ACCOUNTING CHAPTER 9 FINAL

A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $3,000, would have a cost basis of *hint (77+8+5+3) a. $93,000 b. $90,000 c. $82,000 d. $85,000

A

Equipment with a cost of $220,000 has an estimated residual value of $30,000 and an estimated life of 10 years or 19,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 2,100 hours? *hint ( [220-30]/10) a. $19,000 b. $21,000 c. $22,000 d. $30,000

A

A fixed asset's estimated value at the time it is to be retired from service is called a. book value b. residual value c. market value d. carrying value

B

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? hint* (120,000-15,000/15,000 hours= 7) (7*5,000) a. $5,000 b. $35,000 c. $21,000 d. $45,000

B

The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is the a. units-of-production method b. double-declining-balance method c. straight-line method d. time-valuation method

B

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. The cost basis recorded in the buyer's accounting records to recognize this purchase is *hint(40+45+75) a. $154,000 b. $172,000 c. $160,000 d. $120,000

C

Accumulated Depreciation a. is used to show the amount of cost expiration of intangibles b. is the same as Depreciation Expense c. is a contra asset account d. is used to show the amount of cost expiration of natural resources

C

Computer equipment was acquired at the beginning of the year at a cost of $57,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years. Determine the second-year depreciation using the straight-line method. *hint ([57-9]/50 a. $13,200 b. $19,200 c. $9,600 d. $9,000

C

On December 31, Strike Company has decided to discard one of its batting cages. The equipment had an initial cost of $310,000 and has accumulated depreciation of $260,000. Depreciation has been recorded up to the end of the year. Which of the following will be included in the entry to record the disposal? a. Accumulated Depreciation, debit, $310,000 b. Loss on Disposal of Asset; debit, $260,000 c. Equipment, credit, $310,000 d. Gain on Disposal of Asset, credit, $50,000

C

The journal entry for recording payment for the short-term lease of a fixed asset would a. be a memo entry only b. debit the fixed asset and credit Cash c. debit Rent Expense and credit Cash d. debit a liability and credit Cash

C

The name, term, or symbol used to identify a business and its products is called a. goodwill b. a patent c. a trademark d. a copyright

C

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

C

A capital expenditure results in a debit to a. an expense account b. a capital account c. a liability account d. an asset account

D

All of the following are needed for the calculation of straight-line depreciation except a. cost b. residual value c. estimated life d. units produced

D

Expenditures that add to the utility of fixed assets for more than one accounting period are a. committed expenditures b. revenue expenditures c. utility expenditures d. capital expenditures

D