Question 1

The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

Accepted Answer

A)   amortization
B)   depletion
C)   depreciation
D)   allocationE) None of the above
F) All of the above

Question 2

An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.

Accepted Answer

A) True 
 B)False

Question 3

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000. Assume 1,200 hours were used the first year and 2,250, the second year. What is the first-year depreciation for straight-line (SL) , double-declining balance (DDB)  and units-of-output (UOO)  methods?

Accepted Answer

A)   SL: $72,000; DDB: $144,000; UOO: $30,000
B)   SL: $70,000; DDB: $140,000; UOO: $30,000
C)   SL: $70,000, DDB: $144,000; UOO: $30,000
D)   SL: $72,000; DDB: $140,000; UOO: $56,250E) B) and C)
F) C) and D)

Question 4

On December 31, Strike Company sold one of its batting cages for $20,000. The equipment had an initial cost of $310,000 and had accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

Accepted Answer

A)   gain of $20,000
B)   gain of $30,000
C)   loss of $20,000
D)   loss of $30,000E) A) and C)
F) None of the above

Question 5

The cost of repairing damage to a machine during installation is debited to a fixed asset account.

Accepted Answer

A) True 
 B)False

Question 6

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-output method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

Accepted Answer

A)   $5,000
B)   $35,000
C)   $21,000
D)   $45,000E) B) and C)
F) None of the above

Question 7

Which of the following below is an example of a capital expenditure?

Accepted Answer

A)   cleaning the carpet in the front room
B)   tune-up for a company truck
C)   replacing an engine in a company car
D)   replacing all burned-out light bulbs in the factoryE) A) and B)
F) None of the above

Question 8

Match between columns
                        Premises: Replaced a broken window.
Serviced all the air conditioners before summer started.
Added a warehouse to the back of the building.
Installed window shutters on all windows.
Replaced the roof that had been on the building 23 years.
Repainted the interior walls.
Replaced the air conditioners in the customer service areas.

Accepted Answer

The Answer of Revenue expenditure and Capital expenditure is...

Question 9

All property, plant, and equipment assets are depreciated over time.

Accepted Answer

A) True 
 B)False

Question 10

Classify each of the following costs associated with long-lived assets as one of the following:
-Supplies (materials)  used to test new equipment

Accepted Answer

A)  Land improvements
B)  Buildings
C)  Land
D)  Machinery and equipmentE) A) and D)
F) B) and C)

Question 11

A lathe priced at a fair market value of $124,000 is acquired in a transaction that has commercial substance by trading in a similar lathe and paying cash for the difference between the trade-in allowance of $45,000 and the price of the new lathe.
​
(a) What is the amount of cash given?
(b) Assuming that the book value of the lathe traded in is $36,000, what is the gain or loss on the exchange?

Accepted Answer

(a) Cash given = Cost of new lathe - tra...

Question 12

If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is

Accepted Answer

A)    Depreciation Expense 100 Accumulated Depreciation 100\begin{array} { l l l } 	ext { Depreciation Expense } & 100 \	ext { Accumulated Depreciation } & & 100\end{array} Depreciation Expense  Accumulated Depreciation ​100​100​ 
B)    Depreciation Expense 1,200 Accumulated Depreciation 1,200\begin{array} { l l l } 	ext { Depreciation Expense }& 1,200 \	ext { Accumulated Depreciation }& 1,200\end{array} Depreciation Expense  Accumulated Depreciation ​1,2001,200​ 
C)   Accumulated Depreciation  1,200\quad 1,2001,200 Depreciation Expense  1,200\quad 1,2001,200 
D)     Accumulated Depreciation 100 Depreciation Expense 100\begin{array}{lll}	ext { Accumulated Depreciation }& 100 \	ext { Depreciation Expense }& 100\end{array} Accumulated Depreciation  Depreciation Expense ​100100​E) A) and B)
F) A) and C)

Question 13

A building with an appraisal value of $154,000 is made available at an offer price of $172,000. The purchaser acquires the property for $40,000 in cash, a 90-day note payable for $45,000, and a mortgage amounting to $75,000. What is the cost basis recorded in the buyer's accounting records to recognize this purchase?

Accepted Answer

The cost basis recorded in the...

Question 14

Sands Company purchased mining rights for $500,000. They expect to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include

Accepted Answer

A)   a debit to Depletion Expense for $175,000
B)   a credit to Depletion Expense for $350,000
C)   a debit to Accumulated Depletion for $175,000
D)   a credit to Accumulated Depletion for $350,000E) C) and D)
F) A) and B)

Question 15

A fixed asset's estimated value at the time it is to be retired from service is called

Accepted Answer

A)   book value
B)   residual value
C)   market value
D)   carrying valueE) B) and D)
F) C) and D)

Question 16

The calculation for annual depreciation using the straight-line depreciation method is

Accepted Answer

A)   Initial cost / Estimated useful life
B)   Depreciable cost / Estimated useful life
C)   Depreciable cost × Estimated useful life
D)   Initial cost × Estimated useful lifeE) A) and C)
F) B) and C)

Question 17

Research and Development Costs

Accepted Answer

A)  Current Assets
B)  Fixed Assets
C)  Intangible Assets
D)  Current Liability
E)  Long-Term LiabilityF) Owners' EquityG) RevenuesH) Operating ExpensesI) Other Income/ExpenseJ) E) and H)
K) D) and F)

Question 18

Assume the following facts related to a land purchase:

Accepted Answer

A)   $178,000
B)   $180,000
C)   $193,000
D)   $196,000E) A) and B)
F) All of the above

Question 19

Classify each of the following costs associated with long-lived assets as one of the following:
-Costs to survey a new piece of land for a new business location

Accepted Answer

A)  Buildings
B)  Machinery and equipment
C)  Land
D)  Land improvementsE) None of the above
F) C) and D)

Question 20

Which of the following is included in the cost of constructing a building?

Accepted Answer

A)   insurance costs during construction
B)   cost of paving the parking lot
C)   cost of repairing vandalism damage during construction
D)   cost of removing the demolished building existing on the land when it was purchasedE) All of the above
F) A) and C)

Exam 9: Long-Term Assets: Fixed and Intangible

A fixed asset's estimated value at the time it is to be retired from service is called

Correct Answer
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Assume the following facts related to a land purchase:

Correct Answer
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Correct Answer
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The cost basis recorded in the...
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XYZ Co. incurred the following costs related to the office building used in operating its sports supply company: Classify each of the costs as a capital expenditure or a revenue expenditure.

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-output method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

Correct Answer
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Classify each of the following costs associated with long-lived assets as one of the following: -Costs to survey a new piece of land for a new business location

Correct Answer
verified

All property, plant, and equipment assets are depreciated over time.

Correct Answer
verified

Correct Answer
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(a) Cash given = Cost of new lathe - tra...
View Answer

On December 31, Strike Company sold one of its batting cages for $20,000. The equipment had an initial cost of $310,000 and had accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

Correct Answer
verified

If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is

Correct Answer
verified

The cost of repairing damage to a machine during installation is debited to a fixed asset account.

Correct Answer
verified

Research and Development Costs

Correct Answer
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Which of the following below is an example of a capital expenditure?

Correct Answer
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The calculation for annual depreciation using the straight-line depreciation method is

Correct Answer
verified

Which of the following is included in the cost of constructing a building?

Correct Answer
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Correct Answer
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An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.

Correct Answer
verified

The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

Correct Answer
verified

Classify each of the following costs associated with long-lived assets as one of the following: -Supplies (materials) used to test new equipment

Correct Answer
verified

Sands Company purchased mining rights for $500,000. They expect to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include

Correct Answer
verified

Exam 9: Long-Term Assets: Fixed and Intangible

A fixed asset's estimated value at the time it is to be retired from service is called

Correct AnswerverifiedShow Answer

Assume the following facts related to a land purchase:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe cost basis recorded in the...View AnswerShow Answer

XYZ Co. incurred the following costs related to the office building used in operating its sports supply company: Classify each of the costs as a capital expenditure or a revenue expenditure.

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-output method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

Correct AnswerverifiedShow Answer

Classify each of the following costs associated with long-lived assets as one of the following: -Costs to survey a new piece of land for a new business location

Correct AnswerverifiedShow Answer

All property, plant, and equipment assets are depreciated over time.

Correct AnswerverifiedShow Answer

Correct Answerverified(a) Cash given = Cost of new lathe - tra...View AnswerShow Answer

On December 31, Strike Company sold one of its batting cages for $20,000. The equipment had an initial cost of $310,000 and had accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. What is the amount of the gain or loss on this transaction?

Correct AnswerverifiedShow Answer

If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is

Correct AnswerverifiedShow Answer

The cost of repairing damage to a machine during installation is debited to a fixed asset account.

Correct AnswerverifiedShow Answer

Research and Development Costs

Correct AnswerverifiedShow Answer

Which of the following below is an example of a capital expenditure?

Correct AnswerverifiedShow Answer

The calculation for annual depreciation using the straight-line depreciation method is

Correct AnswerverifiedShow Answer

Which of the following is included in the cost of constructing a building?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An exchange is said to have commercial substance if future cash flows remain the same as a result of the exchange.

Correct AnswerverifiedShow Answer

The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets is

Correct AnswerverifiedShow Answer

Classify each of the following costs associated with long-lived assets as one of the following: -Supplies (materials) used to test new equipment

Correct AnswerverifiedShow Answer

Sands Company purchased mining rights for $500,000. They expect to harvest 1 million tons of ore over the next five years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion would include

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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The cost basis recorded in the...
View Answer

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(a) Cash given = Cost of new lathe - tra...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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