Question 1

Match each term with the appropriate definition.Not all definitions will be used.
-Component allocation

Accepted Answer

A)  Net sales revenue divided by average net fixed assets.
B)  Costs that are expensed in the period incurred.
C)  A contractual agreement that allows limited permission for use of a property.
D)  Net income divided by average total assets.
E)  An estimate of how long a tangible asset will last before it physically wears out.F) Asset cost minus residual value.G) Costs that are recorded as revenues.H) An estimate of how long a company will use a particular asset.I) Allocating the cost of tangible assets over their limited useful life.J) A cumulative record of depreciation expense,accumulated depreciation and book value.K) Asset cost minus accumulated depreciation.L) Grants the exclusive right to sell or use a creative work.M) The method whereby different parts of an asset may be depreciated over different useful lives under IFRS.N) The principle that companies wish to pay the lowest possible tax at the last possible time.O) Allocating the cost of intangible assets over their limited useful life.

Question 2

Which of the following statements is correct?

Accepted Answer

A)  Amortization of intangible assets is always recorded in a contra asset account.
B)  Items in a company's inventory that are not expected to be sold in the next year are considered long-lived assets.
C)  All long-lived intangible assets must be amortized over a period of 40 years or less.
D)  Intangible assets with unlimited or indefinite lives are not amortized.

Question 3

Generally,freight costs incurred when a long-lived asset is purchased should be:

Accepted Answer

A)  expensed in the period incurred.
B)  deducted from the Accumulated Depreciation account.
C)  added to the cost of the asset.
D)  not recorded in the accounts.

Question 4

On January 1,2018,Lamar,Inc.purchased equipment for $250,000.It has an estimated useful life of five years,and its residual value is $25,000.If it uses the double declining balance method,what is the amount of accumulated depreciation as of December 31,2019?

Accepted Answer

A)  $90,000
B)  $100,000
C)  $160,000
D)  $200,000

Question 5

Durango,Inc.purchased a parcel of land for $450,000.It paid attorney fees of $3,000 to verify title to the land.In addition,it paid a broker's fee of $7,500 to help find a suitable parcel of land.This parcel of land should be recorded in the accounting records for:

Accepted Answer

A)  $450,000.
B)  $453,000.
C)  $457,500.
D)  $460,500.

Question 6

Recording depreciation is an application of the:

Accepted Answer

A)  expense recognition principle ("matching") .
B)  cost principle.
C)  separate entity assumption.
D)  unit-of-measure assumption.

Question 7

A truck costing $12,000,which has Accumulated Depreciation of $9,000,was sold for $2,000 cash.The entry to record this event would include a:

Accepted Answer

A)  gain of $1,000.
B)  loss of $1,000.
C)  credit to the Vehicles account for $3,000.
D)  credit to Accumulated Depreciation for $9,000.

Question 8

When an asset is sold and the selling price exceeds the asset's book value,net income will increase.

Accepted Answer

A) True 
 B)False

Question 9

Which method should be used to calculate depletion for a natural resource company?

Accepted Answer

A)  Accelerated
B)  Declining-balance
C)  Units-of-production
D)  Straight-line

Question 10

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right?

Accepted Answer

A)  Tangible asset
B)  Research and development
C)  Intangible asset
D)  Fixed asset

Question 11

Depreciation is an allocation method,not a valuation method.

Accepted Answer

A) True 
 B)False

Question 12

If a company wants exclusive rights to a special name,image or slogan,it should obtain a:

Accepted Answer

A)  trademark.
B)  copyright.
C)  license.
D)  patent.

Question 13

Match each term with the appropriate definition.Not all definitions will be used.
-Depreciation schedule

Accepted Answer

A)  Net sales revenue divided by average net fixed assets.
B)  Costs that are expensed in the period incurred.
C)  A contractual agreement that allows limited permission for use of a property.
D)  Net income divided by average total assets.
E)  An estimate of how long a tangible asset will last before it physically wears out.F) Asset cost minus residual value.G) Costs that are recorded as revenues.H) An estimate of how long a company will use a particular asset.I) Allocating the cost of tangible assets over their limited useful life.J) A cumulative record of depreciation expense,accumulated depreciation and book value.K) Asset cost minus accumulated depreciation.L) Grants the exclusive right to sell or use a creative work.M) The method whereby different parts of an asset may be depreciated over different useful lives under IFRS.N) The principle that companies wish to pay the lowest possible tax at the last possible time.O) Allocating the cost of intangible assets over their limited useful life.

Question 14

Which of the following statements about disposal of long-lived assets is not correct?

Accepted Answer

A)  The gain or loss resulting from the disposal of a long-lived asset always appears below the "Income from Operations" line on the income statement.
B)  A journal entry is usually needed to update depreciation expense on a long-lived asset at the time of disposal.
C)  A company may dispose of long-lived assets by selling them,trading them in on new assets,or by scrapping them.
D)  The amount of the gain or loss on disposal of a long-lived asset before the end of its useful life will be influenced by the depreciation method that had been used.

Question 15

When estimated useful life of an asset is revised:

Accepted Answer

A)  depreciation will continue at the current rate.
B)  depreciation expense reported in previous years would be changed retroactively.
C)  the depreciation expense in subsequent years will be changed but previous calculations will not be changed.
D)  generally accepted accounting principles have been violated.

Question 16

A company bought land and a building for $128,000.The building has a useful life of 20 years.Why should the company split the $128,000 cost between the land and the building?

Accepted Answer

A)  Land is not depreciated,while the building will be depreciated over its 20-year useful life.
B)  The cost should not be split between the land and building.
C)  The land will be depreciated over 40 years and the building will be depreciated over 20 years.
D)  Both the land and the building will be depreciated over 20 years.

Question 17

At the end of a depreciable asset's useful life,its book value equals its:

Accepted Answer

A)  accumulated depreciation.
B)  depreciation expense.
C)  depreciable cost.
D)  residual value.

Question 18

Martinez,Inc.acquired a patent on January 1,2017 for $40,000 cash.The patent was estimated to have a useful life of 10 years with no residual value.On December 31,2018,before any adjustments were recorded for the year,management determined that the remaining useful life was 6 years (with that new estimate being effective as of January 1,2018).On June 30,2019,the patent was sold for $25,000.
Required:
Part a.Prepare the journal entry to record the acquisition of the patent on January 1,2017.
Part b.Prepare the journal entry to record the annual amortization for 2017.
Part c.Compute the amount of amortization that would be recorded in 2018.
Part d.Determine the gain (loss)on sale on June 30,2019.
Part e.Prepare the journal entry to record the sale of the patent on June 30,2019.

Accepted Answer

Part a

Part b

Part c
2018 Revised amor...

Question 19

Pebble Beach Co.buys a piece of equipment for $24,000.The equipment has a useful life of ten years.No residual value is expected at the end of the useful life.Using the double-declining-balance method,what is the company's depreciation expense in the first year of the equipment's useful life?

Accepted Answer

A)  $4,800
B)  $6,000
C)  $2,400
D)  $12,000

Question 20

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.

Exam 9: Long-Lived Tangible and Intangible Assets

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right?

Correct Answer
verified

Recording depreciation is an application of the:

Correct Answer
verified

Generally,freight costs incurred when a long-lived asset is purchased should be:

Correct Answer
verified

Depreciation is an allocation method,not a valuation method.

Correct Answer
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When estimated useful life of an asset is revised:

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Pebble Beach Co.buys a piece of equipment for $24,000.The equipment has a useful life of ten years.No residual value is expected at the end of the useful life.Using the double-declining-balance method,what is the company's depreciation expense in the first year of the equipment's useful life?

Correct Answer
verified

If a company wants exclusive rights to a special name,image or slogan,it should obtain a:

Correct Answer
verified

On January 1,2018,Lamar,Inc.purchased equipment for $250,000.It has an estimated useful life of five years,and its residual value is $25,000.If it uses the double declining balance method,what is the amount of accumulated depreciation as of December 31,2019?

Correct Answer
verified

A company bought land and a building for $128,000.The building has a useful life of 20 years.Why should the company split the $128,000 cost between the land and the building?

Correct Answer
verified

Match each term with the appropriate definition.Not all definitions will be used. -Component allocation

Correct Answer
verified

Durango,Inc.purchased a parcel of land for $450,000.It paid attorney fees of $3,000 to verify title to the land.In addition,it paid a broker's fee of $7,500 to help find a suitable parcel of land.This parcel of land should be recorded in the accounting records for:

Correct Answer
verified

Match each term with the appropriate definition.Not all definitions will be used. -Depreciation schedule

Correct Answer
verified

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

Correct Answer
verified

At the end of a depreciable asset's useful life,its book value equals its:

Correct Answer
verified

Correct Answer
verified
Part a

Part b

Part c
2018 Revised amor...
View Answer

When an asset is sold and the selling price exceeds the asset's book value,net income will increase.

Correct Answer
verified

Which method should be used to calculate depletion for a natural resource company?

Correct Answer
verified

A truck costing $12,000,which has Accumulated Depreciation of $9,000,was sold for $2,000 cash.The entry to record this event would include a:

Correct Answer
verified

Which of the following statements about disposal of long-lived assets is not correct?

Correct Answer
verified

Exam 9: Long-Lived Tangible and Intangible Assets

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right?

Correct AnswerverifiedShow Answer

Recording depreciation is an application of the:

Correct AnswerverifiedShow Answer

Generally,freight costs incurred when a long-lived asset is purchased should be:

Correct AnswerverifiedShow Answer

Depreciation is an allocation method,not a valuation method.

Correct AnswerverifiedShow Answer

When estimated useful life of an asset is revised:

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Pebble Beach Co.buys a piece of equipment for $24,000.The equipment has a useful life of ten years.No residual value is expected at the end of the useful life.Using the double-declining-balance method,what is the company's depreciation expense in the first year of the equipment's useful life?

Correct AnswerverifiedShow Answer

If a company wants exclusive rights to a special name,image or slogan,it should obtain a:

Correct AnswerverifiedShow Answer

On January 1,2018,Lamar,Inc.purchased equipment for $250,000.It has an estimated useful life of five years,and its residual value is $25,000.If it uses the double declining balance method,what is the amount of accumulated depreciation as of December 31,2019?

Correct AnswerverifiedShow Answer

A company bought land and a building for $128,000.The building has a useful life of 20 years.Why should the company split the $128,000 cost between the land and the building?

Correct AnswerverifiedShow Answer

Match each term with the appropriate definition.Not all definitions will be used. -Component allocation

Correct AnswerverifiedShow Answer

Durango,Inc.purchased a parcel of land for $450,000.It paid attorney fees of $3,000 to verify title to the land.In addition,it paid a broker's fee of $7,500 to help find a suitable parcel of land.This parcel of land should be recorded in the accounting records for:

Correct AnswerverifiedShow Answer

Match each term with the appropriate definition.Not all definitions will be used. -Depreciation schedule

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

At the end of a depreciable asset's useful life,its book value equals its:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedPart aPart bPart c2018 Revised amor...View AnswerShow Answer

When an asset is sold and the selling price exceeds the asset's book value,net income will increase.

Correct AnswerverifiedShow Answer

Which method should be used to calculate depletion for a natural resource company?

Correct AnswerverifiedShow Answer

A truck costing $12,000,which has Accumulated Depreciation of $9,000,was sold for $2,000 cash.The entry to record this event would include a:

Correct AnswerverifiedShow Answer

Which of the following statements about disposal of long-lived assets is not correct?

Correct AnswerverifiedShow Answer

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Part a

Part b

Part c
2018 Revised amor...
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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