Question 1

Peppertree Co.'s financial statements on December 31,2018,showed the following:  What is the fixed asset turnover for 2018 (rounded to two decimal places) ?

Accepted Answer

A)  3.93
B)  2.60
C)  4.10
D)  2.79E) None of the above
F) A) and D)

Question 2

Holly,Inc.has a building that originally cost $562,500.Holly expects to be able to sell the facility for $160,500 at the end of its useful life.The balance of the related Accumulated Depreciation account is $387,000.The residual value of the facility is:

Accepted Answer

A)  $175,500.
B)  $226,500.
C)  $402,000.
D)  $160,500.E) B) and C)
F) A) and C)

Question 3

Your company has net sales revenue of $36 million during the year.At the beginning of the year,fixed assets are $8 million.At the end of the year,fixed assets are $10 million.What is the fixed asset turnover ratio?

Accepted Answer

A)  4.5
B)  4.0
C)  2.0
D)  3.6E) A) and D)
F) B) and D)

Question 4

When S.Dee Company bought B.Darin Company,the purchase price included a patent valued at $15,000.The patent has 10 years remaining of its legal life,but its estimated useful life to S.Dee Company was only 8 years.The journal entry to record the annual patent amortization would include a:

Accepted Answer

A)  debit to Patent,$1,875.
B)  debit to Amortization expense,$1,875.
C)  credit to Patent,$1,500.
D)  credit to Amortization expense,$1,500.E) All of the above
F) A) and C)

Question 5

Duluth Ranch,Inc.purchased a machine on January 1,2018.The cost of the machine was $34,000.Its estimated residual value was $10,000 at the end of an estimated 5-year life.The company expects to produce a total of 20,000 units.The company produced 2,500 units in 2018 and 3,200 units in 2019.
Required:
Part a.Calculate depreciation expense for 2018 and 2019 using the straight-line method.
Part b.Calculate the depreciation expense for 2018 and 2019 using the units-of-production method.
Part c.Calculate depreciation expense for 2018 through 2022 using the double-declining balance method.

Accepted Answer

Part a
Depreciation expense per year = (...

Question 6

Companies within the same industry do not always use the same depreciation method,but will use the same expected useful life for the same piece of equipment.

Accepted Answer

A) True 
 B)False

Question 7

Xit Company bought a new delivery truck.The manufacturer says that the truck should last for ten years or 120,000 miles.Xit plans to use the truck for 4 years,during which it will be driven 50,000 miles.What is the useful life of the truck for straight-line depreciation purposes?

Accepted Answer

A)  50,000 miles
B)  10 years
C)  4 years
D)  120,000 milesE) C) and D)
F) None of the above

Question 8

Chuck Daniels Auto acquired a hydraulic lift on August 1,2018.The lift cost $165,000,had an estimated useful life of 10 years and a residual value of $16,500 at the end of its useful life.What amount of depreciation expense would be recognized under the double-declining-balance method for the year ending December 31,2018?

Accepted Answer

A)  $13,750
B)  $16,500
C)  $33,000
D)  $19,250E) All of the above
F) C) and D)

Question 9

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

Accepted Answer

A)  A smaller fixed asset turnover ratio and a smaller gain on asset disposal.
B)  A larger fixed asset turnover ratio and a larger gain on asset disposal.
C)  A smaller fixed asset turnover ratio and a larger gain on asset disposal.
D)  A larger fixed asset turnover ratio and a smaller gain on asset disposal.E) None of the above
F) A) and D)

Question 10

Your company buys a computer server that it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

Accepted Answer

A)  eight years.
B)  eleven years.
C)  five years.
D)  three years.E) A) and C)
F) B) and D)

Question 11

When assets are purchased as a group,the total cost must be divided up and allocated to each asset in proportion to the market value of the assets as a whole.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not the same as book value?

Accepted Answer

A)  Carrying value
B)  Cost less accumulated depreciation
C)  Unused cost
D)  Market valueE) C) and D)
F) All of the above

Question 13

The straight-line depreciation method and the double-declining-balance depreciation method:

Accepted Answer

A)  produce the same total depreciation over the asset's useful life.
B)  produce the same amount of depreciation expense each year.
C)  produce the same book value each year.
D)  are the only acceptable methods of depreciation for financial reporting.E) A) and D)
F) B) and C)

Question 14

Match each term with the appropriate definition.Not all definitions will be used.
-Straight-line depreciation

Accepted Answer

A)  When a company expenses the entire cost of a long-lived asset in the first year of use.
B)  When a company receives free publicity in return for charitable contributions.
C)  A tax law dealing with how companies can depreciate their assets.
D)  The acquisition cost of an asset minus its accumulated depreciation.
E)  When a company expenses the cost of a long-lived asset by a constant annual amount.F) The exclusive right to sell or use a product or process that is granted to encourage innovation.G) Net income plus interest,taxes,depreciation and amortization expenses.H) Tangible long-lived assets.I) An intangible asset that represents the value of unidentifiable assets acquired.J) Names or images that appear with a ® or TM.K) What a company expects to receive when an asset is disposed of at the end of its useful life.L) Assets whose values do not change over time.M) When a company allocates the cost of a long-lived asset at a higher rate in the first years of use.N) The estimated total use a company expects to receive from an asset.O) A) and L)
P) M) and N)

Question 15

When originally purchased,a vehicle had an estimated useful life of 8 years.The vehicle cost $25,000 and its estimated residual value is $3,000.After 3 years of straight-line depreciation,the asset's total estimated useful life was revised from 8 years to 5 years and there was no change in the estimated residual value.The Depreciation Expense in year 4 is:

Accepted Answer

A)  $6,875.
B)  $4,400.
C)  $4,125.
D)  $1,650.E) C) and D)
F) A) and D)

Question 16

Match each term with the appropriate explanation.Not all explanations will be used.
-Asset impairment loss

Accepted Answer

A)  Assets that will be used for more than a year.
B)  When a company writes down the value of an asset when estimated future cash flows fall below the original level estimated.
C)  The numerator of the fixed asset turnover ratio.
D)  The cost of financing an asset.
E)  When costs are recorded as assets rather than expenses.F) How expenses are reported in the income statement.G) The denominator of the fixed asset turnover ratio.H) The average proportion of a company's total assets that is long-lived.I) A depreciation method that produces higher amounts of depreciation expense in the early years of an asset's life and lower amounts in the later years.J) When a company writes down the value of an asset because estimated future cash flows fall below the book value.K) Assets that have physical substance.L) A depreciation method that spreads asset cost by use rather than time.M) The process of transferring the cost of long-lived tangible assets to expenses.N) Also known as book value.O) I) and M)
P) D) and F)

Question 17

Assuming no additions,replacements,or extraordinary repairs,the book value of a long-lived asset declines over time.

Accepted Answer

A) True 
 B)False

Question 18

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) B) and C)
F) All of the above

Question 19

Depreciable cost equals an asset's cost:

Accepted Answer

A)  divided by its useful life.
B)  minus its residual (or salvage) value.
C)  minus accumulated depreciation.
D)  plus its residual (or salvage) value.E) None of the above
F) B) and C)

Question 20

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

Accepted Answer

A)  debit Amortization Expense for $62,000 and credit Accumulated Depreciation for $62,000.
B)  debit Intangible assets and credit Accumulated Amortization for an amount equal to 20% of book value.
C)  debit Amortization expense for $62,000 and credit Patent for $62,000.
D)  report no Amortization Expense because patents are not subject to amortization.E) A) and C)
F) A) and B)

Exam 9: Long-Lived Tangible and Intangible Assets

Which of the following is not the same as book value?

Correct Answer
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The straight-line depreciation method and the double-declining-balance depreciation method:

Correct Answer
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Assuming no additions,replacements,or extraordinary repairs,the book value of a long-lived asset declines over time.

Correct Answer
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Xit Company bought a new delivery truck.The manufacturer says that the truck should last for ten years or 120,000 miles.Xit plans to use the truck for 4 years,during which it will be driven 50,000 miles.What is the useful life of the truck for straight-line depreciation purposes?

Correct Answer
verified

When assets are purchased as a group,the total cost must be divided up and allocated to each asset in proportion to the market value of the assets as a whole.

Correct Answer
verified

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

Correct Answer
verified

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

Correct Answer
verified

Depreciable cost equals an asset's cost:

Correct Answer
verified

Peppertree Co.'s financial statements on December 31,2018,showed the following: What is the fixed asset turnover for 2018 (rounded to two decimal places) ?

Correct Answer
verified

Holly,Inc.has a building that originally cost $562,500.Holly expects to be able to sell the facility for $160,500 at the end of its useful life.The balance of the related Accumulated Depreciation account is $387,000.The residual value of the facility is:

Correct Answer
verified

Correct Answer
verified

Companies within the same industry do not always use the same depreciation method,but will use the same expected useful life for the same piece of equipment.

Correct Answer
verified

Match each term with the appropriate definition.Not all definitions will be used. -Straight-line depreciation

Correct Answer
verified

Correct Answer
verified
Part a
Depreciation expense per year = (...
View Answer

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

Correct Answer
verified

Correct Answer
verified

Your company buys a computer server that it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

Correct Answer
verified

Your company has net sales revenue of $36 million during the year.At the beginning of the year,fixed assets are $8 million.At the end of the year,fixed assets are $10 million.What is the fixed asset turnover ratio?

Correct Answer
verified

Match each term with the appropriate explanation.Not all explanations will be used. -Asset impairment loss

Correct Answer
verified

When S.Dee Company bought B.Darin Company,the purchase price included a patent valued at $15,000.The patent has 10 years remaining of its legal life,but its estimated useful life to S.Dee Company was only 8 years.The journal entry to record the annual patent amortization would include a:

Correct Answer
verified

Exam 9: Long-Lived Tangible and Intangible Assets

Which of the following is not the same as book value?

Correct AnswerverifiedShow Answer

The straight-line depreciation method and the double-declining-balance depreciation method:

Correct AnswerverifiedShow Answer

Assuming no additions,replacements,or extraordinary repairs,the book value of a long-lived asset declines over time.

Correct AnswerverifiedShow Answer

Xit Company bought a new delivery truck.The manufacturer says that the truck should last for ten years or 120,000 miles.Xit plans to use the truck for 4 years,during which it will be driven 50,000 miles.What is the useful life of the truck for straight-line depreciation purposes?

Correct AnswerverifiedShow Answer

When assets are purchased as a group,the total cost must be divided up and allocated to each asset in proportion to the market value of the assets as a whole.

Correct AnswerverifiedShow Answer

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

Correct AnswerverifiedShow Answer

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

Correct AnswerverifiedShow Answer

Depreciable cost equals an asset's cost:

Correct AnswerverifiedShow Answer

Peppertree Co.'s financial statements on December 31,2018,showed the following: What is the fixed asset turnover for 2018 (rounded to two decimal places) ?

Correct AnswerverifiedShow Answer

Holly,Inc.has a building that originally cost $562,500.Holly expects to be able to sell the facility for $160,500 at the end of its useful life.The balance of the related Accumulated Depreciation account is $387,000.The residual value of the facility is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Companies within the same industry do not always use the same depreciation method,but will use the same expected useful life for the same piece of equipment.

Correct AnswerverifiedShow Answer

Match each term with the appropriate definition.Not all definitions will be used. -Straight-line depreciation

Correct AnswerverifiedShow Answer

Correct AnswerverifiedPart aDepreciation expense per year = (...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Your company buys a computer server that it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

Correct AnswerverifiedShow Answer

Your company has net sales revenue of $36 million during the year.At the beginning of the year,fixed assets are $8 million.At the end of the year,fixed assets are $10 million.What is the fixed asset turnover ratio?

Correct AnswerverifiedShow Answer

Match each term with the appropriate explanation.Not all explanations will be used. -Asset impairment loss

Correct AnswerverifiedShow Answer

When S.Dee Company bought B.Darin Company,the purchase price included a patent valued at $15,000.The patent has 10 years remaining of its legal life,but its estimated useful life to S.Dee Company was only 8 years.The journal entry to record the annual patent amortization would include a:

Correct AnswerverifiedShow Answer

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Part a
Depreciation expense per year = (...
View Answer

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Correct Answer
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Correct Answer
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