MGMT 210 Ch 8

Arc Co. purchased a piece of equipment for $25,000. At the end of the year, the book value of the equipment is $12,000. The salvage value is 0. How much is accumulated depreciation at the end of the period? Multiple choice question. $37,000 $12,000 $13,000 $25,000

$13,000

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. $220,000 $200,000 $235,000 $215,000

$235,000

_________ are expenditures that make a plant asset more efficient or productive, but do not always increase an asset's useful life.

Betterments

(Plant/Current) assets purchased as a group in a single transaction for a lump-sum price (also called a lump-sum, group, bulk, or basket purchase) are allocated the purchase price based on their relative market values.

Blank 1: Plant

Total asset turnover is computed by dividing net sales by _____ total assets.

Blank 1: average

Trio Co. reported that maintenance and repair costs are expensed as incurred. If Trio's current year machinery and equipment repair costs are $8,200, which accounts would be impacted to complete the journal entry? (Check all that apply.) Multiple select question. Debit Repairs expense. Credit Cash. Debit Cash. Credit Repairs expense. Credit Machinery & equipment. Debit Machinery & equipment.

Debit Repairs expense. Credit Cash.

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

Natural resources

______ value, also called residual value or scrap value, is an estimate of the asset's value at the end of its benefit period. Multiple choice question. Leftover Obsolescence Useful Salvage

Salvage

The asset's acquisition costs less its accumulated depreciation is called: Multiple choice question. market value accumulated deprecation book value resale value

book value

The factors necessary to compute depreciation include all of the following, except: Multiple choice question. useful life. book value. salvage value. cost.

book value.

Question Mode Multiple Choice Question Accumulated depletion is considered to be a ________ and is recorded on the _________. Multiple choice question. contra-asset; balance sheet contra-expense; income statement contra-expense; balance sheet contra-asset; income statement

contra-asset; balance sheet

The inability of a company's plant assets to meet its demands is called: Multiple choice question. salvage obsolescence scrap inadequacy

inadequacy

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

land improvements.

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

lump-sum

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

Blank 1: cost

Land _______ are assets that increase the benefits of land, have a limited useful life, and are depreciated—such as walkways and fences.

Blank 1: improvements

Property rented under a contract is called a ______.

Blank 1: lease

Determine which of the following expenses related to a building would be classified as a capital expenditure. (Check all that apply.) Multiple select question. New air conditioning system Room addition Minor drywall repair Air conditioning maintenance Carpet cleaning

New air conditioning system Room addition

The cost of a plant asset includes the following: Multiple select question. Disposal cost Depreciation expense Purchase price Cost to prepare it for use

Purchase price Cost to prepare it for use

An oil company recognizes the cost of discovering and operating oil wells by recording ______ expense for each unit of oil used. Multiple choice question. depreciation depletion operating amortization

depletion

A(n) _________ is a permanent decline in the market value of an asset relative to its book value. Multiple choice question. inadequacy betterment impairment obsolescence

impairment

On January 24, Bora Co. purchased a delivery van for $22,000. Bora expects to drive the van for approximately 5 years or 100,000 miles, before disposing of it for an estimated salvage value of $2,000. During the first year, Bora drives the van for 18,000 miles. How much would depreciation expense be if Bora uses the units-of-production depreciation method? Multiple choice question. $4,400 $4,000 $3,600 $3,960

$3,600

Alin Co. purchases a building for $300,000 and pays an additional $30,000 for closing costs (brokerage, title, attorney 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. $330,000. $300,000. $350,000. $320,000.

$350,000.

Ironworks Co. sells a machine that cost $5,000 with a current book value of $1,500 for $2,000 cash. Ironworks will record a debit to which account and for how much? Multiple choice question. Equipment for $3,500 Equipment for $5,000 Accumulated Depreciation - Equipment for $1,500 Accumulated Depreciation - Equipment for $3,500

Accumulated Depreciation - Equipment for $3,500

Which depreciation method will compute the most depreciation expense over the life of the asset? Multiple choice question. Straight-line will produce the most depreciation expense. Declining-balance will produce the most depreciation expense. Units-of-production will produce the most depreciation expense. All methods will produce equal depreciation expense over the life of the asset.

All methods will produce equal depreciation expense over the life of the asset.

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

Car wash Dent repair Oil change

Which of the following items related to depreciating equipment would be found on a company's income statement? Multiple choice question. Depreciation Expense - Equipment Equipment Accumulated Depreciation - Equipment Net Book Value

Depreciation Expense - Equipment

The total asset turnover ratio is computed by taking net sales divided by: Multiple choice question. average total assets total current assets total assets average current assets

average total assets

Consistent with the ________ principle, plant assets should be recorded at cost, which includes all the normal and reasonable expenditures necessary to get the asset in place and ready for its intended use. Multiple choice question. cost monetary unit plant asset full disclosure

cost

___________ are expenditures that extend the asset's useful life beyond its original estimate. Multiple choice question. Ordinary repairs Revenue expenditures Betterments Extraordinary repairs

Extraordinary repairs

True or false: Modified Accelerated Cost Recovery System (MACRS) is a depreciation method that allows companies to delay depreciation expense for tax purposes. True false question. True False

False

In a leasehold improvement, the lessee debits the costs to Multiple choice question. Leaseholds Lease Amortization Lease Liability Leasehold Improvements

Leasehold Improvements

On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated depreciation as of December 31 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 Depreciation Expense - Equipment for $1,500 Loss on Disposal of Equipment for $1,500 Accumulated Depreciation for $6,000

Loss on Disposal of Equipment for $1,500

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

Oil change Dent repair Car wash

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

Ordinary repairs

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. Operating costs Shipping fees Purchase price Taxes Installation

Shipping fees Purchase price Taxes Installation

rue or false: The cost of a plant asset consists of all necessary and reasonable expenditures to acquire it and prepare it for its intended use. True false question. True False

True

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

(cost minus salvage value)/useful life

The term ______ refers to a plant asset that is in process of becoming outdated and no longer used. Multiple choice question. obsolescence salvage inadequacy scrap

obsolescence

Privo Co. purchases a machine that cost $15,000. Privo estimates a 5-year life with no salvage value. The first three years of depreciation expense are $6,000; $3,600; and $2,160, respectively. Based on this information, Privo is using the ________ depreciation method. Multiple choice question. units-of-production declining-balance straight-line

declining-balance

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

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. $3,000 $1,500 $1,000 $6,000

$1,000 Reason: This is a partial year depreciation. $26,000 - 2,000 = $24,000/4 = $6000 per year. $6000 x 2/12 = $1,000.

Digg Co. installs a manufacturing machine in its factory at the beginning of the year at a cost of $36,000. The machine's useful life is estimated at 10 years, or 300,000 units of product, with a $6,000 salvage value. During its first year, the machine produces 14,000 units of product. Determine the machine's first year depreciation expense under the units-of-production method. Multiple choice question. $3,000 $3,600 $1,400 $1,680

$1,400 Reason: (36,000-6,000)/300,000 x 14,000=1,400

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.

$1,400 Reason: (14,000-2000)/5 x 7/12=1,400 for a partial year depreciation The partial year depreciation should be recorded for seven months (June 1- December 31).

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. $2,875 $1,850 $2,375 $1,250

$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.

A delivery van that cost $45,000 with accumulated depreciation of $15,000 is sold for $20,000. How much gain or loss will be recognized on this sale? Multiple choice question. $10,000 gain $20,000 gain $15,000 gain $5,000 loss $20,000 loss $10,000 loss

$10,000 loss

Teshin Co. purchases a piece of land with several land improvements for $180,000. The land appraises at $120,000 and the land improvements appraise at $80,000. The land should be recorded at what cost? Multiple choice question. $80,000 $108,000 $72,000 $120,000

$108,000 Reason: The land will be recorded based on the relative market value of the lump-sum purchase at $108,000. [120,000/(120,000+80,000)] x 180,000 = 108,000

New equipment with a market value of $30,000 is received by exchanging an old piece of equipment with a book value of $10,000 along with cash of $7,000. Gain on Exchange of Assets is credited for: Multiple choice question. $13,000 $30,000 $23,000 $10,000

$13,000 Reason: $30,000 market value of new machine minus book value of $10,000 minus cash given of $7,000 = $13,000 gain.

Ion Co. purchased land for $190,000. Ion also paid $5,000 in brokerage fees, $1,000 in legal fees, and $500 in title costs. Ion should record the cost of this land to be: Multiple choice question. $195,000 $196,000 $195,500 $190,000 $196,500

$196,500

Bina Co. purchased a vehicle on January 1st for $15,000 and estimates it will use the vehicle for eight years with a $3,000 salvage value. Using the double declining-balance depreciation method, compute the vehicle's second year depreciation expense. Multiple choice question. $3,000.00 $3,750.00 $2,250.00 $2,812.50

$2,812.50 Reason: (100%/8 x 2)=25%. 15,000 x 25%=3,750 for first year; Second year: (15,000-3750) x 25% =2812.50

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?

$20,000

PT Co. purchased land and an existing building for $200,000. In addition, PT paid closing costs of $15,000. PT removed the building and regraded the land for a total cost of $35,000. PT should record the cost of the land for: Multiple choice question. $200,000

$250,000

New equipment with a market value of $15,000 is purchased by exchanging old equipment with a book value of $10,000 along with cash of $8,000. The debit to Loss on Exchange of Assets is: Multiple choice question. $8,000 $5,000 $3,000 $7,000

$3,000 Reason: Subtract the book value of the old asset of $10,000 plus the cash given of $8,000 from the market value of the new asset of $15,000 equals $18,000 minus $15,000 equals $3,000 loss.

Johnson Co. trades in a machine with a book value of $10,000 for a new machine with a list value of $12,000. In addition to the old machine, Johnson also pays $5,000 cash. The gain or loss on this exchange (which has commercial substance) would be how much? Multiple choice question. $2,000 gain $2,000 loss $3,000 gain $3,000 loss

$3,000 loss Reason: 12,000-10,000-5,000=(3,00)0

Nimo Co. purchased a machine for $12,000 and estimates it will use the machine for five-years with a $2,000 salvage value. Using the double declining-balance depreciation method, compute the machine's first year depreciation expense. Multiple choice question. $4,800 $2,400 $4,000 $2,000

$4,800 Reason: 12,000 x [(100%/5) x 2] =4,800. Salvage value is not subtracted upfront with this method.

Juno Co. purchased a machine for $10,000 and estimates it will use the machine for four years with a $2,000 salvage value. Using the double declining-balance depreciation method, compute the machine's first year depreciation expense.

$5,000 Reason: $10,000 x (.25 x 2) = $5,000.

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. $30,000 $50,000 $60,000

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

Cen Co. purchases land and a building for $130,000. The land is appraised at $100,000 and the building at $150,000. Allocating the cost based on market values, the land should be recorded at what amount? Multiple choice question. $40,000 $60,000 $100,000 $52,000 $90,000 $110,000

$52,000 Reason: [100,000/(100,000+150,000)] x 130,000

At the beginning of the year, Jobs Co. owned one piece of office equipment, a copier. The copier was purchased two years ago for $12,000. At the beginning of the year, the balance in accumulated depreciation was $4,000. Jobs uses straight-line depreciation of $2,000 per year with a zero salvage value. How much is accumulated depreciation at the end of the year? Multiple choice question. $8,000 $4,000 $10,000 $2,000 $12,000 $6,000

$6,000

Vonetech Co. trades in a plant asset with a book value of $15,000 for a new machine with a market value of $10,000. In addition to the old machine, Johnson also pays $1,000 cash. The gain or loss on this exchange which has commercial substance is? Multiple choice question. $5,000 gain $5,000 loss $10,000 gain $6,000 loss

$6,000 loss

Rino Co. pays $35,000 for equipment. The machine's useful life is estimated at 10 years, or 50,000 units of product with a $5,000 salvage value. During the first year, the machine produced 12,000 units of product. How much depreciation expense will Rino record this first year based on the units-of-production depreciation method?

$7,200 Reason: (35,000-5,000)/50,000 x 12,000

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

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

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 Depreciation - Mineral Deposit Mineral Deposit Depletion Expense - Mineral Deposit Accumulated Depletion - Mineral Deposit

Accumulated Depletion - Mineral Deposit

Accumulated amortization is reported on which of the following financial statements? Multiple choice question. Income statement Statement of retained earnings Balance sheet

Balance sheet

Accumulated depreciation is recorded on which of the following financial statements? Multiple choice question. Statement of retained earnings Statement of cash flows Balance sheet Income statement

Balance sheet

Franco Co. reported net sales of $10,000 in year 2 and $8,000 in year 1. Franco reported total assets of $18,000 in year 2 and $22,000 in year 1. Total asset turnover for year 2 would equal (answer should be a decimal number).

Blank 1: 0.5

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.

Blank 1: 2000

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 $_______.

Blank 1: 4000

Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 closing fees (including title 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 $.

Blank 1: 495000, 495,000, or $495000

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 $ per year.

Blank 1: 5000

(Capital/Revenue) expenditures are additional costs of plant assets that provide benefits extending beyond the current period, such as a plant expansion, or machine overhaul.

Blank 1: Capital

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

Blank 1: Depletion Blank 2: Expense

_______________ is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.

Blank 1: Depreciation

______ is the amount by which a company's value exceeds the value of its individual assets and liabilities. It is recorded as an intangible asset, but is not amortized.

Blank 1: Goodwill

T. Chung Co. sold a computer for $500 cash. The computer cost $3,000 and had accumulated depreciation of $2,200 at the time of the sale. Chung will record the sale with an entry to the (Gain/Loss) on Disposal of Equipment account in the amount of $______-.

Blank 1: Loss Blank 2: $300 or 300

(Revenue/Capital) expenditures are additional costs of plant assets that do not materially increase the asset's life or productive capabilities.

Blank 1: Revenue

Book value can be calculated by taking an asset's acquisition costs less its ________________ ___________________.

Blank 1: accumulated Blank 2: depreciation

Accumulated depletion is a contra asset account, and is therefore reported on the _)_______ _______- .

Blank 1: balance Blank 2: sheet

If an asset exchange has commercial substance, a gain or loss is recorded based on the difference between the value of the asset given up and the market value of the asset received.

Blank 1: book

Accumulated depreciation is a ___________ asset account (one that is linked with the plant asset account, but has an opposite normal balance) and is reported on the balance sheet.

Blank 1: contra

The exclusive right to publish or sell a musical, literary, or artistic work during the life of the creator plus 70 years is called a .

Blank 1: copyright

A plant asset is (depreciated/discarded/obsolete) when it is no longer useful to the company, and it has no market value.

Blank 1: discarded

Grand Co. trades in an old machine for a new machine. The new machine has a list price of $10,000. The old machine has a cost of $12,000, and accumulated depreciation of $9,000. In addition, Grand will pay $6,000 towards the purchase. Because the new machine is much more technologically advanced, the exchange has commercial substance. The trade will include a (gain/loss) of $.

Blank 1: gain Blank 2: 1000

A permanent decline in the fair value of an asset relative to its book value is called asset ________ .

Blank 1: impairment

An improvements to a leased asset is called a leasehold ______.

Blank 1: improvement

Modified Accelerated Cost Recovery System is acceptable for financial reporting purposes.

Blank 1: not

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

Blank 1: plant

Total asset turnover is computed as net _____ /average total assets.

Blank 1: sales

Straight-line depreciation is calculated by taking cost minus (salvage/market) value divided by useful life.

Blank 1: salvage

A symbol, name, phrase or jingle identified with a company, product or service is called a .

Blank 1: trademark

The life (also called service life) is the length of time the asset is productively used in a company's operations.

Blank 1: useful

Which of the following items are plant assets? (Check all that apply.) Multiple select question. Building being used for operations Equipment being used in operations Land held for investment Equipment with no value

Building being used for operations Equipment being used in operations

Which of the following assets are amortized? (Check all that apply.) Multiple select question. Building Coal mine Copyright Patent Land

Copyright Patent

A patent was purchased for $20,000 and expected to be used for the 20-year life with no salvage value. The entry to expense the patent during the second year of life will include which of the following entries? (Check all that apply.) Multiple select question. Debit to Accumulated Amortization $1,000. Debit to Amortization Expense $1,000. Credit to Amortization Expense $1,000. Credit to Accumulated Amortization $1,000.

Debit to Amortization Expense $1,000. Credit to Accumulated Amortization $1,000.

A company sells a machine that cost $7,000 for $500 cash. The machine had $6,500 accumulated depreciation. The entry to record this transaction will include which of the following entries? (Check all that apply.) Multiple select question. Debit to Cash for $500. Credit to Cash for $500. Credit to Gain on Sale of Machinery for $500. Debit to Loss on Sale of Machinery for $500. Credit to Machinery for $7,000. Credit to Accumulated Depreciation - Machinery for $6,500. Debit to Machinery for $7,000. Debit to Accumulated Depreciation - Machinery for $6,500.

Debit to Cash for $500. Credit to Machinery for $7,000. Debit to Accumulated Depreciation - Machinery for $6,500.

Rojo's Roses Co. received an invoice for replacement of the engine on its main delivery van. The replacement will extend the life of the van an additional three years. The entry to record receipt of the invoice would include which of the following entries? (Check all that apply.) Multiple select question. Credit to Repairs Expense. Debit to Repairs Expense. Debit to Equipment. Credit to Equipment. Credit to Accounts Payable. Debit to Cash.

Debit to Equipment. Credit to Accounts Payable.

Zion Co. paid cash for an upgrade to an existing machine that would reduce the amount of waste produced by the machine (and therefore, increasing efficiency). The journal entry to record this upgrade would include which of the following entries? (Check all that apply.) Multiple select question. Debit to Cash Debit to Machinery Credit to Machinery Credit to Repair & Maintenance Expense Credit to Cash Debit to Repair & Maintenance Expense

Debit to Machinery Credit to Cash

_______ is the process of allocating the cost of a natural resource to the period when it is consumed. Multiple choice question. Amortization Impairment Depletion Depreciation

Depletion

Diamond Co. paid cash to overhaul a forklift, which extended the life of the forklift for an additional four years. The entry to record this purchase would include a debit to the _______ account. Multiple choice question. Cash Repairs & Maintenance Expense Depreciation Expense - Equipment Equipment

Equipment

Quick Catering Co. paid for a refrigeration system to be added to their delivery van to keep the food cooled during deliveries. To record this expense, Quick would debit the ________ account. Multiple choice question. Unearned Delivery Fees Depreciation Expense - Equipment Equipment Repairs & Maintenance Expense

Equipment

True or false: 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. True False

False

Sangmoon Co. sells equipment for $1,000 cash. The equipment cost Sangmoon $6,500 and is fully depreciated at the time of sale and has no salvage value. Sangmoon will record the sale with a credit to which account and for how much? Multiple choice question. Loss on Sale of Equipment for $5,500. Equipment for $1,000. Gain on Sale of Equipment for $1,000. Equipment for $5,500. Loss on Sale of Equipment for $1,000. Gain on Sale of Equipment for $5,500.

Gain on Sale of Equipment for $1,000.

Which of the following intangible assets is not amortized using straight-line amortization? Multiple choice question. Goodwill Leasehold Patent Copyright

Goodwill

_____ is measured as the excess of the cost of an acquired entity over the value of the acquired net assets. Multiple choice question. Goodwill Copyright Patent Leasehold

Goodwill

Amortization expense is recorded on which financial statement? Multiple choice question. Income statement Balance sheet Statement of retained earnings

Income statement

Depreciation Expense is reported on which of the following financial statements? Multiple choice question. Income statement Statement of retained earnings Balance sheet Statement of cash flows

Income statement

_______ are nonphysical assets used in operations that confer on their owners long-term rights, or competitive advantages. Multiple choice question. Intangible assets Natural resource Current assets Plant assets

Intangible assets

_______ are nonphysical assets used in operations that confer on their owners long-term rights, or competitive advantages. Multiple choice question. Plant assets Intangible assets Natural resource Current assets

Intangible assets

Keva Co. trades in a vehicle with an original cost of $20,000 and accumulated depreciation of $18,000. The list price of the new vehicle is $25,000. In addition to the old vehicle, Keva also provides $24,000 cash. Assuming this transaction has commercial substance, the entry to record this transaction would include debits to which of the following accounts? (Check all that apply.) Multiple select question. Loss on Exchange of Vehicles for $1,000 Vehicles for $25,000 Accumulated Depreciation - Vehicles for $18,000 Cash for $24,000 Gain on Exchange of Vehicles for $1,000

Loss on Exchange of Vehicles for $1,000 Vehicles for $25,000 Accumulated Depreciation - Vehicles for $18,000

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 _________ account. Multiple choice question. Loss on Disposal of Machinery Accumulated Depreciation - Machinery Depreciation Expense - Machinery 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

Mineral deposit Copy machine

To calculate depletion expense, first determine the depletion per unit. Depletion per unit can be calculated by taking (cost ______)/total units of capacity. Multiple choice question. Minus operating expenses Plus operating expenses Minus salvage value Plus salvage value

Minus salvage value

Ordinary repairs, such as repairs and maintenance to a vehicle, would be recorded with a debit to which of the following accounts? Multiple choice question. Vehicle Accounts payable Repairs expense Depreciation expense

Repairs expense

Which of the following expenses would not be considered an ordinary repair? Multiple choice question. Replacing small parts Replacing an engine Cleaning Lubricating

Replacing an engine

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. Fines incurred for failing to get the correct permits Shipping charges Assembling Testing Repairs necessary for damages incurred during installation

Shipping charges Assembling Testing

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. Fines incurred for failing to get the correct permits Repairs necessary for damages incurred during installation Testing Shipping charges Assembling

Testing Shipping charges Assembling

Martinez Co. sells a machine that cost $10,000 with accumulated depreciation of $8,000 for $2,000 cash. The entry to record this transaction will recognize a gain or loss of how much? Multiple choice question. There is a gain of $2,000. There is a loss of $2,000. There is a loss of $8,000. There is a gain of $8,000. There is no gain or loss.

There is no gain or loss.

True or false: The book value of an asset when using straight-line depreciation is always greater than the book value from using double-declining-balance, except at the beginning and end of the asset's useful life, when it is the same.

True Reason: Declining-balance will always produce more depreciation expense in earlier years which will result in a lower book value.

When an asset is sold for an amount that is above the asset's current book value, the company should record? Multiple choice question. a gain on sale of equipment. a loss on sale of equipment. neither a gain or loss.

a gain on sale of equipment.

Copyrights, trademarks, and other intangible assets are expensed over their useful lives through the process of: Multiple choice question. depreciation impairment depletion amortization

amortization

If an intangible asset has a limited life, its cost is systematically allocated to expense over its useful life through the process of: Multiple choice question. depletion amortization impairment depreciation

amortization

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. extraordinary repair. betterment. ordinary repair. revenue expenditure.

betterment.

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

book value

The depreciation method that determines the depreciation charge for the period by multiplying a depreciation rate (often twice the straight-line rate) by the asset's beginning-period book value is known as the __________ method.

declining-balance

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 ________ the asset by recording an entry to remove it from the balance sheet. Multiple choice question. discard depreciate take a loss on

discard

Sioux Co. replaced the roof on its existing building, therefore increasing the building's life by 10 years. The cost of the roof is considered a(n): Multiple choice question. revenue expenditure extraordinary repair betterment ordinary repair

extraordinary repair

A plant asset trade-in with commercial substance implies that it alters the company's: Multiple choice question. income statement current cash flows past cash flows future cash flows

future cash flows

Advantages of leasing versus buying an asset include all of the following: Multiple select question. asset purchases often allow exchanges to trade up on assets lease terms often allow exchanges to trade up on leased assets large payments near the end of the lease term little or no up-front payment

lease terms often allow exchanges to trade up on leased assets little or no up-front payment

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

natural resource

Bilos Co. purchased a patent on a newly developed technology. They will recognize the cost of this patent: Multiple choice question. immediately, using depletion expense over the asset's life using depreciation expense immediately, using patent expense over the asset's life using amortization expense

over the asset's life using amortization expense

Wyatt Co. purchased a popular symbol that doubled its sales in the first year. The cost of this symbol is an asset called a: Multiple choice question. copyright leasehold patent trademark

trademark

To calculate depletion expense in a period, a company should multiply the depletion per unit by: Multiple choice question. units extracted in the period total units of capacity units extracted and sold in the period units sold in the period

units extracted and sold in the period

Grand Co. owns one copier that was purchased for $10,000 three years ago. The depreciation expense taken on the copier each year has been $2,700; $1,800; and $2,200, based on the number of copies that have been made on the copier. Based on this information, the company uses the ________ depreciation method. Multiple choice question. straight-line MACRS units-of-production declining-balance

units-of-production

The method of depreciation that charges a varying amount to depreciation expense for each period of an asset's useful life depending on its usage is called the _________ method. Multiple choice question. straight-line units-of-production MACRS declining-balance

units-of-production

The ______ life of a plant asset is the length of time it is productively used in a company's operations Multiple choice question. productive useful obsolescence total

useful