Accounting: chapter 9, 11, 12

Failure to record a liability probably will

result in an overstated net income

A company purchases a coal mine for $1,000,000. It estimates that the mine contains 5,000,000 tons of coal and has a five-year life with no salvage value. If the company extracts and sells 800,000 tons during the first year, how much accumulated depletion should be recorded?

$160,000

Focal Point Engineering purchased a trademark at the beginning of 2017 for $200,000. Although the trademark's legal life is 20 years, economic benefits were expected for only 10 years. Also, during 2017, the company incurred research and development costs of $200,000. The book value of the trademarks at December 31, 2017, is

$180,000

The exclusive right to reproduce and sell a literary, artistic, or musical work is called a

Copyright

On January 1, a company vehicle with a useful life of eight years and a residual value of $1,000 was purchased for $25,000. What is the depreciation expense in year 3 under straight-line depreciation?

$3,000

On January 1, a company vehicle with a useful life of eight years and a residual value of $1,000 was purchased for $25,000. What is the depreciation expense in year 1 using the double-declining-balance method?

$6,250

Elway Company purchases land for $85,000 cash. Elway assumes $2,500 in property taxes due on the land. The title and attorney fees totaled $1,000. Elway has the land graded for $2,200. They paid $10,000 for paving of a parking lot. What amount does Elway record as the cost for the land?

$90,700

Which of the following involves a contingent liability?

A pending lawsuit

Which of the following best describes the behavior over time of the components of equal mortgage payments?

Interest expense decreases and reduction in principal increases.

Which of the following statements is not true about goodwill?

It should be expensed in the year acquired

Which of the following is not a capital expenditure?

Painting the office walls

When the yield/market rate of interest is greater than the contractual/stated rate of interest

bonds will be issued at a discount

An unsecured bond is also known as a

debenture bond.

An asset that costs $7,000 and has accumulated depreciation of $5,200 is sold for $1,000. The ensuing journal entry would include a

debit to Loss on Sale of Asset for $800

A corporation issues bonds that pay interest each April 1 and October 1. The corporation's December 31 adjusting entry could include a

debit to Unamortized Bond Premium.

Crowley Corporation purchased a building on January 2 by signing a long-term $600,000 mortgage with monthly payments of $5,500. The mortgage carries an interest rate of 10 percent. The entry to record the first monthly payment will include a

debit to the Interest Expense account for $5,000

The cost of tearing down a building situated on land just purchased should be

debited to the Land account