Question 1

Match the descriptions with their terms:
-Costs associated with the purchase of plant assets.

Accepted Answer

A)  Plant assets 
B)  Depreciation 
C)  Carrying amount 
D)  Residual value 
E)  Straight-line method
F) Units-of-production method
G) Diminishing balance method
H) Amortisation
I) Revenue expenditures
J) Capital expenditures

Question 2

Indicate whether each of the following expenditures should be classified as:
-Cost of tearing down a warehouse on land just purchased

Accepted Answer

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

Question 3

Complete the following statements:
-A plant asset originally cost $16,000 and was estimated to have a $1,000 residual value at the end of its 5-year useful life. If at the end of three years, the asset was sold for $4,000, and had accumulated depreciation recorded of $9,000, the company should recognise a(n) ______________ on disposal in the amount of $____________.

Accepted Answer

The answer of Complete the following statements:
-A plant asset originally...

Question 4

Which of the following is not a characteristic of a plant asset?

Accepted Answer

A)  Plant assets are intangible. 
B)  Plant assets are used in the operations of a business. 
C)  Plant assets are expected to provide future economic benefits for a number of years. 
D)  Not currently used in the business but held for future use.

Question 5

Match the descriptions with their terms:
-Must be expensed when incurred.

Accepted Answer

A)  Gain on disposal 
B)  Loss on disposal 
C)  Trademark 
D)  Finance lease 
E)  Asset turnover
F) Average useful life
G) Goodwill
H) Agricultural assets
I) Intangible asset
J) Research costs

Question 6

Biological assets cannot be recognised unless the assets can be reliably measured and:

Accepted Answer

A)  the products are the result of harvesting. 
B)  it is probable that the future economic benefits will eventuate 
C)  the asset can be sold into an active market. 
D)  the cost of the asset is zero.

Question 7

Presented below are selected transactions for Ronnen Products Ltd for 2019.
  Journalise all entries required as a result of the above transactions. Ronnen Products Ltd uses the straight-line method of depreciation and has recorded depreciation through 31 December, 2019.

Accepted Answer

The answer of Presented below are selected transactions for Ronnen...

Question 8

Match the descriptions with their terms:
-Process of allocating the cost of an intangible asset over its useful or legal life.

Accepted Answer

A)  Plant assets 
B)  Depreciation 
C)  Carrying amount 
D)  Residual value 
E)  Straight-line method
F) Units-of-production method
G) Diminishing balance method
H) Amortisation
I) Revenue expenditures
J) Capital expenditures

Question 9

Chuck's Timber Mill sold two machines in 2019. The following information pertains to the two machines:
  Required:
(a) Calculate the depreciation on each machine to the date of disposal. The financial year ends 31 December.
(b) Prepare the journal entries in 2019 to record 2019 depreciation and the sale of each machine.

Accepted Answer

The answer of Chuck's Timber Mill sold two machines in...

Question 10

Equipment was purchased for $45,000. Freight charges amounted to $500 and there was a cost of $2,500 for building a foundation and installing the equipment. It is estimated that the equipment will have a $8,000 residual value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be:

Accepted Answer

A)  $9,600. 
B)  $8,000. 
C)  $9,000. 
D)  $7,400.

Question 11

Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an estimated life of 4 years or 12,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation expense for the first full year, during which the equipment was used 3,300 hours?

Accepted Answer

A)  $40,000. 
B)  $41,250. 
C)  $42,500. 
D)  $37,500.

Question 12

Outback Airlines purchased a 747 aircraft on 1 January, 2019, at a cost of $30,000,000. The estimated useful life of the aircraft is 20 years, with an estimated residual value of $4,000,000.
Calculate the accumulated depreciation and carrying amount at 31 December, 2019, 2020 and 2021 using the straight-line method and the diminishing value method and a rate of 10%.

Accepted Answer

The answer of Outback Airlines purchased a 747 aircraft on...

Question 13

Cole Company buys land for $50,000 on 31/12/19. As of 31/3/20, the land has appreciated in value to $50,500. On 31/12/20, the land has an appraised value of $51,800. By what amount must the Land account be increased in 2022?

Accepted Answer

A)  $0. 
B)  $500. 
C)  $1,300. 
D)  $1,800.

Question 14

a. A machine that cost $18,000 and on which $13,000 of depreciation had been recorded was disposed of for $5,200. Indicate whether a gain or loss should be recorded, and for what amount.
b. Assume that the machine in part A above was instead discarded. Indicate whether a gain or loss should be recorded, and for what amount.
c. Assume that the machine in part A above was instead sold for $4,800. Indicate whether a gain or loss should be recorded, and for what amount.

Accepted Answer

The answer of a. A machine that cost $18,000 and...

Question 15

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

Accepted Answer

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

Question 16

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of for $2,000 cash. The entry to record this event would include a:

Accepted Answer

A)  gain of $1,000. 
B)  loss of $1,000. 
C)  credit to Truck account for $3,000. 
D)  credit to Accumulated depreciation for $9,000.

Question 17

Jeff's Copy Shop purchased equipment for $18,000 on 1 January, 2019. Jeff estimated the useful life to be 3 years with no residual value, and the straight-line method of depreciation will be used. On 1 January, 2020, Jeff decides that the business will use the equipment for a total of 5 more years. What is the revised depreciation expense for 2019?

Accepted Answer

A)  $6,000. 
B)  $3,000. 
C)  $2,400. 
D)  $4,500.

Question 18

An agricultural activity is the management by an entity of the biological transformation of:

Accepted Answer

A)  agricultural produce into biological assets. 
B)  biological assets into agricultural produce. 
C)  harvested produce into biological assets. 
D)  processed goods into harvested goods.

Question 19

Match the descriptions with their terms:
-Examples are franchises and licences.

Accepted Answer

A)  Gain on disposal 
B)  Loss on disposal 
C)  Trademark 
D)  Finance lease 
E)  Asset turnover
F) Average useful life
G) Goodwill
H) Agricultural assets
I) Intangible asset
J) Research costs

Question 20

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

Accepted Answer

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

Exam 8: Reporting and Analysing Non-Current Assets

Match the descriptions with their terms: -Costs associated with the purchase of plant assets.

Indicate whether each of the following expenditures should be classified as: -Cost of tearing down a warehouse on land just purchased

Which of the following is not a characteristic of a plant asset?

Match the descriptions with their terms: -Must be expensed when incurred.

Biological assets cannot be recognised unless the assets can be reliably measured and:

Presented below are selected transactions for Ronnen Products Ltd for 2019. Journalise all entries required as a result of the above transactions. Ronnen Products Ltd uses the straight-line method of depreciation and has recorded depreciation through 31 December, 2019.

Match the descriptions with their terms: -Process of allocating the cost of an intangible asset over its useful or legal life.

Cole Company buys land for $50,000 on 31/12/19. As of 31/3/20, the land has appreciated in value to $50,500. On 31/12/20, the land has an appraised value of $51,800. By what amount must the Land account be increased in 2022?

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

A truck that cost $12,000 and on which $9,000 of accumulated depreciation has been recorded was disposed of for $2,000 cash. The entry to record this event would include a:

An agricultural activity is the management by an entity of the biological transformation of:

Match the descriptions with their terms: -Examples are franchises and licences.

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