Question 1

A research consortium has a large portion of its plant assets concentrated in an area where technology is rapidly changing. The organization wants to minimize taxable income and maximize net income reported to shareholders. Recommend a course of action for accomplishing this objective and provide support for your recommendation.

Accepted Answer

The answer of A research consortium has a large portion...

Question 2

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given. (Choices may be used more than once.)
-This method is used in situations where technological advances are rapid.

Accepted Answer

A) Straight-line 
B) Units-of-production 
C) Double-declining-balance 
D) MACRS

Question 3

Fanatics Company purchased a patent at the beginning of the year for $450,000. Economic benefits were expected for only 10 years, but the patent's legal life is 20 years. Also during the year, the company incurred research and development costs of $185,000.
A)Determine the following amounts:
1.Research and Development Expense for the year
2.Patent Amortization Expense for the year
B)Prepare the intangible assets section of the balance sheet at the end of the year

Accepted Answer

The answer of Fanatics Company purchased a patent at the...

Question 4

Falling Leaves Lawn Care
​
This company purchased new excavating equipment at the beginning of 2019. The equipment has a cost of $37,000, an estimated life of 5 years, and an estimated residual value of $7,000. A full year's depreciation expense is to be recorded in 2019. The equipment was used 20,000 hours during 2019 and 24,000 hours during 2020. The number of expected hours over 5 years is 100,000.
-Refer to Falling Leaves Lawn Care. The company is comparing the straight-line and double-declining-balance depreciation methods. Of these two methods, which method creates the larger expense and larger tax savings in 2019?

Accepted Answer

A) Straight-line depreciation creates the larger expense, while double-declining-balance depreciation creates the larger tax savings. 
B) Straight-line depreciation creates both the larger expense and the larger tax savings. 
C) Double-declining-balance depreciation creates both the larger expense and the larger tax savings. 
D) Double-declining-balance depreciation creates the larger expense, while straight-line depreciation creates the larger tax savings.

Question 5

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.)
-Land improvements

Accepted Answer

A) Balance Sheet--Property, Plant, and Equipment 
B) Balance Sheet--Intangible Assets 
C) Balance Sheet--Current Assets 
D) Balance Sheet--Other Assets 
E) Income Statement--Operating Section
F)Income Statement--Other Revenue and Expense Section

Question 6

Focal Point Engineering purchased a trademark at the beginning of the year for $200,000. Although the trademark's legal life is 20 years, economic benefits were expected for only 10 years. Also, during the year, the company incurred research and development costs of $200,000. The book value of the trademark at the end of the year, is

Accepted Answer

A) $200,000. 
B) $180,000. 
C) $175,000. 
D) $280,000.

Question 7

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?

Accepted Answer

A) the asset's acquisition cost, replacement cost, and its estimated residual value 
B) the estimated residual value of the asset, its replacement cost, and its market value 
C) the asset's replacement cost, its estimated life, and its estimated residual value 
D) the estimated life of the asset, its acquisition cost, and its estimated residual value

Question 8

Finnegan's Fixtures purchased molding machines at the beginning of 2019 for $10,000. The machines have an estimated residual value of $2,000 and an estimated life of 5 years or 50,000 hours of operation. The company is considering alternative depreciation methods. Calculate the following:
A)Accumulated depreciation at December 31, 2020, using the straight-line depreciation method.
B)Depreciation expense for 2019 using the units-of-production depreciation method. Assume that the machines are operated for 5,000 hours in 2019 and 8,000 hours in 2020.
C)Book value of the equipment at December 31, 2020, using the double-declining-balance depreciation method.
D)What are the advantages of using straight-line depreciation for financial reporting purposes?

Accepted Answer

The answer of Finnegan's Fixtures purchased molding machines at the...

Question 9

If technology changes rapidly, a firm should

Accepted Answer

A) expense plant assets immediately because of the uncertainty of future benefits. 
B) depreciate plant assets over long periods of time. 
C) consider an accelerated rate of depreciation. 
D) use the straight-line method of depreciation as it is the easiest.

Question 10

Fantasy Cruise Lines
​
On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method.
-Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?

Accepted Answer

A) $200,000 
B) $400,000 
C) $ 0 
D) $100,000

Question 11

When plant assets are purchased in a group, each asset is debited to the respective plant asset account for its fair market value at the time of acquisition.

Accepted Answer

A) True 
 B)False

Question 12

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.)
-Research and development costs

Accepted Answer

A) Balance Sheet--Property, Plant, and Equipment 
B) Balance Sheet--Intangible Assets 
C) Balance Sheet--Current Assets 
D) Balance Sheet--Other Assets 
E) Income Statement--Operating Section
F)Income Statement--Other Revenue and Expense Section

Question 13

Fresh n' Fit Cuisine purchased land and a building for $320,000 so that it could open a new restaurant. The building's fair market value at the time of purchase was $220,000. In addition, the following costs were incurred prior to the restaurant's opening:  How much will be recorded as land improvements?

Accepted Answer

A) $25,000 
B) $6,000 
C) $106,000 
D) $125,000

Question 14

Match these terms with their correct definition.
-Cost less accumulated depreciation

Accepted Answer

A) Book value 
B) Cost 
C) Depletion 
D) Depreciable cost 
E) Depreciation
F)Impairment
G)Involuntary disposal
H)Residual value

Question 15

How are research and development costs reported in the financial statements? Why is this treatment required?

Accepted Answer

The answer of How are research and development costs reported...

Question 16

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.)
-Loss on disposal of plant asset

Accepted Answer

A) Balance Sheet--Property, Plant, and Equipment 
B) Balance Sheet--Intangible Assets 
C) Balance Sheet--Current Assets 
D) Balance Sheet--Other Assets 
E) Income Statement--Operating Section
F)Income Statement--Other Revenue and Expense Section

Question 17

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.)
-Gain on disposal of plant asset

Accepted Answer

A) Balance Sheet--Property, Plant, and Equipment 
B) Balance Sheet--Intangible Assets 
C) Balance Sheet--Current Assets 
D) Balance Sheet--Other Assets 
E) Income Statement--Operating Section
F)Income Statement--Other Revenue and Expense Section

Question 18

Fiona's Italian Market purchased a delivery truck for deliveries for $25,000 at the beginning of 2019. The truck has an estimated life of 5 years, and an estimated residual value of $5,000. The company plans to use the straight-line depreciation method. At the beginning of 2020, the company spent $4000 to replace the truck's transmission. This resulted in a 2-year extension of useful life, but no change in residual value.
A)What type of cost is the $4,000? Explain.
B)Calculate the asset's book value at the end of 2019.
C)Calculate depreciation expense for 2020.

Accepted Answer

The answer of Fiona's Italian Market purchased a delivery truck...

Question 19

Match these terms with their correct definition.
-Situation where an asset is lost or destroyed through theft, acts of nature, or by accident

Accepted Answer

A) Book value 
B) Cost 
C) Depletion 
D) Depreciable cost 
E) Depreciation
F)Impairment
G)Involuntary disposal
H)Residual value

Question 20

A company wants to minimize the amount of time and effort its bookkeepers spend on calculating depreciation. Since the company has not been profitable, taxes are not an issue, but maximizing the profit and minimizing reported losses are major objectives. Recommend a course of action for this company and provide support for your recommendation.

Accepted Answer

The answer of A company wants to minimize the amount...

Exam 7: Operating Assets

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given. (Choices may be used more than once.) -This method is used in situations where technological advances are rapid.

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Land improvements

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?

If technology changes rapidly, a firm should

Fantasy Cruise Lines On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method. -Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?

When plant assets are purchased in a group, each asset is debited to the respective plant asset account for its fair market value at the time of acquisition.

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Research and development costs

Match these terms with their correct definition. -Cost less accumulated depreciation

How are research and development costs reported in the financial statements? Why is this treatment required?

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Loss on disposal of plant asset

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Gain on disposal of plant asset

Match these terms with their correct definition. -Situation where an asset is lost or destroyed through theft, acts of nature, or by accident

Exam 7: Operating Assets

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given. (Choices may be used more than once.) -This method is used in situations where technological advances are rapid.

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Land improvements

Which of the following sets of factors is needed to calculate depreciation on plant and equipment?

If technology changes rapidly, a firm should

Fantasy Cruise Lines ​ On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method. -Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?

When plant assets are purchased in a group, each asset is debited to the respective plant asset account for its fair market value at the time of acquisition.

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Research and development costs

Match these terms with their correct definition. -Cost less accumulated depreciation

How are research and development costs reported in the financial statements? Why is this treatment required?

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Loss on disposal of plant asset

Identify where each of the following accounts would be reported on the financial statements. (Choices may be used more than once.) -Gain on disposal of plant asset

Match these terms with their correct definition. -Situation where an asset is lost or destroyed through theft, acts of nature, or by accident

Fantasy Cruise Lines On January 1, 2019 the company purchased a ship for $1,000,000. It has a 10-year useful life and a residual value of $100,000. The company uses the double-declining-balance method. -Refer to Fantasy Cruise Lines. What will be the book value of the ship after 10 years?