Question 1

Indicate whether each of the following expenditures should be classified as:
-Driveway cost

Accepted Answer

A)  land (L) 
B)   land improvements (LI) 
C)   buildings (
B)  
D)   equipment (
E)  
E)   none of these (X)  B

Question 2

For each item listed, choose a code letter to indicate the allocation terminology for the item. Use the following codes for your answer:
-Trademarks

Accepted Answer

A)   Amortisation (
A)  
B)   Depreciation (
D)  
C)   None of these (N)  A

Question 3

Select of Section of the statement of financial position where the following items are reported. Use the following code to identify your answer:
-Buildings

Accepted Answer

A)   Property, plant and equipment(PP
E)  
B)   Intangibles(I) 
C)   Other(O) 
D)   Not on the statement of financial position(N/
A)   A

Question 4

Indicate whether each of the following expenditures should be classified as:
-Cost of trial runs for machinery

Accepted Answer

A)   land (L) 
B)   land improvements (LI) 
C)   buildings (
B)  
D)   equipment (
E)  
E)   none of these (X) .

Question 5

The Hang-Out, a popular pizza hang-out, has a thriving delivery business. The Hang-Out has a fleet of three delivery vehicles and they use the units of production (kilometre) method of depreciation. Prior to making the entry for this year's depreciation expense, the asset register for the fleet is as follows:
  Required:
(a) Determine the depreciation rates per kilometre for each car.
(b) Determine the depreciation expense for each car for the current year.
(c) Make one compound journal entry to record the annual depreciation expense for the fleet.

Accepted Answer

The answer of The Hang-Out, a popular pizza hang-out, has...

Question 6

Prepare the journal entries to record the following transactions for the Nobles Company, which has a financial year end of 31 December and uses the straight-line method of depreciation.
(a) On 30 September, 2019, the company sold old delivery equipment for $9,000. The delivery equipment was purchased on 1 January, 2017, for $21,000 and was estimated to have a $3,000 residual value at the end of its 5-year life. Depreciation on the delivery equipment has been recorded through 31 December, 2018.
(b) On 30 June, 2019, the company sold old office equipment for $18,000. The office equipment originally cost $24,000 and had accumulated depreciation to the date of disposal of $10,000.

Accepted Answer

The answer of Prepare the journal entries to record the...

Question 7

Match the descriptions with their terms:
-Expected cash value of the asset at the end of its useful life.

Accepted Answer

A)   Plant assets
B)   Depreciation
C)   Carrying amount
D)   Residual value
E)   Straight-line methodF)  Units-of-production methodG)  Diminishing balance methodH)  AmortisationI)  Revenue expendituresJ)  Capital expenditures

Question 8

Which of the following statements regarding accounting for the acquisition of property, plant and equipment is incorrect?

Accepted Answer

A)   Asset acquisition costs that are not expensed immediately are referred to as capital expenditures.
B)   Capital expenditures are expenditures that increase the company's investment in productive facilities.
C)   When the construction of a building is complete, the cost of interest is recorded as interest expense.
D)   When purchasing land, the cost for clearing, draining, filling and grading should be charged to a Land Improvements account.

Question 9

The Donovan Medical Centre purchased a new surgical laser for $64,000. The estimated residual value is $4,000. The laser has a useful life of six years and the clinic expects to use it 10,000 hours. It was used 1,600 hours in year 1; 2,100 hours in year 2; 2,400 hours in year 3; 1,400 hours in year 4; 2,000 hours in year 5; 500 hours in year 6.
Instructions:
(a) Calculate the annual depreciation for each of the six years under each of the following methods:
 (1) straight-line
 (2) units-of-production (service).
(b) If you were the administrator of the clinic, which method would you select as the most appropriate? Justify your answer.
(c) Which method would result in the lowest reported profit in the first year? Which method would result in the lowest total reported profit over the six-year period?

Accepted Answer

The answer of The Donovan Medical Centre purchased a new...

Question 10

For each item listed, choose a code letter to indicate the allocation terminology for the item. Use the following codes for your answer:
-Patents

Accepted Answer

A)   Amortisation (
A)  
B)   Depreciation (
D)  
C)   None of these (N)

Question 11

Warners Warehouse installs a new parking lot. The paving cost $45,000 and the lights to illuminate the new parking area cost $15,000. Which of the following statements is true with respect to these additions?

Accepted Answer

A)   $45,000 should be debited to the Land account.
B)   $60,000 should be debited to Land improvements.
C)   $60,000 should be debited to the Land account.
D)   $15,000 should be debited to Land improvements.

Question 12

Match the descriptions with their terms:
-Calculated as the average cost of plant assets divided by depreciation expense.

Accepted Answer

A)   Gain on disposal
B)   Loss on disposal
C)   Trademark
D)   Finance lease
E)   Asset turnoverF)  Average useful lifeG)  GoodwillH)  Agricultural assetsI)  Intangible assetJ)  Research costs

Question 13

Select of Section of the statement of financial position where the following items are reported. Use the following code to identify your answer:
-Land improvements

Accepted Answer

A)   Property, plant and equipment(PP
E)  
B)   Intangibles(I) 
C)   Other(O) 
D)   Not on the statement of financial position(N/
A)

Question 14

Match the descriptions with their terms:
-Indicates how efficiently a company is able to generate sales with a given amount of assets.

Accepted Answer

A)   Gain on disposal
B)   Loss on disposal
C)   Trademark
D)   Finance lease
E)   Asset turnoverF)  Average useful lifeG)  GoodwillH)  Agricultural assetsI)  Intangible assetJ)  Research costs

Question 15

Which of the following statements regarding depreciation is true?

Accepted Answer

A)   All property, plant and equipment assets must be depreciated.
B)   Recording deprecation on plant assets affects the income statement only.
C)   In calculating depreciation expense both the cost of the asset and its residual value are estimates.
D)   Depreciable amount is the cost of the asset less its residual value.

Question 16

Indicate whether each of the following expenditures should be classified as:
-Insurance and freight on equipment purchased

Accepted Answer

A)  land (L) 
B)   land improvements (LI) 
C)   buildings (
B)  
D)   equipment (
E)  
E)   none of these (X)

Question 17

Indicate whether each of the following expenditures should be classified as:
-Parking lots

Accepted Answer

A)   land (L) 
B)   land improvements (LI) 
C)   buildings (
B)  
D)   equipment (
E)  
E)   none of these (X) .

Question 18

Identify the following expenditures :
-Oil change on a company truck.

Accepted Answer

A)   capital expenditures
B)   revenue expenditures.

Question 19

Trentham Transport purchases a new delivery truck for $80,000. The stamp and transfer duty is $3,000. The logo of the company is painted on the side of the truck for $500. The truck registration is $700 and a 12 month accident insurance policy is $1100. The truck undergoes safety testing for $330. What does Trentham Transport record as the cost of the new truck?

Accepted Answer

A)   $85,630.
B)   $83,830.
C)   $80,000.
D)   $83,000.

Question 20

Value in use is the:

Accepted Answer

A)   book value of net cash flows.
B)   nominal value of net cash flows.
C)   present value of net cash flows.
D)   face value of net cash flows.

Exam 8: Reporting and Analysing Non-Current Assets

Indicate whether each of the following expenditures should be classified as: -Driveway cost

For each item listed, choose a code letter to indicate the allocation terminology for the item. Use the following codes for your answer: -Trademarks

Select of Section of the statement of financial position where the following items are reported. Use the following code to identify your answer: -Buildings

Indicate whether each of the following expenditures should be classified as: -Cost of trial runs for machinery

Match the descriptions with their terms: -Expected cash value of the asset at the end of its useful life.

Which of the following statements regarding accounting for the acquisition of property, plant and equipment is incorrect?

For each item listed, choose a code letter to indicate the allocation terminology for the item. Use the following codes for your answer: -Patents

Warners Warehouse installs a new parking lot. The paving cost $45,000 and the lights to illuminate the new parking area cost $15,000. Which of the following statements is true with respect to these additions?

Match the descriptions with their terms: -Calculated as the average cost of plant assets divided by depreciation expense.

Select of Section of the statement of financial position where the following items are reported. Use the following code to identify your answer: -Land improvements

Match the descriptions with their terms: -Indicates how efficiently a company is able to generate sales with a given amount of assets.

Which of the following statements regarding depreciation is true?

Indicate whether each of the following expenditures should be classified as: -Insurance and freight on equipment purchased

Indicate whether each of the following expenditures should be classified as: -Parking lots

Identify the following expenditures : -Oil change on a company truck.

Value in use is the: