Question 1

An asset can be disposed of by all of the following except:

Accepted Answer

A)  Discarding it.
B)  Selling it.
C)  Exchanging it for another asset.
D)  Donating it to charity.
E)  Continuing to use it after it is fully depreciated. E

Question 2

On September 30 of the current year,a company acquired and placed in service a machine at a cost of $700,000.It has been estimated that the machine has a service life of five years and a salvage value of $40,000.Using the double-declining-balance method of depreciation,complete the schedule below showing depreciation amounts for all six years (round answers to the nearest dollar).The company closes its books on December 31 of each year.

Accepted Answer

*for 3 months.**for 9 months; adjusted to the salvage value.

Question 3

The depreciation method that recognizes equal amounts of annual depreciation over the life of an asset is ________.

Accepted Answer

straight-line

Question 4

Land improvements are:

Accepted Answer

A)  Assets that increase the usefulness of land,and like land,are not depreciated.
B)  Assets that increase the usefulness of land,but that have a limited useful life and are subject to depreciation.
C)  Included in the cost of the land account.
D)  Expensed in the period incurred.
E)  Also called basket purchases.

Question 5

A company purchased a delivery van on October 1 of the current year at a cost of $40,000.The van is expected to last six years and has a salvage value of $2,200.The company's annual accounting period ends on December 31.
1.What is the depreciation expense for the current year,assuming the straight-line method is used?
2.What is the book value of the van at the end of the first year?

Accepted Answer

The answer of A company purchased a delivery van on...

Question 6

Another name for a capital expenditure is:

Accepted Answer

A)  Revenue expenditure.
B)  Asset expenditure.
C)  Long-term expenditure.
D)  Contributed capital expenditure.
E)  Balance sheet expenditure.

Question 7

Westport Company reports the following in millions: net sales of $25,300 for 2016 and $22,640 for 2015; end-of-year total assets of $14,875 for 2016 and $13,680 for 2015.Compute its total asset turnover for 2016 and assess its level if competitors average a total asset turnover of 2.0 times.

Accepted Answer

The answer of Westport Company reports the following in millions:...

Question 8

Obsolescence refers to the insufficient capacity of a company's plant assets to meet the company's production demands.

Accepted Answer

A) True 
 B)False

Question 9

A building was purchased for $370,000 and depreciated for ten years on a straight-line basis under the assumption it would have a twenty-year life and a $10,000 salvage value.At the beginning of the building's eleventh year it was recognized the building had eight years of remaining life instead of ten and that at the end of the remaining eight years its salvage value would be $16,000.What amount of depreciation should be recorded in each of the building's remaining eight years?

Accepted Answer

The answer of A building was purchased for $370,000 and...

Question 10

A machine with an original cost of $120,000 and no salvage value had an estimated useful life of 6 years,but after 4 complete years,it was decided that the original estimate of useful life should have been 8 years.Assuming the company uses straight-line depreciation,the amount of depreciation expense in year 5 is:

Accepted Answer

A)  $20,000
B)  $80,000
C)  $10,000
D)  $12,000
E)  $5,000

Question 11

An asset's book value is $36,000 on January 1,Year 6.The asset is being depreciated $500 per month using the straight-line method.Assuming the asset is sold on July 1,Year 7 for $25,000,the company should record:

Accepted Answer

A)  Neither a gain or loss is recognized on this type of transaction.
B)  A gain on sale of $2,000.
C)  A loss on sale of $1,000.
D)  A gain on sale of $1,000.
E)  A loss on sale of $2,000.

Question 12

Lima Enterprises purchased a depreciable asset for $22,000 on April 1,Year 1.The asset will be depreciated using the straight-line method over its four-year useful life.Assuming the asset's salvage value is $2,000,what will be the amount of accumulated depreciation on this asset on December 31,Year 3?

Accepted Answer

A)  $5,000
B)  $15,000
C)  $15,125
D)  $20,000
E)  $13,750

Question 13

An accelerated depreciation method yields larger depreciation expense in the early years of an asset's life and less depreciation expense in later years.

Accepted Answer

A) True 
 B)False

Question 14

The purchase of a property that included land,building,and related improvements is called a lump-sum or basket purchase.

Accepted Answer

A) True 
 B)False

Question 15

Total asset turnover is used to evaluate:

Accepted Answer

A)  The efficient use of assets to generate sales.
B)  The necessity for asset replacement.
C)  The number of times operating assets were sold during the year.
D)  The cash flows used to acquire assets.
E)  The relation between asset cost and book value.

Question 16

Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor.The real estate consists of land appraised at $35,000,a building appraised at $105,000,and paddleboats appraised at $210,000.Compute the cost that should be allocated to the land.

Accepted Answer

A)  $93,000.
B)  $140,000.
C)  $32,500.
D)  $31,000.
E)  $97,500.

Question 17

A trademark is an exclusive right granted to its owner to publish and sell a musical,literary,or artistic work during the life of the creator plus 70 years.

Accepted Answer

A) True 
 B)False

Question 18

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.The machine's book value at the end of year 3 is:

Accepted Answer

A)  $30,000.
B)  $45,000.
C)  $52,500.
D)  $7,500.
E)  $6,875.

Question 19

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 and sold.

Accepted Answer

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

Question 20

Owning a patent:

Accepted Answer

A)  Gives the owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.
B)  Gives the owner exclusive rights to manufacture and sell a patented item or to use a process for 20 years.
C)  Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years.
D)  Indicates that the value of a company exceeds the fair market value of a company's net assets if purchased separately.
E)  Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years.

Exam 8: Reporting and Analyzing Long-Term Assets

An asset can be disposed of by all of the following except:

The depreciation method that recognizes equal amounts of annual depreciation over the life of an asset is ________.

Land improvements are:

Another name for a capital expenditure is:

Westport Company reports the following in millions: net sales of $25,300 for 2016 and $22,640 for 2015; end-of-year total assets of $14,875 for 2016 and $13,680 for 2015.Compute its total asset turnover for 2016 and assess its level if competitors average a total asset turnover of 2.0 times.

Obsolescence refers to the insufficient capacity of a company's plant assets to meet the company's production demands.

An asset's book value is $36,000 on January 1,Year 6.The asset is being depreciated $500 per month using the straight-line method.Assuming the asset is sold on July 1,Year 7 for $25,000,the company should record:

An accelerated depreciation method yields larger depreciation expense in the early years of an asset's life and less depreciation expense in later years.

The purchase of a property that included land,building,and related improvements is called a lump-sum or basket purchase.

Total asset turnover is used to evaluate:

Riverboat Adventures pays $310,000 plus $15,000 in closing costs to buy out a competitor.The real estate consists of land appraised at $35,000,a building appraised at $105,000,and paddleboats appraised at $210,000.Compute the cost that should be allocated to the land.

A trademark is an exclusive right granted to its owner to publish and sell a musical,literary,or artistic work during the life of the creator plus 70 years.

Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value.The machine's book value at the end of year 3 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 and sold.

Owning a patent: