Chapter 10 Accounting terms

Masonry Construction Group paid $13,000 for a plant asset that had a market value of $13,500. At which of the following amounts should the plant asset be​ recorded?

$13000

Businesses record goodwill​ ________.

if they acquire another company at an amount higher than the market value of its net assets

Freeman Company owns a delivery truck. Which of the following​ costs, associated with the​ truck, will be capitalized and​ depreciated?

modification for new use

Westin Delivery Service owns a delivery truck. Which of the following​ costs, associated with the​ truck, will be treated as a revenue​ expenditure?

oil change and lubrication

The expected value of an asset at the end of its useful life is known as​ ________

residual value

Which of the following depreciation methods always allocates a higher amount of depreciation in earlier years than in later​ years?

the double−declining−balance method

Which of the following depreciation methods allocates a varying amount of depreciation to expense each year based on an​ asset's usage?

the units−of−production method

Which of the following items should be​ amortized?

​patents, copyrights, trademarks

Which of the following is a characteristic of a plant​ asset, such as a​ building?

It is used in the operations of a business.

Which of the following is the correct accounting treatment for a​ patent?

A patent must be capitalized and amortized over 20 years or less.

Which of the following is an expense that results from the usage of a natural​ resource?

Depletion

Which of the following should be included in the cost of​ land?

cost to clear the land of old buildings

Which of the following is true of​ goodwill?

Goodwill is not amortized.

Regarding impairment of intangible​ assets, which of the following statements is​ incorrect?

If any impairment​ occurs, the company records a loss in the period in which the intangible asset was acquired.

Which of the following requires businesses to record​ depreciation?

Matching principle

A​ company's accountant capitalized a payment that should have been recorded as a revenue expenditure. How will this error affect the​ company's financial​ statements?

Net income will be overstated

Which of the following is true when the estimate of an​ asset's useful life is​ changed?

The​ asset's remaining depreciable book value will be spread over the​ asset's new useful life.

A fully depreciated plant asset​ ________.

can be​ discarded, sold, or exchanged for another plant asset

The type of intangible asset related to the exclusive right to reproduce and sell a book or intellectual property is a​ ______

copyright