Question 1

The accumulated depletion of a natural resource is reported on the

Accepted Answer

A)  balance sheet as depreciation from the cost of the resource 
B)  income statement as a deduction from revenues 
C)  income statement as an increase in revenue 
D)  balance sheet as a deduction from the cost of the resource

Question 2

Which of the following statements is true?

Accepted Answer

A)  The fixed asset ratio is not useful for comparing different companies. 
B)  A smaller fixed asset turnover ratio is associated with firms that are more labor intensive and require smaller fixed asset investments. 
C)  The fixed asset ratio cannot be compared across time for an individual company. 
D)  A larger fixed asset turnover ratio is associated with firms that are more labor intensive and require smaller fixed asset investments.

Question 3

Match each account name to the financial statement section a-i) in which it would appear.
-Amortization Expense

Accepted Answer

A) Current Assets 
B) Fixed Assets 
C) Intangible Assets 
D) Current Liability 
E) Long-Term Liability
F)Owners' Equity
G)Revenues
H)Operating Expenses
I)Other Income/Expense

Question 4

Identify the following as a fixed asset FA), or intangible asset IA), natural resource NR), or none of theseN)a) computer
b) patent
c) oil reserve
d) goodwill
e) U.S. Treasury note
f) land used for employee parking
g) gold mine

Accepted Answer

The answer of Identify the following as a fixed asset...

Question 5

A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of 3 years. Assuming that it will have a residual value of $445, determine the depreciation for the first and second year by the straight-line method. Round your answers to the nearest whole dollar.

Accepted Answer

The answer of A copy machine acquired on May 1...

Question 6

Match the intangible assets described with their proper classification a-d).
-Rights to sell a book and make a profit

Accepted Answer

A) Patent 
B) Copyright 
C) Trademark 
D) Goodwill

Question 7

On December 31, Strike Company sold one of its batting cages for $55,000. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. What is the amount of the gain or loss on this transaction?

Accepted Answer

A)  loss of $55,000 
B)  loss of $5,000 
C)  gain of $5,000 
D)  gain of $55,000

Question 8

On December 31, Bowman Company estimated that goodwill of $80,000 was impaired. A patent with an estimated useful economic life of 10 years was acquired for $252,000.
Required:
1) Journalize the adjusting entry on December 31 for the impaired goodwill.
2) Journalize the adjusting entry on December 31 for the amortization of the patent rights.

Accepted Answer

The answer of On December 31, Bowman Company estimated that...

Question 9

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

Accepted Answer

A) True 
 B)False

Question 10

Classify each of the following costs associated with long-lived assets as one of the following:
-Cost of insurance during the construction of new office building

Accepted Answer

A) Buildings 
B) Machinery and equipment 
C) Land 
D) Land improvements

Question 11

Expenditures for research and development are generally recorded as

Accepted Answer

A)  assets and amortized over their estimated useful life 
B)  current operating expenses 
C)  assets and amortized over 40 years 
D)  current assets

Question 12

Classify each of the following as:
-Installing a new air conditioning system in an old building

Accepted Answer

A) Ordinary maintenance and repairs 
B) Asset improvements 
C) Extraordinary repairs

Question 13

Classify each of the following as:
-Exterior and interior painting

Accepted Answer

A) Ordinary maintenance and repairs 
B) Asset improvements 
C) Extraordinary repairs

Question 14

The double-declining-balance method is an accelerated depreciation method.

Accepted Answer

A) True 
 B)False

Question 15

Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year has been determined, the amounts can not be changed.

Accepted Answer

A) True 
 B)False

Question 16

Sands Company purchased mining rights for $500,000. They expect to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include

Accepted Answer

A)  a credit to Accumulated Depletion for $350,000 
B)  a debit to Accumulated Depletion for $175,000 
C)  a debit to Depletion Expense for $175,000 
D)  a credit to Depletion Expense for $350,000

Question 17

Classify each of the following costs associated with long-lived assets as one of the following:
-Fences around land at new business location

Accepted Answer

A) Land improvements 
B) Buildings 
C) Land 
D) Machinery and equipment

Question 18

On June 1, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Using straight-line depreciation, calculate depreciation expense for the final partial) year of service.

Accepted Answer

A)  $12,500 
B)  $17,500 
C)  $40,000 
D)  $30,000

Question 19

The depreciation method that does not use residual value in calculating the first year's depreciation expense is

Accepted Answer

A)  straight-line 
B)  units-of-output 
C)  double-declining-balance 
D)  none of the above

Question 20

Machinery is purchased on July 1 of the current fiscal year for $240,000. It is expected to have a useful life of 4 years, or 25,000 operating hours, and a residual value of $15,000. Compute the depreciation for the last six months of the current fiscal year ending December 31 by each of the following methods:
a) straight-line
b) double-declining-balance
c) units-of-output used for 1,600 hours during the current year)

Accepted Answer

The answer of Machinery is purchased on July 1 of...

Exam 9: Fixed Assets and Intangible Assets

The accumulated depletion of a natural resource is reported on the

Which of the following statements is true?

Match each account name to the financial statement section a-i) in which it would appear. -Amortization Expense

Identify the following as a fixed asset FA), or intangible asset IA), natural resource NR), or none of theseN)a) computer b) patent c) oil reserve d) goodwill e) U.S. Treasury note f) land used for employee parking g) gold mine

A copy machine acquired on May 1 with a cost of $2,545 has an estimated useful life of 3 years. Assuming that it will have a residual value of $445, determine the depreciation for the first and second year by the straight-line method. Round your answers to the nearest whole dollar.

Match the intangible assets described with their proper classification a-d) . -Rights to sell a book and make a profit

On December 31, Strike Company sold one of its batting cages for $55,000. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. What is the amount of the gain or loss on this transaction?

Functional depreciation occurs when a fixed asset is no longer able to provide services at the level for which it was intended.

Classify each of the following costs associated with long-lived assets as one of the following: -Cost of insurance during the construction of new office building

Expenditures for research and development are generally recorded as

Classify each of the following as: -Installing a new air conditioning system in an old building

Classify each of the following as: -Exterior and interior painting

The double-declining-balance method is an accelerated depreciation method.

Once the useful life of a depreciable asset has been estimated and the amount to be depreciated each year has been determined, the amounts can not be changed.

Sands Company purchased mining rights for $500,000. They expect to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include

Classify each of the following costs associated with long-lived assets as one of the following: -Fences around land at new business location

On June 1, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of $90,000 and an estimated useful life of 3 years and 30,000 hours. Using straight-line depreciation, calculate depreciation expense for the final partial) year of service.

The depreciation method that does not use residual value in calculating the first year's depreciation expense is