Question 1

Ace Electronics bought a new cash register for $2,500.Ace originally planned to use the cash register for 4 years and then sell it for $200.After 4 years,Ace had recorded $2,300 of depreciation.If Ace continues to use the cash register,still planning to sell it eventually for $200,then Ace should record:

Accepted Answer

A)   no additional depreciation.
B)   $200 of additional depreciation.
C)   $575 of additional depreciation.
D)   the removal of the cash register from its books because it is fully depreciated.E) C) and D)
F) A) and B)

Question 2

When a company records depletion on natural resources,it will have which of the following effects?

Accepted Answer

A)   Expenses increase
B)   Net income decreases
C)   Inventory increases
D)   Cash flow decreasesE) B) and D)
F) A) and D)

Question 3

Use the information above to answer the following question.Assume the company decides to sell the computer system on July 1,2017 for $1,000,000.Which of the following statements about the journal entry (or entries) required on July 1 is not correct?

Accepted Answer

A)   The depreciation expense must be recorded for 6 months, January 1 to July 1.
B)   The Equipment asset account must be credited for $1,600,000 to record the sale.
C)   Accumulated Depreciation is debited for $612,500 in the entry to record the sale.
D)   The loss on the sale is $12,500.E) None of the above
F) C) and D)

Question 4

Intangible assets are:

Accepted Answer

A)   long-lived assets with no physical substance.
B)   unnecessary for most major companies.
C)   all current assets.
D)   any assets acquired without using cash.E) A) and B)
F) None of the above

Question 5

Which of the following characteristics is not associated with intangible assets?

Accepted Answer

A)   Lack physical substance.
B)   Those with an unlimited life are not amortized.
C)   Usually have a residual value.
D)   Amortization expense is reported each period for those with finite lives.E) B) and C)
F) A) and B)

Question 6

When a company sells a long-lived asset,stockholders' equity will change by the:

Accepted Answer

A)   amount of the sale.
B)   amount of the asset's book value.
C)   amount of the asset's Accumulated Depreciation.
D)   difference between the sales price and the asset's book value.E) All of the above
F) A) and D)

Question 7

Which of the following statements about capitalizing costs is correct?

Accepted Answer

A)   Capitalizing costs refers to the process of converting assets to expenses.
B)   All costs incurred to acquire an asset may be capitalized.
C)   Capitalizing a cost means to record it as an asset.
D)   Capitalizing costs results in an immediate decrease in net income.E) All of the above
F) A) and D)

Question 8

A company paid $17,000 for a vehicle that had an estimated useful life of 4 years,total capacity of 100,000 miles,and a residual value of $1,000.After 2 full years of using the vehicle (20,000 miles in Year 1 and 27,000 miles in Year 2),the company sold the vehicle for $6,000 and reported a loss on disposal of $3,480.
Required:
Determine the method of depreciation that was used by the company.(Show your work using all three methods.)

Accepted Answer

The company used the units-of-production...

Question 9

Which of the following statements about depreciation methods is not correct?

Accepted Answer

A)   The amount of depreciation expense recorded in each year of an asset's life depends on the method that is used.
B)   Different depreciation methods can be used for different classes of assets provided the methods are used consistently over time so that financial statement users can compare results across periods.
C)   At the end of an asset's life, after it has been fully depreciated, the total amount of depreciation will equal the asset's depreciable cost.
D)   The amount of net income reported each year will be the same regardless of the depreciation method used.E) B) and C)
F) A) and D)

Question 10

Depreciation is an allocation method,not a valuation method.

Accepted Answer

A) True 
 B)False

Question 11

Complete the table below by placing "X's" in the correct columns to identify the: (1)type of asset and (2)appropriate method of allocating the existing costs that were already recorded.

Accepted Answer

The answer of Complete the table below by placing "X's"...

Question 12

A real estate management company buys land that contains an abandoned apartment building for $4.5 million.It pays a construction company $500,000 to demolish the apartment building.Which of the following is correct?

Accepted Answer

A)   The company would record $5 million as the cost of the land.
B)   The company would record $4.5 million as the cost of the land.
C)   The company would record $4 million as the cost of the land.
D)   The company would record $500,000 as demolition expense.E) B) and C)
F) A) and D)

Question 13

Which of the following phrases best describes the interpretation of the fixed asset turnover ratio?

Accepted Answer

A)   It measures how efficiently sales are generated with a given amount of fixed assets.
B)   It measures return on total assets.
C)   It measures the speed of cash collected on fixed assets.
D)   It measures how quickly fixed assets are bought and sold.E) A) and C)
F) A) and B)

Question 14

A declining fixed asset turnover ratio can be caused by acquiring additional assets in the current period in anticipation of increased revenue in the future.

Accepted Answer

A) True 
 B)False

Question 15

Depletion is different from depreciation and amortization in that depletion is:

Accepted Answer

A)   added to inventory.
B)   used for intangible assets.
C)   no different from depreciation and amortization.
D)   an accelerated method.E) All of the above
F) A) and C)

Question 16

Why should a company divide up the cost of a "basket purchase" among the different assets purchased?

Accepted Answer

A)   A company with a longer list of assets will appear to be stronger.
B)   Some of the assets might be paid for more quickly than others.
C)   The different assets might be depreciated over different useful lives.
D)   Baskets are not long-lived assets.E) A) and D)
F) A) and B)

Question 17

A gain on the disposal of an asset occurs when the:

Accepted Answer

A)   asset's book value is greater than the selling price.
B)   asset's cost is greater than the asset's accumulated depreciation.
C)   selling price is greater than the asset's book value.
D)   accumulated depreciation is greater than the asset's book value.E) B) and C)
F) A) and D)

Question 18

Which of the following is not an amount that is needed to calculate straight-line depreciation?

Accepted Answer

A)   The cost of the asset
B)   An estimate of the asset's useful economic life to the company
C)   The estimated amount that the company will receive when it disposes of the asset
D)   The cost the company will be required to incur to replace the assetE) None of the above
F) A) and B)

Question 19

A trucking company sold its fleet of trucks for $55,000.The trucks originally cost $1,410,000 and had Accumulated Depreciation of $1,269,000 recorded through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

Accepted Answer

A)   Gain of $86,000
B)   Gain of $55,000
C)   Loss of $55,000
D)   Loss of $86,000E) None of the above
F) A) and B)

Question 20

When a company capitalizes a cost,its ______ increase.

Accepted Answer

A)   long-lived assets
B)   liabilities
C)   expenses
D)   revenuesE) C) and D)
F) B) and D)

Exam 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Which of the following statements about depreciation methods is not correct?

Correct Answer
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Which of the following characteristics is not associated with intangible assets?

Correct Answer
verified

When a company records depletion on natural resources,it will have which of the following effects?

Correct Answer
verified

A trucking company sold its fleet of trucks for $55,000.The trucks originally cost $1,410,000 and had Accumulated Depreciation of $1,269,000 recorded through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

Correct Answer
verified

Intangible assets are:

Correct Answer
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Which of the following is not an amount that is needed to calculate straight-line depreciation?

Correct Answer
verified

A real estate management company buys land that contains an abandoned apartment building for $4.5 million.It pays a construction company $500,000 to demolish the apartment building.Which of the following is correct?

Correct Answer
verified

A declining fixed asset turnover ratio can be caused by acquiring additional assets in the current period in anticipation of increased revenue in the future.

Correct Answer
verified

A gain on the disposal of an asset occurs when the:

Correct Answer
verified

Why should a company divide up the cost of a "basket purchase" among the different assets purchased?

Correct Answer
verified

When a company sells a long-lived asset,stockholders' equity will change by the:

Correct Answer
verified

Complete the table below by placing "X's" in the correct columns to identify the: (1)type of asset and (2)appropriate method of allocating the existing costs that were already recorded.

Correct Answer
verified

Depreciation is an allocation method,not a valuation method.

Correct Answer
verified

Use the information above to answer the following question.Assume the company decides to sell the computer system on July 1,2017 for $1,000,000.Which of the following statements about the journal entry (or entries) required on July 1 is not correct?

Correct Answer
verified

When a company capitalizes a cost,its ______ increase.

Correct Answer
verified

Which of the following phrases best describes the interpretation of the fixed asset turnover ratio?

Correct Answer
verified

Which of the following statements about capitalizing costs is correct?

Correct Answer
verified

Correct Answer
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Correct Answer
verified
The company used the units-of-production...
View Answer

Depletion is different from depreciation and amortization in that depletion is:

Correct Answer
verified

Exam 9: Reporting and Interpreting Long-Lived Tangible and Intangible Assets

Which of the following statements about depreciation methods is not correct?

Correct AnswerverifiedShow Answer

Which of the following characteristics is not associated with intangible assets?

Correct AnswerverifiedShow Answer

When a company records depletion on natural resources,it will have which of the following effects?

Correct AnswerverifiedShow Answer

A trucking company sold its fleet of trucks for $55,000.The trucks originally cost $1,410,000 and had Accumulated Depreciation of $1,269,000 recorded through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

Correct AnswerverifiedShow Answer

Intangible assets are:

Correct AnswerverifiedShow Answer

Which of the following is not an amount that is needed to calculate straight-line depreciation?

Correct AnswerverifiedShow Answer

A real estate management company buys land that contains an abandoned apartment building for $4.5 million.It pays a construction company $500,000 to demolish the apartment building.Which of the following is correct?

Correct AnswerverifiedShow Answer

A declining fixed asset turnover ratio can be caused by acquiring additional assets in the current period in anticipation of increased revenue in the future.

Correct AnswerverifiedShow Answer

A gain on the disposal of an asset occurs when the:

Correct AnswerverifiedShow Answer

Why should a company divide up the cost of a "basket purchase" among the different assets purchased?

Correct AnswerverifiedShow Answer

When a company sells a long-lived asset,stockholders' equity will change by the:

Correct AnswerverifiedShow Answer

Complete the table below by placing "X's" in the correct columns to identify the: (1)type of asset and (2)appropriate method of allocating the existing costs that were already recorded.

Correct AnswerverifiedShow Answer

Depreciation is an allocation method,not a valuation method.

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.Assume the company decides to sell the computer system on July 1,2017 for $1,000,000.Which of the following statements about the journal entry (or entries) required on July 1 is not correct?

Correct AnswerverifiedShow Answer

When a company capitalizes a cost,its ______ increase.

Correct AnswerverifiedShow Answer

Which of the following phrases best describes the interpretation of the fixed asset turnover ratio?

Correct AnswerverifiedShow Answer

Which of the following statements about capitalizing costs is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe company used the units-of-production...View AnswerShow Answer

Depletion is different from depreciation and amortization in that depletion is:

Correct AnswerverifiedShow Answer

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The company used the units-of-production...
View Answer

Correct Answer
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