Question 1

On June 1, 2019, Martin Products purchased a silver mine for $3,000,000. Costs to further explore and develop the mine totaled $1,500,000. The value of the mine once mining operations are completed is expected to total $1,000,000. Martin Products expects to extract 1,250,000 tons of ore from the mine. During 2019, 150,000 tons of ore were extracted. 80,000 tons were sold to another company for further processing.
What is the depletion rate for Martin Products?

Accepted Answer

A)  $3.60 per ton 
B)  $2.80 per ton 
C)  $2.40 per ton 
D)  $1.60 per ton

Question 2

During 2019, Belmont, Inc. had net sales of $19,880,000 and net income of $2,430,000. Total assets were $13,800,000 at January 1, 2019 and $16,200,000 at December 31, 2019.
Belmont's asset turnover for 2019 is:

Accepted Answer

A)  1.405 
B)  0.182 
C)  0.196 
D)  1.325

Question 3

Portland Company purchased a machine on January 1, 2018 for $24,000. The company estimates that the machine will have a $2,000 salvage value at the end of its 10 year useful life. On September 30, 2022 the machine was sold for a gain of $1,750.
What must have been the selling price of the machine?

Accepted Answer

A)  $14,350 
B)  $11,800 
C)  $15,300 
D)  $17,500

Question 4

On January 1, 2019, Ginger Company purchased land and a building for a total cash price of $6,900,000. Individually, the land was appraised at $2,250,000 and the building at $5,250,000. The buildings estimated useful life is 25 years and its estimated salvage value is $300,000.
Required:
a. Prepare the journal entry to record the purchase of land and building on January 1, 2019.
b. What is the 2019 depreciation expense on the building, assuming that double declining-balance depreciation is used?

Accepted Answer

The answer of On January 1, 2019, Ginger Company purchased...

Question 5

On April 1, 2019, Justin Company purchased a copper mine at a cost of $28,000,000. The mine was estimated to contain 1,000,000 tons of ore and to have a residual value of $8,000,000 after mining operations are completed. During the year, 250,000 tons of ore were removed from the mine.
On December 31, 2019, the book value of the mine is:

Accepted Answer

A)  $20,500,000 
B)  $23,000,000 
C)  $17,500,000 
D)  $14,000,000

Question 6

On June 30, 2019, Robert, Inc. sold some used equipment for $90,000. The equipment had been purchased several years ago for $195,000. Robert, Inc. properly recorded a $21,000 gain on the sale.
The accumulated depreciation on the equipment at the date of sale was:

Accepted Answer

A)  $ 96,000 
B)  $102,000 
C)  $126,000 
D)  $ 66,000

Question 7

Several years ago, Kokoras, Inc. purchased a computer costing $135,000, for which total depreciation of $105,000 has been recorded.
Assuming that the computer is sold for $45,000 cash, the proper entry to record the sale is:

Accepted Answer

A)  Debit Cash, $45,000; debit Accumulated Depreciation, $105,000; credit Computer, $135,000 
B)  Debit Cash, $45,000; debit Accumulated Depreciation, $105,000; credit Computer, $144,000 
C)  Debit Cash, $45,000; debit Accumulated Depreciation, $105,000; credit Computer, $135,000; credit Gain on Sale of Computer, $15,000 
D)  Debit Cash, $45,000; credit Computer $30,000; credit Gain on Sale of Computer, $15,000

Question 8

Bread Company sells a plant asset that originally cost $1,080,000 for $360,000 on December 31, 2019. The accumulated depreciation account had a balance of $540,000 after the current year's depreciation had been recorded.
The company should recognize a:

Accepted Answer

A)  $360,000 loss on disposal 
B)  $180,000 loss on disposal 
C)  $180,000 gain on disposal 
D)  $360,000 gain on disposal

Question 9

On January 1, 2017, Cornie, Inc. purchased a machine for $111,600. Cornie uses straight-line depreciation and estimates an eight-year useful life and a $3,600 salvage value. On December 31, 2024, Cornie cannot locate a buyer for the used machine so it is scrapped.
In recording the machine retirement, Cornie should reflect:

Accepted Answer

A)  No gain or loss 
B)  A $ 3,600 gain 
C)  A $ 3,600 loss 
D)  A $86,400 loss

Question 10

Arabia Corporation purchased a truck at the beginning of 2019 for $540,000. The truck is estimated to have a salvage value of $18,000 and a useful life of 480,000 miles. It was driven 72,000 miles in 2019 and 128,000 miles in 2020.
What is the book value of the truck on December 31, 2020?

Accepted Answer

A)  $334,800 
B)  $252,000 
C)  $322,500 
D)  $180,000

Question 11

On January 1, 2019, Calvin, Inc. purchased a new machine for $192,000. Its estimated useful life is 10 years with an expected salvage value of $32,000.
Assuming double-declining balance depreciation, 2019 depreciation expense is:

Accepted Answer

A)  $20,000 
B)  $12,000 
C)  $38,400 
D)  $32,000

Question 12

Following is a numbered list of assets and the definitions of six assets. Place the number of the appropriate asset in the space to the left of its definition.
-Legal protection for an owner against the unauthorized reproduction of a specific written work, recorded work, or artwork.

Accepted Answer

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

Question 13

A company purchased a computer on January 1, 2019 for $40,000 cash. The computer is estimated to have a 5 year useful life, and no salvage value. On January 1, 2020, due to obsolescence, the computer is estimated to have only 2 years of remaining useful life, and the estimated salvage value after the 2 remaining years will be $4,000.
Assuming straight line depreciation, the amount of depreciation expense to be recorded on December 31, 2020 will be:

Accepted Answer

A)  $16,000 
B)  $12,000 
C)  $20,000 
D)  $14,000

Question 14

Peak, Inc. acquired a machine that involved the following expenditures and related factors:
 The initial accounting cost of the machine should be:

Accepted Answer

A)  $34,576 
B)  $28,016 
C)  $32,016 
D)  $31,616

Question 15

On January 1, 2017, Panda Company purchased a delivery truck for $105,000. They estimated the useful life of the truck to be 6 years, and the salvage value to be $19,500. On July 1, 2022, they sold the truck for a loss of $2,700.
Assuming the company uses straight line depreciation, calculate the selling price of the truck.

Accepted Answer

A)  $22,125 
B)  $24,825 
C)  $23,925 
D)  $33,750

Question 16

For each of the following items, indicate whether the costs should be capitalized or expensed immediately.
1. Purchased a patent for $32,000.
2. Paid $715,000 to overhaul a drilling rig. The overhaul will extend the useful life by 3 years.
3. Paid $1,600 for routine maintenance and lubrication of a tractor. 
4. Paid $19,000 to install new equipment in the production line that will "super-cool" the product and allow for faster shipping of fresher merchandise.

Accepted Answer

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

Question 17

Accumulated Depletion is the estimated cost of natural resources removed from their natural setting to date.

Accepted Answer

A) True 
 B)False

Question 18

Equipment was purchased for $180,000 on March 1, 2019. Its estimated useful life is eight years with a $18,000 expected salvage value.
Using double-declining balance depreciation, the 2020 depreciation expense is:

Accepted Answer

A)  $35,625 
B)  $37,500 
C)  $33,750 
D)  $40,500

Question 19

Eastern Company purchased a machine on January 1, 2019, for $180,000. At that time, the machine's useful life was an estimated six years with a zero salvage value. Just before depreciation was recorded for 2023, the machine's estimated useful life was extended by six years with a $12,000 salvage value.
Using straight-line depreciation, what is the 2023 depreciation expense?

Accepted Answer

A)  $30,000 
B)  $13,716 
C)  $13,500 
D)  $ 6,000

Question 20

Perfect Pastries buys a display case for her bakery business on January 1, 2019. The case cost $36,000 and is expected to be used for ten years. At the end of the ten years it is expected that the case can be sold for $4,000. 
Compute the depreciation expense for the third year (2021) using both straight-line and double-declining-balance depreciation methods.

Accepted Answer

The answer of Perfect Pastries buys a display case for...

Exam 9: Accounting for Long-Lived and Intangible Assets

During 2019, Belmont, Inc. had net sales of $19,880,000 and net income of $2,430,000. Total assets were $13,800,000 at January 1, 2019 and $16,200,000 at December 31, 2019. Belmont's asset turnover for 2019 is:

Portland Company purchased a machine on January 1, 2018 for $24,000. The company estimates that the machine will have a $2,000 salvage value at the end of its 10 year useful life. On September 30, 2022 the machine was sold for a gain of $1,750. What must have been the selling price of the machine?

On June 30, 2019, Robert, Inc. sold some used equipment for $90,000. The equipment had been purchased several years ago for $195,000. Robert, Inc. properly recorded a $21,000 gain on the sale. The accumulated depreciation on the equipment at the date of sale was:

Several years ago, Kokoras, Inc. purchased a computer costing $135,000, for which total depreciation of $105,000 has been recorded. Assuming that the computer is sold for $45,000 cash, the proper entry to record the sale is:

Bread Company sells a plant asset that originally cost $1,080,000 for $360,000 on December 31, 2019. The accumulated depreciation account had a balance of $540,000 after the current year's depreciation had been recorded. The company should recognize a:

Arabia Corporation purchased a truck at the beginning of 2019 for $540,000. The truck is estimated to have a salvage value of $18,000 and a useful life of 480,000 miles. It was driven 72,000 miles in 2019 and 128,000 miles in 2020. What is the book value of the truck on December 31, 2020?

On January 1, 2019, Calvin, Inc. purchased a new machine for $192,000. Its estimated useful life is 10 years with an expected salvage value of $32,000. Assuming double-declining balance depreciation, 2019 depreciation expense is:

Following is a numbered list of assets and the definitions of six assets. Place the number of the appropriate asset in the space to the left of its definition. -Legal protection for an owner against the unauthorized reproduction of a specific written work, recorded work, or artwork.

Peak, Inc. acquired a machine that involved the following expenditures and related factors: The initial accounting cost of the machine should be:

Accumulated Depletion is the estimated cost of natural resources removed from their natural setting to date.

Equipment was purchased for $180,000 on March 1, 2019. Its estimated useful life is eight years with a $18,000 expected salvage value. Using double-declining balance depreciation, the 2020 depreciation expense is: