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Extraordinary repairs are expenditures extending the asset's useful life beyond its original estimate,and are capital expenditures because they benefit future periods.

A) True
B) False

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Describe the accounting for intangible assets,including their acquisition,cost allocation,and accounts involved.

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Intangible assets are recorded at acquis...

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Match each of the following terms with the appropriate definitions. -A condition where a plant asset is no longer useful in producing goods or services with a competitive advantage.


A) Salvage value
B) Book value
C) Depletion
D) Leasehold improvements
E) Extraordinary repairs
F) Inadequacy
G) Land improvements
H) Patent
I) Obsolescence
J) Copyright

K) H) and J)
L) A) and D)

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What are the general accounting procedures for recording asset disposals?

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The first step in the accounting process...

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During the current year,a company exchanged an old truck costing $58,000 with accumulated depreciation of $52,000 for a new truck.The new truck had a cash price of $80,000 and the company received a $16,000 trade-in allowance on the old truck with the balance of $64,000 paid in cash.Prepare the journal entry to record the exchange,assuming the transaction has commercial substance.

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None...

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Plant assets are defined as:


A) Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business.
B) Current assets.
C) Held for sale.
D) Intangible assets used in the operations of a business that have a useful life of more than one accounting period.
E) Tangible assets used in the operation of business that have a useful life of less than one accounting period.

F) B) and E)
G) All of the above

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Total asset cost plus depreciation expense equals book value.

A) True
B) False

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Martin Company purchases a machine at the beginning of the year at a cost of $60,000.The machine is depreciated using the double-declining-balance method.The machine's useful life is estimated to be 4 years with a $5,000 salvage value. -Depreciation expense in year 4 is:


A) $13,750.
B) $3,750.
C) $30,000.
D) $2,500.
E) $5,000.

F) A) and E)
G) C) and D)

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Schwartz Co.paid $780,000 cash to buy the plant assets of Kimberly Co.that went out of business.An independent appraiser assigned the following values to the assets acquired:  Land $522,000 Building 243,000 Equipment 135,000 Total $900,000\begin{array} { l l } \text { Land } & \$ 522,000 \\\text { Building } & 243,000 \\\text { Equipment } & 135,000 \\\text { Total } & \$ 900,000\end{array} Prepare Schwartz' journal entry to record the acquisition of these assets.

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\[\begin{array} { l c }
\text { Land } ...

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When the usefulness of plant assets used to extract natural resources is directly related to the depletion of a natural resource,their costs are depreciated using the units-of-production method of depreciation,as long as the assets will not be moved to and used at another site when extraction of the natural resources is complete.

A) True
B) False

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A company had net sales of $230,000 for 2015 and $288,000 for 2016.The company's average total assets for 2015 were $150,000 and $180,000 for 2016.Calculate the total asset turnover for each year and comment on the company's efficiency in the use of its assets.

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2015: $230,000/$150,000 = 1.53
2016: $28...

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Match each of the following terms with the appropriate definitions. -Alternations or improvements to leased property made by the lessee.


A) Salvage value
B) Book value
C) Depletion
D) Leasehold improvements
E) Extraordinary repairs
F) Inadequacy
G) Land improvements
H) Patent
I) Obsolescence
J) Copyright

K) A) and G)
L) A) and B)

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Natural resources are:


A) Consumable assets such standing timber, mineral deposits, and oil and gas fields.
B) Tangible assets used in the operations of the business.
C) Current assets because they are depleted.
D) Not subject to allocation to expense over their useful lives.
E) Depleted using a straight-line method.

F) C) and E)
G) C) and D)

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A company purchased mining property for $1,560,000.The property was estimated to contain 13,000,000 tons of ore.In the current year,the company removed and sold 263,000 tons of ore.Calculate the depletion expense for the current year.

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$1,560,000/13,000,00...

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The formula to compute annual straight-line depreciation is:


A) Depreciable cost divided by useful life in units.
B) (Cost plus salvage value) divided by the useful life in years.
C) (Cost minus salvage value) divided by the useful life in years.
D) Cost multiplied by useful life in years.
E) Cost divided by useful life in units.

F) B) and E)
G) A) and E)

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A company's old machine that cost $40,000 and had accumulated depreciation of $22,000 was traded in on a new machine having an estimated 20-year life with an invoice price of $45,000.The company also paid $33,000 cash,along with its old machine to acquire the new machine.If this transaction has commercial substance,the new machine should be recorded at:


A) $40,000.
B) $33,000.
C) $45,000.
D) $18,000.
E) $51,000.

F) A) and D)
G) B) and C)

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The depreciation method that produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a(an) :


A) Accelerated depreciation method.
B) Book value depreciation method.
C) Straight-line depreciation method.
D) Units-of-production depreciation method.
E) Unrealized depreciation method.

F) A) and B)
G) B) and C)

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Once an asset's book value equals its salvage value,depreciation stops.

A) True
B) False

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The following information is available on a depreciable asset owned by Mutual Savings Bank:  Purchase date  July 1, Year 1 Purchase price $85,000 Salvage value $10,000 Useful life 10 years  Depreciation method  straight-line \begin{array} { | l | l | } \hline \text { Purchase date } & \text { July } 1 , \text { Year } 1 \\\hline \text { Purchase price } & \$ 85,000 \\\hline \text { Salvage value } & \$ 10,000 \\\hline \text { Useful life } & 10 \text { years } \\\hline \text { Depreciation method } & \text { straight-line } \\\hline\end{array} The asset's book value is $70,000 on July 1,Year 3.On that date,management determines that the asset's salvage value should be $5,000 rather than the original estimate of $10,000.Based on this information,the amount of depreciation expense the company should recognize during the last six months of Year 3 would be:


A) $8,125.00
B) $7,375.00
C) $4,062.50
D) $3,750.00
E) $7,812.50

F) A) and D)
G) A) and E)

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Explain in detail how to compute each of the following depreciation methods: straight-line,units-of-production,and double-declining-balance.

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Straight-line depreciation is calculated...

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