing

Question 26

The costs associated with clearing land and removing buildings are considered land improvements.

Question 27

Costs of testing machinery or equipment before they are used would be included in the price of the machinery or the equipment.

Question 28

Which of the following would be considered part of land improvements?

A)Removal of unwanted building on the land
B)Title transfer fees
C)Paving of the parking lot
D)Surveying fees

Question 29

Other than land,long-term assets that are capitalized are:

A)expensed in the year of purchase.
B)depreciated over the life of the asset.
C)recorded at market value.
D)recorded at net realizable value.

Question 30

Which of the following would NOT be a part of land improvements?

A)Paving of the parking lot
B)Installing fences around the property
C)Putting in sidewalks
D)Grading and leveling the land

Question 31

The total cost allocated to each item in a basket purchase is based upon:

A)the original cost of the items.
B)their relative market values.
C)their individual selling price.
D)their individual market values.

Question 32

Capitol Construction Company made a basket purchase of three items.Item X was appraised at $35,000;item Y was appraised at $55,000 and item Z was appraised at $60,000.The purchase price was $125,000.The amount at which item Z should be recorded (rounded to the nearest dollar)is:

A)$72,000.
B)$83,300.
C)$50,000.
D)$29,167.

Question 33

Which would NOT be included in the recorded price of a piece of machinery?

A)Installation costs
B)Maintenance costs
C)Delivery charges
D)Sales taxes

Question 34

Which of the following would be included in the cost of a constructed building?

A)Purchase price of the building
B)Payments for material,labor,and overhead
C)Survey and legal fees
D)Realtor commissions

Question 35

Metropolitan Masonry made a basket purchase of three items.Item X was appraised at $35,000;item Y was appraised at $55,000 and item Z was appraised at $60,000.The purchase price was $125,000.The amount at which item Y should be recorded is:

A)($55,000/$125,000)× $150,000.
B)($55,000/$150,000)× $125,000.
C)($55,000/$95,000)× $150,000.
D)($55,000/$95,000)× $125,000.

Question 36

When a company buys a building,realtor commissions are not included in the cost of the building.

Question 37

The cost of furniture and fixtures,such as desks,chairs and other items,includes its basic cost plus all other costs to ready the asset for its intended use.

Question 38

Which of the following would NOT be considered part of the cost of the land?

A)Survey and legal fees
B)Realtor commissions
C)Paving
D)Unpaid property taxes on the land

Question 39

Lionworks Corporation made a basket purchase of three items.Item X was appraised at $35,000;item Y was appraised at $55,000;and item Z was appraised at $60,000.The purchase price was $125,000.The amount at which item X should be recorded (rounded to the nearest dollar)is:

A)$42,000.
B)$29,167.
C)$41,667.
D)$38,043.

Question 40

Sydney's Siding made a basket purchase involving four assets.Their market values were A: $45,000;B: $37,500;C: $41,000;and D: $53,000.The price Sydney's paid for the four assets was $160,000.What percentage of the $160,000 price would be allocated to asset C to the nearest one-tenth of a percent?

A)30.0%
B)25.5%
C)23.2%
D)21.2%

Question 41

In accounting,what is the meaning of capitalized?

A)Capitalized means that a liability account is credited (increased)for the cost of an asset.
B)Capitalized means that an asset account is debited (increased)for the cost of an asset.
C)Capitalized means that the cost of an asset is recorded as a debit (increase)to expense.
D)Capitalized means that a given city has been selected as a government center.

Question 42

Straight-line depreciation is calculated by the formula (cost - salvage value)divided by useful life (generally in years).

Question 43

Book value is depreciable cost minus accumulated depreciation.

Question 44

Depreciation is based upon cost,useful life and salvage value.

Question 45

A company purchased a truck on August 1,2013.Using straight-line depreciation,the company would report four (4)months depreciation on December 31,2013.

Question 46

A company purchased furniture on January 1.Its cost was $15,600,and it had a residual value of $1,600.Its useful life is determined to be 3 years.Using double-declining balance depreciation,the depreciation for year 1 to the nearest dollar will be:

A)$10,400.
B)$9,333.
C)$5,200.
D)$4,667.

Question 47

Double-declining balance is an accelerated method of calculating depreciation where salvage value is NOT part of the initial computation.

Question 48

A company purchased a computer system on March 1.Its cost was $35,000 and it had an estimated salvage value of $5,000.It was expected to have a useful life of four years.To the nearest dollar,the depreciation for year 2 using straight-line depreciation will be:

A)$8,750.
B)$7,500.
C)$6,250.
D)$5,625.

Question 49

Calculating depreciation using a base such as miles driven per year would be an example of double-declining balance depreciation.

Question 50

A fixed asset's useful life may be shorter than its physical life due to obsolescence.

Question 51

Costs that should be charged to the land account include:

A)the cost of removing unwanted buildings.
B)paving the parking lot.
C)installing fences.
D)the cost of a sign.

Question 52

A company purchased a computer system on March 1.Its cost was $35,000,and it had an estimated salvage value of $5,000.It was expected to have a useful life of four years.To the nearest dollar,the depreciation for year 1 using straight-line depreciation will be:

A)$8,750.
B)$7,500.
C)$6,250.
D)$5,625.

Question 53

Cesario Corporation purchases a machine for $125,000.It has an estimated salvage value of $10,000 and is expected to produce 50,000 units in its lifetime.During the first year of operation,it produced 14,500 units.To the nearest dollar,the depreciation for the first year under the units of production method will be:

A)$36,250.
B)$35,500.
C)$33,350.
D)$31,250.

Question 54

The choice of depreciation method depends on the cost of the asset and its' expected useful life.

Question 55

Bob's Bakery made a basket purchase involving four assets.Their market values were A: $45,000;B: $37,500;C: $41,000;and D: $53,000.The price Bob's paid for the four assets was $145,000.To the nearest dollar,what final price will be recorded for asset D?

A)$30,807
B)$33,683
C)$36,969
D)$43,541

Question 56

A new vehicle was purchased on January 1 for $38,000.It has a salvage value of $7,000 and a useful life of 5 years.To the nearest dollar,how much will the depreciation expense for the vehicle be for the first year using the straight-line method?

A)$6,200
B)$633
C)$7,600
D)$517

Question 57

New equipment was purchased on January 1 for $142,000.It has a salvage value of $28,000 and a useful life of 8 years.To the nearest dollar,how much will the depreciation expense for the equipment be for the first year using the straight-line method?

A)$1,188
B)$17,750
C)$1,479
D)$14,250

Question 58

Depreciation is a process of valuation of an asset.

Question 59

Which of the following would be considered part of the cost of a printing press?

A)The medical fees for a worker who was injured while installing the press
B)The cost of a test run to make sure the press worked properly
C)Both A and B are part of the cost of the printing press.
D)Neither A nor B are part of the cost of the printing press.

Question 60

A company should choose a depreciation method that most closely matches the cost of the asset against the future revenues it generates.

Question 61

The matching principle dictates whether the cost of a repair should be expensed or depreciated.

Question 62

An asset has a cost of $50,000 with a residual value of $10,000.It has a life of 5 years and was purchased on January 1.Its fourth full year of depreciation expense under double-declining-balance will be:

A)$7,200.
B)$4,320.
C)$800.
D)$0.

Question 63

Only Organics has a delivery truck that was purchased for $42,000 and has a salvage value of $5,000.It expects the truck to last 125,000 miles.During Year 1,the truck traveled 32,500 miles and during Year 2,the truck traveled 28,500 miles.What is the depreciation expense for Year 2 to the nearest dollar using the units-of-production method? (Round to three decimal places to get the unit rate. )

A)$10,920
B)$9,620
C)$9,576
D)$8,436

Question 64

After an asset is fully depreciated,the asset:

A)must be removed from the Balance Sheet.
B)remains on the Balance Sheet at a value of $0.
C)remains on the Balance Sheet at (cost - Accumulated Depreciation).
D)remains on the Balance Sheet at cost.

Question 65

Expenditures incurred,such as changing the oil and filter on a delivery truck,would be considered ordinary repairs.

Question 66

Acme paid $100,000 for a machine with a $5,000 salvage value and an estimated life of 190,000 hours.
Acme reports on a calendar year basis and used the machine for 1,700 hours during the first year it owned the asset.Which of the following statements accurately compare the first year depreciation expense if the asset had been purchased on January 1 of the current year versus a March 1 acquisition date.

A)Depreciation Expense if acquired January 1 is $850 and if acquired March 1 is $708.
B)Depreciation Expense if acquired January 1 is $850 and if acquired March 1 is $637.
C)In both cases,the Depreciation Expense is $850.
D)Depreciation Expense if acquired January 1 is $895 and if acquired March 1 is $746.

Question 67

Custom Closets purchased office fixtures on January 1.The cost was $12,000,and the fixtures had a residual value of $2,000.The fixtures were given a useful life of 8 years.After the end of three years,it was determined that the fixtures would be obsolete in 2 more years and their residual value would still be $2,000.What will be the depreciation under the straight-line method to the nearest dollar be for the fourth year?

A)$1,500
B)$1,250
C)$3,125
D)$3,750

Question 68

It is determined that a computer's depreciation expense for the year is $3,500.The journal entry to record this will be:

A)debit Depreciation Expense - computer $3,500;credit Cash $3,500.
B)debit Accumulated Depreciation - computer $3,500;credit Cash $3,500.
C)debit Depreciation Expense - computer $3,500;credit Accumulated Depreciation,$3,500.
D)debit Cash $3,500;credit Depreciation Expense - computer $3,500.

Question 69

The depreciation method often used for income tax purposes is the:

A)expense method.
B)units-of-production method.
C)double-declining balance method.
D)straight-line method.

Question 70

After 4 years,a machine had an accumulated depreciation of $38,000.Originally,the machine had an anticipated life of 8 years and a salvage value of $5,000.If the current book value after 4 years is $43,000 and the machine has only 2 years of useable life left,how much will be depreciated in Year 5 and in Year 6 using the straight-line method of depreciation,and assuming the salvage value is still $5,000?

A)$21,500 each year
B)$9,500 each year
C)$19,000 each year
D)$10,125 each year

Question 71

A company purchased a van at a cost of $42,000 and expects its salvage value to be $6,000 after 120,000 miles of service.Using the units-of-production method,what is the first year's depreciation if the van is driven 24,000 miles?

A)$1,200
B)$4,200
C)$7,200
D)$12,000

Question 72

If an asset generates revenue evenly over time,the depreciation method best suited for this asset would be the:

A)double-declining balance method.
B)straight-line method.
C)units-of-production method.
D)expense method.

Question 73

A building was purchased on August 1 for $450,000.It has a salvage value of $38,000 and a useful life of 35 years.To the nearest dollar,how much will the depreciation expense for the building be for the first year ended December 31,using the straight-line method?

A)$12,857
B)$5,357
C)$4,905
D)$11,771

Question 74

Replacing an engine on a delivery truck would be considered a betterment.

Question 75

A method best suited for depreciating items,such as copy machines and vehicles,would be the:

A)expense method.
B)units-of-production method.
C)double-declining balance method.
D)straight-line method.

Question 76

Ironworks Industries purchased a piece of equipment for $65,000 with an estimated salvage value of $15,000 on January 1.Its estimated life is 5 years.To the nearest dollar,what is the equipment's depreciation using double-declining-balance for year 2?

A)$26,000
B)$20,000
C)$15,600
D)$12,000

Question 77

The depreciation method in which the depreciable cost of an asset is apportioned equally over its estimated life in terms of month or years is called the:

A)double-declining-balance method.
B)units-of-production method.
C)amortization method.
D)straight-line method.

Question 78

Leo's Lawncare purchased equipment on January 1.The cost was $15,000,and the equipment had a residual value of $4,000.The equipment was given a useful life of 7 years.After the end of two years,it was determined that the equipment would be obsolete in 3 more years and the residual value would still be $4,000.What will be the depreciation under the straight-line method to the nearest dollar be for the third year?

A)$1,571
B)$2,619
C)$3,142
D)$7,857

Question 79

If an asset produces more revenue in its early years,the depreciation method best suited for this asset would be the:

A)expense method.
B)units-of-production method.
C)double-declining balance method.
D)straight-line method.

Question 80

Adding on 30 rooms to an existing hotel would be considered a betterment because the addition added to the hotel's capacity.