Question 1

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

Accepted Answer

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

Question 2

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 straight-line 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)  $37,500. 
C)  $41,250. 
D)  $42,500.

Question 3

Match the descriptions with their terms:
-A long-term agreement allowing the lessee to use the lessor's asset.

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 4

Identify the following expenditures :
-Replacing a Pentium chip with a core 2 Duo chip, which increases productive capacity. No extension of useful life expected.

Accepted Answer

A)  capital expenditures 
B)  revenue expenditures.

Question 5

Match the descriptions with their terms:
-Process of allocating the cost of equipment over its service 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 6

For each entry below make a correcting entry if necessary.
(a) The $50 cost of repairing a printer was charged to Computer equipment.
(b) The $5,500 cost of a major engine overhaul was debited to Repair expense. The overhaul is expected to increase the operating efficiency of the truck.
(c) $6,000 of stamp duty costs associated with the acquisition of land were debited to Legal expense.
(d) A $400 charge for transportation expenses on new equipment purchased was debited to Freight-in.

Accepted Answer

The answer of For each entry below make a correcting...

Question 7

Identify the following expenditures :
-Overhaul of a truck motor. One-year extension in useful life is expected.

Accepted Answer

A)  capital expenditures 
B)  revenue expenditures.

Question 8

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

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 9

Complete the following statements:
-The management by an entity of the biological transformation of assets into 
produce is known as a(n) ________________ activity.

Accepted Answer

The answer of Complete the following statements:
-The management by an...

Question 10

A patent that was acquired for $800,000 at the beginning of the current year expires in 20 years and is expected to have value for 4 years. Present the adjusting entry to amortise the patent for the current year.

Accepted Answer

The answer of A patent that was acquired for $800,000...

Question 11

Kauri Ltd purchased equipment on 1 January, 2018, at a cost of $75,000. The equipment was originally estimated to have a residual value of $5,000 and an estimated life of 10 years. Depreciation has been recorded through 31 December, 2020, using the straight-line method. On 1 January, 2021, the estimated salvage value was revised to $6,000 and the useful life was revised to a further 8 years.
Instructions: Determine the depreciation expense for 2021

Accepted Answer

The answer of Kauri Ltd purchased equipment on 1 January,...

Question 12

The following information is available from the 2019 annual reports of Fresh Food and Food for Cheap:
  Required:
(a) Based on the preceding information, calculate the following values for each company:
 1. average useful life of plant assets
 2. average age of plant assets
 3. asset turnover.
(b) What conclusion concerning the management of plant assets can be drawn from these data?

Accepted Answer

The answer of The following information is available from the...

Question 13

Match the descriptions with their terms:
-Cost less accumulated depreciation.

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 14

Indicate whether each of the following expenditures should be classified as:
-Material and labour costs incurred to construct factory

Accepted Answer

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

Question 15

Matai Ltd purchased a machine on 1 January, 2018. In addition to the purchase price paid, the following additional costs were incurred: 
(a) sales tax paid on the purchase price
(b) transportation and insurance costs while the machinery was in transit from the seller
(c) personnel training costs for initial operation of the machinery
 (d) installation costs necessary to secure the machinery to the building flooring
(e) major overhaul to extend the life of the machinery
 (f) lubrication of the machinery gearing before the machinery was placed into service
(g) lubrication of the machinery gearing after the machinery was placed into service
 (h) annual operating license fee.
Indicate whether the items (a) through (h) are capital or revenue expenditures in the spaces provided: C = capital, R = revenue.

Accepted Answer

The answer of Matai Ltd purchased a machine on 1...

Question 16

Wisemans Winery purchases land for $200,000 cash. Wisemans Winery assumes $2,500 in rates and taxes due on the land. The title and legal fees totaled $2,750. Wisemans Winery has the land graded for $5,000 and fenced for $20,000. What amount does Wisemans Winery record as the cost for the land?

Accepted Answer

A)  $200,000 
B)  $230,250 
C)  $210,250 
D)  $202,750

Question 17

A plant asset was purchased on 1 January for $30,000 with an estimated residual value of $6,000 at the end of its useful life. The current year's depreciation expense is $3,000 calculated on the straight-line basis and the balance of the Accumulated depreciation account at the end of the year is $15,000. The remaining useful life of the plant asset is:

Accepted Answer

A)  10 years. 
B)  8 years. 
C)  5 years. 
D)  3 years.

Question 18

A truck costing $35,000 was destroyed when its engine caught fire. At the date of the fire, the accumulated depreciation on the truck was $16,000. An insurance cheque for $40,000 was received based on the replacement cost of the truck. The entry to record the insurance proceeds and the disposition of the truck will include a:

Accepted Answer

A)  gain on disposal of $5,000. 
B)  debit to the Truck account of $19,000. 
C)  credit to the Accumulated depreciation account for $16,000. 
D)  gain on disposal of $21,000.

Question 19

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

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 20

Indicate whether each of the following expenditures should be classified as:
-Sewage system 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

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

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 straight-line method. What is the amount of depreciation expense for the first full year, during which the equipment was used 3,300 hours?

Match the descriptions with their terms: -A long-term agreement allowing the lessee to use the lessor's asset.

Identify the following expenditures : -Replacing a Pentium chip with a core 2 Duo chip, which increases productive capacity. No extension of useful life expected.

Match the descriptions with their terms: -Process of allocating the cost of equipment over its service life.

Identify the following expenditures : -Overhaul of a truck motor. One-year extension in useful life is expected.

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

Complete the following statements: -The management by an entity of the biological transformation of assets into produce is known as a(n) ________________ activity.

A patent that was acquired for $800,000 at the beginning of the current year expires in 20 years and is expected to have value for 4 years. Present the adjusting entry to amortise the patent for the current year.

Match the descriptions with their terms: -Cost less accumulated depreciation.

Indicate whether each of the following expenditures should be classified as: -Material and labour costs incurred to construct factory

Wisemans Winery purchases land for $200,000 cash. Wisemans Winery assumes $2,500 in rates and taxes due on the land. The title and legal fees totaled $2,750. Wisemans Winery has the land graded for $5,000 and fenced for $20,000. What amount does Wisemans Winery record as the cost for the land?

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

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