Chapter 19 Multiple Choice Questions

(A) one month

The smallest unit of time used to calculate depreciation is (A) one month (B) half a year (C) one year (D) none of these.

(A) $12,500.00

A company buys a copy machine and a display case for $50,000.00. The value of the copy machine is $15,000.00. The value of the display case is $45,000.00. The amount recorded in Office Equipment for the copy machine is (A) $12,500.00 (B) $15,000.00 (C) $25,000.00 (D) $37,500.00.

(B) ten years

A patent having a legal life of 15 years and an expected useful life of ten years will be amortized over (A) five years (B) ten years (C) 12 1/2 years (D) 15 years.

(C) petty cash

All of the following are examples of intangible asset except (A) copyrights (B) patents (C) petty cash (D) trademarks.

(B) total depreciation expense since the asset was purchased

At any time, the accumulated depreciation for a plant asset owned by the company reflects (A) depreciation expense for the current year (B) total depreciation expense since the asset was purchased (C) next year's estimated depreciation expense (D) total estimated depreciation for the life of the asset.

(C) Matching Expenses with Revenue

Expensing the cost of an asset over the asset's useful life is an application of the concept (A) Going Concern (B) Historical Cost (C) Matching Expenses with Revenue (D) Objective Evidence.

(C) Matching Expenses with Revenue

Charging more depreciation expense in the early years is an application of the concept of (A) Adequate Disclosure (B) Historical Cost (C) Matching Expenses with Revenue (D) Realization of Revenue.

(D) Historical Cost

Recording a plant asset at its original cost is an application of the concept (A) Going Concern (B) Matching Expenses with Revenue (C) Objective Evidence (D) Historical Cost.

(D) $180.00

The annual depreciation for a plant asset with an original cost of $2,000.00, estimated salvage value of $200.00, and estimated useful life of ten years, using the straight-line method, is (A) $200.00 (B) $2,000.00 (C) $1,800.00 (D) $180.00.

(C) multiplying the book value by a constant depreciation rate at the end of each fiscal period

The declining-balance method of depreciation is calculated by (A) charging an equal amount of depreciation each year (B) subtracting the annual depreciation expense from the book value (C) multiplying the book value by a constant depreciation rate at the end of each fiscal period (D) none of the above.

(A) records a greater depreciation expense in the early years of an asset's useful life

The double declining-balance method of depreciation (A) records a greater depreciation expense in the early years of an asset's useful life (B) records a lesser depreciation expense in the early years of an asset's useful life (C) slows down the recording of depreciation in the early years of an asset's useful life (D) accelerates the recording of depreciation in the later years of an asset's useful life.

(C) cash received is more than the book value of the asset

When a plant asset is sold and a gain is recorded, (A) cash received equals the book value of the asset (B) cash received is less than the book value of the asset (C) cash received is more than the book value of the asset (D) none of these.

(B) cash received is less than the book value of the asset

When a plant asset is sold and a loss is recorded, (A) cash received equals the book value of the asset (B) cash received is less than the book value of the asset (C) cash received is more than the book value of the asset (D) none of these.

(A) cash received equals the book value of the asset

When a plant asset is sold with no gain or loss recorded, (A) cash received equals the book value of the asset (B) cash received is less than the book value of the asset (C) cash received is more than the book value of the asset (D) none of these.