Question 1

The Pizza Store trades in a delivery car for a newer model.The old delivery car has a cost of $9,000 and accumulated depreciation of $7,000.The Pizza Store pays cash of $8,000.The fair value of the newer car is $16,000.What is the gain or loss for the Pizza Store on the exchange of vehicles?

Accepted Answer

A)  $6,000 loss
B)  $2,000 gain
C)  $6,000 gain
D)  $8,000 gain

Question 2

CBS Corporation acquired a patent for $3,800,000.The patent has a legal life of 20 years.Because of changing technology,this patent is expected to generate revenue for only 5 years and have no residual value.The annual amortization expense for the patent is: (Round your final answer to the nearest dollar. )

Accepted Answer

A)  $0
B)  $3,800,000
C)  $190,000
D)  $760,000

Question 3

Weaver Motors purchased a machine that will help diagnose problems with engines.The machine cost $300,000 on January 3,2019 and had a residual value of $30,000,with a useful life of 6 years.
Required:
Calculate the depreciation expense and book value as of December 31,2019 under both the straight-line and double-declining-balance methods.

Accepted Answer

STRAIGHT-LINE
Depreciation Expense:
($30...

Question 4

At the beginning of the year,the balance in the Buildings account was $800,000.At the end of the year,the balance in the Buildings account was $1,600,000.During the year,a building was purchased for $1,500,000.This was the only purchase of buildings during the year.What was the cost of the building or buildings sold during the year?

Accepted Answer

A)  $0
B)  $700,000
C)  $800,000
D)  $1,500,000

Question 5

On January 1,2019,Plenty of Oil,Inc.purchased an oil field that is estimated to have 15,000,000 barrels of oil for $45,000,000.In 2019,1,300,000 barrels of oil were extracted and sold.In 2020,2,100,000 barrels of oil were extracted and sold.The oil field will have no residual value.What is the book value of the oil reserves that will be reported on the balance sheet as of December 31,2020?

Accepted Answer

A)  $10,200,000
B)  $34,800,000
C)  $38,700,000
D)  $45,000,000

Question 6

On January 2,2019,Konan Corporation acquired equipment for $900,000.The estimated life of the equipment is 5 years or 100,000 hours.The estimated residual value is $20,000.What is the balance in Accumulated Depreciation on December 31,2020,if Konan Corporation uses the double-declining-balance method of depreciation? (Round any intermediary calculations to two decimal places and your final answer to the nearest dollar. )

Accepted Answer

A)  $576,000
B)  $352,000
C)  $216,000
D)  $880,000

Question 7

Morgan Oaks Company replaced the windshields and painted several of its vehicles during the year.These costs should be:

Accepted Answer

A)  debited to Equipment.
B)  depreciated over the life of the vehicles.
C)  credited to Accumulated Depreciation.
D)  debited to Repair Expense.

Question 8

The records of Milwaukee Sprinkler Systems report net sales of $520,000,net income of $130,000 and average total assets of $360,000.Using DuPont analysis,calculate the two ratios used for return on assets.(Round your final answer to two decimal places. )

Accepted Answer

A)  Net profit margin ratio is 2.77;Total asset turnover is 25%.
B)  Net profit margin ratio is 25%;Total asset turnover is 1.44.
C)  Net profit margin ratio is 36%;Total asset turnover is 4.00.
D)  Net profit margin ratio is 2.50;Total asset turnover is 36%.

Question 9

U.S.Generally Accepted Accounting Principles require the reporting of plant assets at ________ on the balance sheet.International Financial Reporting Standards allow the reporting of plant assets at ________ on the balance sheet.

Accepted Answer

A)  current replacement cost;fair market value
B)  fair market value;fair market value
C)  historical cost;fair market value
D)  historical cost;net realizable value

Question 10

A lump-sum purchase of multiple,long-term plant assets requires the company to:

Accepted Answer

A)  record the assets purchased as a single asset.
B)  divide the total cost among the various assets according to values estimated by the company's management.
C)  divide the total cost among the various assets according to their market values.
D)  divide the total cost among the various assets according to their book values.

Question 11

Sullivan Sales purchased a machine on January 1,2019 which cost $450,000.The machine had a residual value of $50,000 and a useful life of 10 years.Sullivan Sales can replace this machine with one that is more efficient and decides to sell the old machine for $100,000 on July 1,2021.
Required:
Prepare the appropriate journal entries to record the sale of this machine,assuming the company uses the double-declining-balance method of depreciation.The fiscal year ends on December 31.

Accepted Answer

Depreciation Schedule:

The m...

Question 12

All intangible assets must be amortized.

Accepted Answer

A) True 
 B)False

Question 13

The computation of depletion expense is most closely related to which method for computing depreciation?

Accepted Answer

A)  straight-line
B)  units-of-production
C)  double-declining balance
D)  modified accelerated cost recovery system

Question 14

The exclusive right to produce and sell an invention such as a smart phone requires a:

Accepted Answer

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

Question 15

Which of the following statements is INCORRECT?

Accepted Answer

A)  The cost of land includes fencing and paving.
B)  The cost of any asset is the sum of all the costs incurred to bring the asset to its intended use.
C)  The cost of a leasehold improvement should be amortized over the shorter of its useful life or the term of the lease.
D)  All of the above statements are correct.

Question 16

Which of the following costs for a delivery vehicle should NOT be capitalized?

Accepted Answer

A)  repair dented fender
B)  service air conditioning system
C)  repair air conditioning system
D)  all of the above

Question 17

Equipment with a book value of $8,000 is sold for $3,000 cash.The statement of cash flows will report a:

Accepted Answer

A)  $3,000 cash inflow in the operating activities section
B)  $3,000 cash inflow in the investing activities section.
C)  $5,000 cash outflow in the operating activities section.
D)  $5,000 cash outflow in the financing activities section.

Question 18

Smiley Corporation sold equipment costing $72,000 with $66,000 of accumulated depreciation for $11,000 cash.Which of the following journal entries should be prepared?

Accepted Answer

A)  debit Cash for $11,000 and credit Gain on Sale of Equipment for $11,000
B)  debit Accumulated Depreciation - Equipment for $66,000 and credit Equipment for $66,000
C)  debit Cash for $11,000,credit Equipment for $6,000 and credit Gain on Sale of Equipment for $5,000
D)  debit Cash for $11,000,debit Accumulated Depreciation - Equipment for $66,000,credit Equipment for $72,000 and credit Gain on Sale of Equipment for $5,000

Question 19

When using straight-line depreciation to compute depreciation for a partial year:

Accepted Answer

A)  compute depreciation for a full year under straight-line depreciation and multiply it by 50%.
B)  compute depreciation for a full year under straight-line depreciation and use that amount.
C)  the straight-line method automatically adjusts for partial periods,so no adjustments are needed.
D)  compute depreciation for a full year under straight-line depreciation and multiply it by the fraction of the year that you held the asset.

Question 20

Excalibur Company sells equipment for $20,000 cash.The gain or loss on the sale of equipment equals:

Accepted Answer

A)  the cash received upon the sale.
B)  the book value of the equipment.
C)  the accumulated depreciation of the equipment plus the cash received from the sale.
D)  the difference between the cash received on sale and the book value of the equipment.

Exam 7: Plant Assets, natural Resources, Intangibles

Correct Answer
verified
STRAIGHT-LINE
Depreciation Expense:
($30...
View Answer

The Pizza Store trades in a delivery car for a newer model.The old delivery car has a cost of $9,000 and accumulated depreciation of $7,000.The Pizza Store pays cash of $8,000.The fair value of the newer car is $16,000.What is the gain or loss for the Pizza Store on the exchange of vehicles?

Correct Answer
verified

When using straight-line depreciation to compute depreciation for a partial year:

Correct Answer
verified

All intangible assets must be amortized.

Correct Answer
verified

Equipment with a book value of $8,000 is sold for $3,000 cash.The statement of cash flows will report a:

Correct Answer
verified

Morgan Oaks Company replaced the windshields and painted several of its vehicles during the year.These costs should be:

Correct Answer
verified

The computation of depletion expense is most closely related to which method for computing depreciation?

Correct Answer
verified

Correct Answer
verified

Correct Answer
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U.S.Generally Accepted Accounting Principles require the reporting of plant assets at on the balance sheet.International Financial Reporting Standards allow the reporting of plant assets at on the balance sheet.

Correct Answer
verified

Correct Answer
verified
Depreciation Schedule:
The m...
View Answer

The records of Milwaukee Sprinkler Systems report net sales of $520,000,net income of $130,000 and average total assets of $360,000.Using DuPont analysis,calculate the two ratios used for return on assets.(Round your final answer to two decimal places. )

Correct Answer
verified

Smiley Corporation sold equipment costing $72,000 with $66,000 of accumulated depreciation for $11,000 cash.Which of the following journal entries should be prepared?

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Which of the following statements is INCORRECT?

Correct Answer
verified

Excalibur Company sells equipment for $20,000 cash.The gain or loss on the sale of equipment equals:

Correct Answer
verified

Which of the following costs for a delivery vehicle should NOT be capitalized?

Correct Answer
verified

A lump-sum purchase of multiple,long-term plant assets requires the company to:

Correct Answer
verified

The exclusive right to produce and sell an invention such as a smart phone requires a:

Correct Answer
verified

Exam 7: Plant Assets, natural Resources, Intangibles

Correct AnswerverifiedSTRAIGHT-LINEDepreciation Expense:($30...View AnswerShow Answer

The Pizza Store trades in a delivery car for a newer model.The old delivery car has a cost of $9,000 and accumulated depreciation of $7,000.The Pizza Store pays cash of $8,000.The fair value of the newer car is $16,000.What is the gain or loss for the Pizza Store on the exchange of vehicles?

Correct AnswerverifiedShow Answer

When using straight-line depreciation to compute depreciation for a partial year:

Correct AnswerverifiedShow Answer

All intangible assets must be amortized.

Correct AnswerverifiedShow Answer

Equipment with a book value of $8,000 is sold for $3,000 cash.The statement of cash flows will report a:

Correct AnswerverifiedShow Answer

Morgan Oaks Company replaced the windshields and painted several of its vehicles during the year.These costs should be:

Correct AnswerverifiedShow Answer

The computation of depletion expense is most closely related to which method for computing depreciation?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

U.S.Generally Accepted Accounting Principles require the reporting of plant assets at ________ on the balance sheet.International Financial Reporting Standards allow the reporting of plant assets at ________ on the balance sheet.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedDepreciation Schedule: The m...View AnswerShow Answer

The records of Milwaukee Sprinkler Systems report net sales of $520,000,net income of $130,000 and average total assets of $360,000.Using DuPont analysis,calculate the two ratios used for return on assets.(Round your final answer to two decimal places. )

Correct AnswerverifiedShow Answer

Smiley Corporation sold equipment costing $72,000 with $66,000 of accumulated depreciation for $11,000 cash.Which of the following journal entries should be prepared?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following statements is INCORRECT?

Correct AnswerverifiedShow Answer

Excalibur Company sells equipment for $20,000 cash.The gain or loss on the sale of equipment equals:

Correct AnswerverifiedShow Answer

Which of the following costs for a delivery vehicle should NOT be capitalized?

Correct AnswerverifiedShow Answer

A lump-sum purchase of multiple,long-term plant assets requires the company to:

Correct AnswerverifiedShow Answer

The exclusive right to produce and sell an invention such as a smart phone requires a:

Correct AnswerverifiedShow Answer

Correct Answer
verified
STRAIGHT-LINE
Depreciation Expense:
($30...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

U.S.Generally Accepted Accounting Principles require the reporting of plant assets at on the balance sheet.International Financial Reporting Standards allow the reporting of plant assets at on the balance sheet.

Correct Answer
verified

Correct Answer
verified
Depreciation Schedule:
The m...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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