Accounting Quiz ch 7-8
Which of the following accounts would not be reported in the Property, Plant, and Equipment section of a balance sheet
Deprecation Expense - Buildings
Depreciation is process by which
The cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset
Refer to the information for Norewood, Inc. If Norewood uses the double-declining-balance depreciation method, what amount is the depreciation expense for 2017
$15,000
Refer to the information for Norewood, Inc. Based on this information, if Norewood uses the straight-line method, what is the book value at December 31, 2018
$51,875
Refer to the information for Norewood, Inc. If Norewood uses the units-of-production method, what is the depreciation rate per hour for the equipment
$6.00
Refer to the information for Norewood, Inc. Based on this information, what amount will Norwood, Inc. report as depreciation expense over the 8-year life of the equipment?
$75,000
All of the following are characteristics of current liabilities except
All three of the below are characteristics of current liabilities - They may be replaced with a new short-term liability rather than being paid in cash - they may involve estimated amounts - they are due within one year or within the operating cycle, whichever is longer
Management should select the depreciation method that
Best measures the plant asset's contribution to revenues over its useful life
Which one of the following is not a consideration when recording period depreciation expense on plant assets
Cash needed to replace the plant assets
Which of the following statements is true of liabilities
Classification of current liabilities is important because of the liquidity concept
Which of the following statements regarding contingencies is true
Contingencies that are probable and estimable must be recorded before the outcome of future events
Fall Corp. uses plant assets that are subject to rapid decrease in value due to obsolescence and physical deterioration. Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of the company's assets
Double-declining-balance
Refer to the information for Norewood, Inc. Based on this information, what method of depreciation will produce the maximum depreciation expense in 2016
Double-declining-balance
Which of the following assets does not decline in service potential over the course off its useful life
Land
Norewood, Inc question info
Norewood, Inc. Purchases a crane of $80,000. The crane has an estimated residual value of $5,000 and as estimated life of 8 years, or 12,500 hours of operation. The crane was purchased on January 1, 2016 and was used 2,700 hours in 2016 and 2,600 hours in 2017
Which of the following below is ab example of a capital expenditure
Replacing an engine in a company car
Borden Company incurred the following cost to acquire and prepare land for a new parking lot: purchase price for land, cost to clear the land, cost of paving, lighting for the parking lot, and landscaping for the parking lot. How should the company determine which cost should be recorded as Land Improvements and which cost should be record as Land?
The cost with an unlimited life will increase Land, and the cost with limited useful life will increase Land improvements
To determine whether a lottery winner would prefer to receive the money in a single lump sum immediately or received an equal amount over a period of years, you would use which type of time value of money calculation
The present value of an annuity
The accounting life of intangible assets is determined by
Their legal lives or useful lives, whichever is shorter
Blanket Airlines acquires a new aircraft. It has estimated life of 15 years and should be used for 15,000 hours of flight. What is the most appropriate method of depreciation to properly match revenues and expenses?
Units-of-production
Refer to the information for Norewood, Inc. Based on this information, what method of depreciation will produce the maximum depreciation expense in 2017
Units-of-production
Which of the following is an example of a contingent liability
a lawsuit pending against a restaurant chain for improper preparation of food
Oakland Corp. purchased land and a building for a combined cost of $500,000. Oakland must
allocate the $500,000 acquisition cost to separate Land and Building accounts based on their respective fair market values
which of the following is not considered an intangible asset
an oil well
Interest payable on a loan becomes a liability
as it accrues
Goodwill can be recorded as an asset when a(n)
business is purchased and payment is made in excess of the value of the net assets
If technology changes rapidly, a firm should
consider an accelerated rate of depreciation
which of the following statements regarding contingencies is true
contingencies that are probable and not estimable are disclosed in the notes to the financial statements
the book value of a plant asset is the difference between the
cost of the assets and the accumulated depreciation to date
A firm is required to estimate a liability for repairs for products sold with a warranty. If the firm's accountants later find that the estimated amount for repairs has been overstated, the correct accounting procedure is to
do nothing for the year in question and modify the next year's estimate
Interest may be included in the acquisition cost of a plant asset
during the construction period of self-constructed assets
Assets classified as property, plant, and equipment are reported at
each asset's original cost less depreciation since acquisition
An example of a current liability that must be accrued is
income taxes payable
operating assets with no physical properties are called
intangible assets
The modified Accelerated Cost Recovery System (MACRS) is a depreciation method that
is used for tax purposes
The four subdivisions for plant assets are
land, land improvement, buildings, and equipment
The landlord records the security deposit she collects from the tenant as a(n)
liability
When an asset is sold, a gain occurs when the
sale price exceeds the books value of the asset sold
Many companies use MACRS (Modified Accelerated Cost Recovery Systems) depreciation for
tax purposes because of a desire to report higher expenses in early years in order to pay lower taxes
Plant assets are depreciated because
the accrual basis of accounting requires matching of costs to revenues