Question 1

The total cost of an asset less its accumulated depreciation is called:

Accepted Answer

A)  Current (market) value.
B)  Present value.
C)  Book value.
D)  Replacement cost.
E)  Historical cost.F) B) and D)
G) D) and E)

Question 2

What are some of the variables that make a plant asset's useful life difficult to predict?

Accepted Answer

There are several factors that make it d...

Question 3

A company had a tractor destroyed by fire. The tractor originally cost $85,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $20,000. The company should recognize:

Accepted Answer

A)  A gain of $20,000.
B)  A loss of $5,000.
C)  A gain of $65,000.
D)  A gain of $5,000.
E)  A loss of $20,000.F) B) and C)
G) B) and D)

Question 4

The phrase capital-intensive refers to companies with large amounts invested in plant assets.

Accepted Answer

A) True 
 B)False

Question 5

The calculation of total asset turnover is:

Accepted Answer

A)  Net assets multiplied by total assets.
B)  Average total assets multiplied by net sales.
C)  Gross profit divided by average total assets.
D)  Average total assets divided by gross profit.
E)  Net sales divided by average total assets.F) All of the above
G) B) and D)

Question 6

The modified accelerated cost recovery system (MACRS) :

Accepted Answer

A)  Does not allow partial year depreciation.
B)  Is an outdated system that is no longer used by companies.
C)  Is identical to units of production depreciation.
D)  Is required for financial reporting.
E)  Is included in the U.S. federal income tax rules for depreciating assets.F) D) and E)
G) B) and E)

Question 7

Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated.

Accepted Answer

A) True 
 B)False

Question 8

Revenue expenditures, also called income statement expenditures, are additional costs of plant assets that do not materially increase the assets' life or productive capabilities.

Accepted Answer

A) True 
 B)False

Question 9

What are the general accounting procedures for recording asset disposals?

Accepted Answer

The first step in the accounting process...

Question 10

Once the estimated depreciation expense for an asset is calculated:

Accepted Answer

A)  The estimate itself cannot be changed; however, new information should be disclosed in financial statement footnotes.
B)  Any changes are accumulated and recognized when the asset is sold.
C)  It may be revised based on new information.
D)  It cannot be changed, based on the historical cost principle.
E)  It cannot be changed, based on the consistency principle.F) A) and D)
G) A) and C)

Question 11

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

Accepted Answer

A) True 
 B)False

Question 12

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

Accepted Answer

A)  1.23.
B)  1.09.
C)  1.13.
D)  0.81.
E)  0.89.F) A) and B)
G) All of the above

Question 13

A trademark is an exclusive right granted to its owner to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years.

Accepted Answer

A) True 
 B)False

Question 14

A leasehold is:

Accepted Answer

A)  The same as a patent.
B)  The rights granted to the lessee by the lessor of a lease.
C)  Recorded as revenue expenditure when paid.
D)  A short-term rental agreement.
E)  An asset held as an investment.F) B) and D)
G) B) and C)

Question 15

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. The machine's book value at the end of year 3 is:

Accepted Answer

A)  $45,000.
B)  $30,000.
C)  $7,500.
D)  $6,875.
E)  $52,500.F) D) and E)
G) All of the above

Question 16

Another name for a capital expenditure is:

Accepted Answer

A)  Long-term expenditure.
B)  Balance sheet expenditure.
C)  Contributed capital expenditure.
D)  Asset expenditure.
E)  Revenue expenditure.F) B) and D)
G) A) and B)

Question 17

Crestfield leases office space for $7,000 per month. On January 3, the company incurs $12,000 to improve the leased office space. These improvements are expected to yield benefits for 10 years. Crestfield has 4 years remaining on its lease. What journal entry would be needed to record the expense for the first year related to the improvements?

Accepted Answer

A)  Debit Depletion Expense $3,000; credit Accumulated Depletion $3,000.
B)  Debit Depreciation Expense $1,200; credit Accumulated Depreciation $1,200.
C)  Debit Amortization Expense $1,200; credit Accumulated Amortization $1,200.
D)  Debit Amortization Expense $3,000; credit Accumulated Amortization $3,000.
E)  Debit Depletion Expense $12,000; credit Accumulated Depletion $12,000.F) A) and C)
G) D) and E)

Question 18

A company purchased a mineral deposit for $800,000. It expects this property to produce 120,000 tons of minerals and to have a salvage value of $50,000. In the current year, the company mined and sold 9,000 tons of minerals. Its depletion expense for the current period equals:

Accepted Answer

A)  $60,000.
B)  $139,500.
C)  $150,000.
D)  $56,250.
E)  $15,000.F) B) and D)
G) A) and B)

Question 19

The useful life of a plant asset is:

Accepted Answer

A)  Never related to its physical life.
B)  Determined by law.
C)  Determined by the FASB.
D)  Its productive life, but not to exceed one year.
E)  The length of time it is productively used in a company's operations.F) B) and D)
G) A) and E)

Question 20

Betterments are a type of capital expenditure.

Accepted Answer

A) True 
 B)False

Exam 10: Plant Assets, Natural Resoures, and Intangibles

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. The machine's book value at the end of year 3 is:

Correct Answer
verified

A leasehold is:

Correct Answer
verified

A trademark is an exclusive right granted to its owner to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years.

Correct Answer
verified

The calculation of total asset turnover is:

Correct Answer
verified

Another name for a capital expenditure is:

Correct Answer
verified

What are the general accounting procedures for recording asset disposals?

Correct Answer
verified
The first step in the accounting process...
View Answer

The modified accelerated cost recovery system (MACRS) :

Correct Answer
verified

Once the estimated depreciation expense for an asset is calculated:

Correct Answer
verified

A company purchased a mineral deposit for $800,000. It expects this property to produce 120,000 tons of minerals and to have a salvage value of $50,000. In the current year, the company mined and sold 9,000 tons of minerals. Its depletion expense for the current period equals:

Correct Answer
verified

Revenue expenditures, also called income statement expenditures, are additional costs of plant assets that do not materially increase the assets' life or productive capabilities.

Correct Answer
verified

What are some of the variables that make a plant asset's useful life difficult to predict?

Correct Answer
verified
There are several factors that make it d...
View Answer

The phrase capital-intensive refers to companies with large amounts invested in plant assets.

Correct Answer
verified

A company had a tractor destroyed by fire. The tractor originally cost $85,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $20,000. The company should recognize:

Correct Answer
verified

Betterments are a type of capital expenditure.

Correct Answer
verified

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

Correct Answer
verified

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

Correct Answer
verified

Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated.

Correct Answer
verified

Correct Answer
verified

The total cost of an asset less its accumulated depreciation is called:

Correct Answer
verified

The useful life of a plant asset is:

Correct Answer
verified

Exam 10: Plant Assets, Natural Resoures, and Intangibles

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. The machine's book value at the end of year 3 is:

Correct AnswerverifiedShow Answer

A leasehold is:

Correct AnswerverifiedShow Answer

A trademark is an exclusive right granted to its owner to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years.

Correct AnswerverifiedShow Answer

The calculation of total asset turnover is:

Correct AnswerverifiedShow Answer

Another name for a capital expenditure is:

Correct AnswerverifiedShow Answer

What are the general accounting procedures for recording asset disposals?

Correct AnswerverifiedThe first step in the accounting process...View AnswerShow Answer

The modified accelerated cost recovery system (MACRS) :

Correct AnswerverifiedShow Answer

Once the estimated depreciation expense for an asset is calculated:

Correct AnswerverifiedShow Answer

A company purchased a mineral deposit for $800,000. It expects this property to produce 120,000 tons of minerals and to have a salvage value of $50,000. In the current year, the company mined and sold 9,000 tons of minerals. Its depletion expense for the current period equals:

Correct AnswerverifiedShow Answer

Revenue expenditures, also called income statement expenditures, are additional costs of plant assets that do not materially increase the assets' life or productive capabilities.

Correct AnswerverifiedShow Answer

What are some of the variables that make a plant asset's useful life difficult to predict?

Correct AnswerverifiedThere are several factors that make it d...View AnswerShow Answer

The phrase capital-intensive refers to companies with large amounts invested in plant assets.

Correct AnswerverifiedShow Answer

A company had a tractor destroyed by fire. The tractor originally cost $85,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $20,000. The company should recognize:

Correct AnswerverifiedShow Answer

Betterments are a type of capital expenditure.

Correct AnswerverifiedShow Answer

A company had average total assets of $887,000. Its gross sales were $1,090,000 and its net sales were $1,000,000. The company's total asset turnover equals:

Correct AnswerverifiedShow Answer

The book value of an asset when using double-declining-balance depreciation is always greater than the book value from using straight-line depreciation, except at the beginning and the end of the asset's useful life, when it is the same.

Correct AnswerverifiedShow Answer

Additions to land that increase the usefulness of the land such as parking lots, fences, and lighting are not depreciated.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The total cost of an asset less its accumulated depreciation is called:

Correct AnswerverifiedShow Answer

The useful life of a plant asset is:

Correct AnswerverifiedShow Answer

Correct Answer
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verified
The first step in the accounting process...
View Answer

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Correct Answer
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Correct Answer
verified
There are several factors that make it d...
View Answer

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