Chapter 10 Accounting

Ella Co. owns a mineral deposit and recognizes $15,000 of depletion expense during the period. This entry will be recorded with a credit to: Multiple choice question. Accumulated Depletion - Mineral Deposit Mineral Deposit Accumulated Depreciation - Mineral Deposit Depletion Expense - Mineral Deposit

Accumulated Depletion - Mineral Deposit

____ Blank 1Blank 1 Plant , Correct Unavailable assets purchased as a group in a single transaction for a lump-sum price are allocated the purchase price based on their relative market values.

Plant

Assets that increase the benefits of land, have a limited useful life, such as parking lots and lighting systems, are called: Multiple choice question. land structures land additions land improvements land

land improvements

The purchase of a group of plant assets for one price is called a Blank______ purchase. Multiple choice question. lump-sum extraordinary fixed-rate betterment

lump-sum

Tops Co. purchases equipment for $12,000 and has been using straight-line depreciation, estimating a 5-year life and $500 salvage value. At the beginning of the third year, Tops decides to use the equipment for a total of 6-years with no salvage value. Compute the revised depreciation for the third year. Multiple choice question. $2,375 $1,250 $1,850 $2,875

$1,850 Reason: (12,000-500)/5=2,300 per year. $2,300 x 2 years = $4,600 depreciation taken. Book value at beginning of year 3 = $12,000-4,600= $7,400/4 = $1,850.

Daley Co. owns a mineral deposit with an estimated 600,000 tons of available ore. It was purchased for $300,000 and has no salvage value. During the current period, Daley mined and sold 40,000 tons of ore. Depletion expense for the period will be how much? Multiple choice question. $20,000 $0.50 $40,000 $300,000

$20,000 Reason: $300,000/600,000 x 40,000=20,000

Alin Co. purchases a building for $300,000 and pays an additional $30,000 for title fees and lawyer fees. Alin also pays $20,000 in renovations, including painting, carpet, lighting, etc. Alin should record the cost of the building at: Multiple choice question. $350,000. $320,000. $300,000. $330,000.

$350,000.

A company acquires a patent for $20,000 to manufacture and sell an item. The company intends to hold the patent for 5 years. Amortization for the first year will be recorded with a debit to Amortization Expense for $_____

4000

Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 for taxes and lawyer fees. Geo also paid $60,000 to modify the building, changing the layout specifically for Geo's needs. Geo should record the building at $______.

495000

Which of the following situations will result in recognizing a gain on sale of a plant asset? Multiple choice question. A fully depreciated asset is sold for $1,000. An asset with book value of $2,000 is sold for $2,000. A fully depreciated asset is discarded. An asset with a book value of $2,000 is sold for $1,500. An asset that cost $5,000 with accumulated depreciation of $3,000 is sold for $1,500.

A fully depreciated asset is sold for $1,000.

______ are expenditures that make a plant asset more efficient or productive, but do not always increase an asset's useful life. Multiple choice question. Ordinary repairs Extraordinary repairs Revenue expenditures incorrect Betterments

Betterments

The factors necessary to compute depreciation include (cost/selling price/market value)selling priceBlank 1Blank 1 selling price , Incorrect Unavailable, salvage value and useful life.

COST

Determine which of the following expenses are considered revenue expenditures related to a company vehicle. Multiple select question. Engine overhaul Dent repair Car wash Installation of special equipment Oil change

Dent repair Car wash Oil change

The process of allocating the cost of a natural resource to a period when it is consumed requires a debit entry to the ____ ____ account.

Depletion Expense

Which of the following items are plant assets? (Check all that apply.) Multiple select question. Equipment used in operations Equipment with a useful life of one accounting period. Building used for operations Land held for expansion

Equipment used in operations Building used for operations

The cost of plant assets should include all of the normal and reasonable expenditures necessary to get the asset in place and ready for its intended use, including repairs to damages incurred after installation True false question.TrueFalse

False

______ are nonphysical assets used in operations that give companies long-term rights, or competitive advantages. Multiple choice question. Current assets Plant assets Natural resource incorrect Intangible assets

Intangible assets

On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated depreciation of $4,500. The entry to record this disposal would include a debit to which account and for how much? Multiple choice question. Equipment for $6,000 Loss on Disposal of Equipment for $1,500 Accumulated Depreciation for $6,000 Depreciation Expense - Equipment for $1,500

Loss on Disposal of Equipment for $1,500

Forward Co. discarded a machine that cost $5,000 and was fully depreciated. The entry to record this transaction would include a credit to the Blank______ account. Multiple choice question. Machinery Accumulated Depreciation - Machinery Loss on Disposal of Machinery Depreciation Expense - Machinery

Machinery

Which of the following asset(s) are not considered intangible assets? (Check all that apply.) Multiple select question. Trademark Mineral deposit Copy machine Copyright Goodwill

Mineral deposit Copy machine

are assets that are physically consumed when used, such as mineral deposits and oil and gas fields. Multiple choice question. Natural resources correct Intangible assets Current assets Plant assets

Natural resources

Multiple Choice Question Blank______ are expenditures that keep an asset in good operating condition. They are necessary if an asset is to perform to expectations over its useful life. Multiple choice question. Capital repairs Extraordinary repairs Betterments Ordinary repairs

Ordinary repairs

____ assets are assets used in a company's operations that have a useful life of more than one accounting period.

Plant

Seven Co. owns a coal mine with an estimated 1,000,000 tons of available coal. It was purchased for $300,000 and has $50,000 salvage value. During the current period, Seven mined and sold 200,000 tons of coal. Depletion expense for the period will be how much? Multiple choice question. $50,000 $30,000 $60,000

Reason: (300,000 - 50,000)/1,000,000 x 200,000 = 50,000.

_____ expenditures are additional costs of plant assets that do not materially increase the asset's life or capabilities.

Revenue

Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. This would include which of the following costs? (Check all that apply.) Multiple select question. Repairs necessary for damages incurred during installation Fines incurred for failing to get the correct permits Testing Assembling Shipping charges

Testing Assembling Shipping charges

Plant assets are recorded at cost, which includes all expenditures necessary to get the asset in place and ready for use. All of the following would be included as part of the cost of a plant asset except: Multiple choice question. damage done when unpacking the plant asset costs to modify the new plant asset cost to purchase the new plant asset costs to customize the new plant asset

damage done when unpacking the plant asset

The process of allocating the cost of a plant asset to expense while it is in use is called ____

depreciation

A company owns an asset that is fully depreciated. The asset is no longer being used in operations and has no market value. The company has decided to Blank______ the asset by recording an entry to remove it from the balance sheet. Multiple choice question. take a loss on depreciate discard

discard

Brice Co. purchases land in order to drill oil. This oil field would be classified as a(n) Blank______ on the balance sheet. Multiple choice question. natural resource plant asset current asset intangible asset

natural resource

A Blank______ is an exclusive right granted to its owner to manufacture and sell an item or use a process for 20 years. Multiple choice question. copyright patent leasehold goodwill

patent

On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for four-years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year partial depreciation expense for October 30 through December 31. Multiple choice question. $6,000 $1,000 $3,000 $1,500

$1,000

On June 1, Harding Co. purchased a machine for $14,000 and estimates it will use the machine for five-years with a $2,000 salvage value. Using the straight-line depreciation method, compute the machine's first year (partial) depreciation expense for June 1st through December 31st. Multiple choice question. $1,400 $1,000 $2,400 $2,800 $1,200

$1,400

Wen Co. purchased a building for $200,000. Wen paid $20,000 in lawyer and title fees. Wen also paid an additional $15,000 to modify the building in order to accommodate his business needs. Wen should record the cost of the building at: Multiple choice question. $235,000 $200,000 $220,000 $215,000

$235,000

Straight-line depreciation can be calculated by taking: Multiple choice question. (cost minus salvage value)/productive life (cost plus salvage value)/productive life (cost minus salvage value)/useful life (cost plus salvage value)/useful life

(cost minus salvage value)/useful life

On January 1, Enco Co. purchases a milling machine for $15,000. The machine is expected to last seven years and have a salvage value of $1,000. Assuming the company uses the straight-line method, depreciation expense should be $____ per year

2000

On January 2, Dice Co. purchases a mixing machine for $25,500. The machine is expected to last four years and have a salvage value of $5,500. Assuming the company uses the straight-line method, depreciation expense should be $

5000

______ is the process of allocating the cost of a plant asset to expense while it is in use. Multiple choice question. Amortization Depletion Allocation Depreciation

Depreciation

The cost at which a company records purchases of machinery and equipment should include which of the following? (Check all that apply.) Multiple select question. Installation Purchase price Shipping fees Operating costs Taxes

Installation Purchase price Shipping fees Taxes

Which of the following factors determine depreciation? (Check all that apply.) Multiple select question. Book value Current market value of asset Salvage value Appraisal of asset Cost of asset Useful life

Salvage value Cost of asset Useful life

Niren Co. made modifications to a manufacturing machine that increased its productivity by 40%. Niren would classify this expense as a(n): Multiple choice question. betterment. revenue expenditure. extraordinary repair. ordinary repair.

betterment.

When a company revises an estimate used to record depreciation expense, the company should revise depreciation by using the formula (Blank______ - revised salvage value)/revised remaining useful life. Multiple choice question. accumulated depreciation book value original cost market value

book value