Question 1

Estimated residual value can be zero if the company does not expect to receive anything when disposing of the asset.

Accepted Answer

A) True 
 B)False  True

Question 2

For each of the following amounts paid by a purchaser, determine whether the amount is debited to Land, Land Improvements, or Building.

Accepted Answer

The answer of For each of the following amounts paid...

Question 3

For each of the following expenditures, indicate whether the amount is debited to an asset account or to an expense account.

Accepted Answer

The answer of For each of the following expenditures, indicate...

Question 4

Hastings Corporation has purchased a group of assets for $21,900. The assets and their relative market values are listed below.  Which of the following amounts would be debited to the Land account? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Accepted Answer

A)   $4,133
B)   $12,045
C)   $4,380
D)   $5,475

Question 5

Amortization is the process by which businesses spread the allocation of an intangible asset's cost over its useful life.

Accepted Answer

A) True 
 B)False

Question 6

Capitalizing a cost involves crediting the asset account.

Accepted Answer

A) True 
 B)False

Question 7

A trademark should not be amortized over its useful life.

Accepted Answer

A) True 
 B)False

Question 8

Regardless of the type of plant asset disposal, the first step is to bring the depreciation up to date.

Accepted Answer

A) True 
 B)False

Question 9

Blake, Inc. purchased a van on January 1, 2015, for $800,000. Estimated life of the van was five years, and its estimated residual value was $90,000. Blake uses the straight-line method of depreciation. Give the journal entry to record the purchase of van for cash.

Accepted Answer

The answer of Blake, Inc. purchased a van on January...

Question 10

A business, which has a calendar year accounting period, purchased an asset on March 1, 2016. The business disposed of the asset on August 31, 2017. For the calendar year 2017, depreciation should be calculated from January 1 to August 31.

Accepted Answer

A) True 
 B)False

Question 11

U. S. Generally Accepted Accounting Principles permits the presentation of plant assets at their fair market value.

Accepted Answer

A) True 
 B)False

Question 12

Westland, Inc. owns a delivery truck. Which of the following costs, associated with the truck, will be treated as a revenue expenditure?

Accepted Answer

A)   oil change and lubrication
B)   major engine overhaul
C)   modification for new use
D)   addition to storage capacity

Question 13

On June 30, 2017, Adilide, Inc. discarded equipment costing $40,000. Accumulated Depreciation as of December 31, 2016, was $25,000. Assume annual depreciation on the equipment is $2,500. Prepare the journal entries for the 2017 depreciation expense and for the disposal of the equipment.

Accepted Answer

The answer of On June 30, 2017, Adilide, Inc. discarded...

Question 14

On June 30, 2016, Colora Printers purchased a printer for $59,000. It expects the printer to last for four years and have a residual value of $8,000. Compute the depreciation expense on the printer for the year ended December 31, 2016, using the straight-line method. (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Accepted Answer

A)   $12,750
B)   $6,375
C)   $14,750
D)   $7,438

Question 15

The units-of-production method allocates a varying amount of depreciation each year based on an asset's usage.

Accepted Answer

A) True 
 B)False

Question 16

Roberts Construction Group paid $11,000 for a plant asset that had a market value of $20,500. At which of the following amounts should the plant asset be recorded?

Accepted Answer

A)   $20,500
B)   $5,500
C)   $11,000
D)   $22,000

Question 17

Steel Rolling Corp. purchased a mine, which holds an estimated 39,000 tons of iron ore, on January 1, 2017, for $522,000. The mine is expected to have zero residual value. The business extracted and sold 17,500 tons of ore in 2017 and 15,800 tons of ore in 2018. What is the depletion expense for 2017? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Accepted Answer

A)   $211,404
B)   $234,150
C)   $172,404
D)   $287,670

Question 18

Which of the following asset categories would include the cost of clearing land and removing unwanted buildings?

Accepted Answer

A)   land
B)   buildings
C)   land improvements
D)   machinery and equipment

Question 19

Which of the following is an expense that results from the usage of a natural resource?

Accepted Answer

A)   depletion
B)   amortization
C)   depreciation
D)   obsolescence

Question 20

O'Reilly Corp. purchased a mine on January 1, 2016, for $539,000. The mine is estimated to contain 38,000 tons of iron ore. There is no residual value. The business extracted and sold 14,500 tons of ore in 2016 and 14,800 tons of ore in 2017. What is the book value of the mine at the end of 2017? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Accepted Answer

A)   $463,000
B)   $123,526
C)   $377,300
D)   $539,000

Exam 10: Plant Assets, Natural Resources, and Intangibles

Estimated residual value can be zero if the company does not expect to receive anything when disposing of the asset.

For each of the following amounts paid by a purchaser, determine whether the amount is debited to Land, Land Improvements, or Building.

For each of the following expenditures, indicate whether the amount is debited to an asset account or to an expense account.

Amortization is the process by which businesses spread the allocation of an intangible asset's cost over its useful life.

Capitalizing a cost involves crediting the asset account.

A trademark should not be amortized over its useful life.

Regardless of the type of plant asset disposal, the first step is to bring the depreciation up to date.

Blake, Inc. purchased a van on January 1, 2015, for $800,000. Estimated life of the van was five years, and its estimated residual value was $90,000. Blake uses the straight-line method of depreciation. Give the journal entry to record the purchase of van for cash.

A business, which has a calendar year accounting period, purchased an asset on March 1, 2016. The business disposed of the asset on August 31, 2017. For the calendar year 2017, depreciation should be calculated from January 1 to August 31.

U. S. Generally Accepted Accounting Principles permits the presentation of plant assets at their fair market value.

Westland, Inc. owns a delivery truck. Which of the following costs, associated with the truck, will be treated as a revenue expenditure?

On June 30, 2017, Adilide, Inc. discarded equipment costing $40,000. Accumulated Depreciation as of December 31, 2016, was $25,000. Assume annual depreciation on the equipment is $2,500. Prepare the journal entries for the 2017 depreciation expense and for the disposal of the equipment.

The units-of-production method allocates a varying amount of depreciation each year based on an asset's usage.

Roberts Construction Group paid $11,000 for a plant asset that had a market value of $20,500. At which of the following amounts should the plant asset be recorded?

Which of the following asset categories would include the cost of clearing land and removing unwanted buildings?

Which of the following is an expense that results from the usage of a natural resource?