Question 1

Total asset turnover is used to evaluate:

Accepted Answer

A)  The efficiency of management's use of assets to generate sales
B)  The need for asset replacement
C)  The number of times operating assets were sold during the year
D)  The cash flows used to acquire assets
E)  The relation between asset cost and book valueF) A) and C)
G) C) and E)

Question 2

A company paid $314,000 for a machine that was expected to last five years and have a salvage value of $40,000.During the third year of the machine's life,$37,000 cash was paid for replacement parts that were expected to increase the machine's productivity by 10% each year.Prepare the journal entry to record the $37,000 cost incurred in the third year.

Accepted Answer

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Question 3

The total cost of an asset less its accumulated depreciation is called:

Accepted Answer

A)  Historical cost
B)  Book value
C)  Present value
D)  Current (market) value
E)  Replacement costF) A) and B)
G) All of the above

Question 4

Gain or loss on the disposal of an asset is determined by comparing "value given" (book value)to "value received".

Accepted Answer

A) True 
 B)False

Question 5

Ordinary repairs are expenditures that keep assets in normal,good operating condition.

Accepted Answer

A) True 
 B)False

Question 6

The four main accounting issues for plant assets are: (1)_________________________, (2)_____________________________, (3)_________________________, (4)_____________________________.

Accepted Answer

Computing of the costs of plant assets,Allocating the costs of plant assets against revenues for the periods they benefit,Accounting for repairs and expenditures,Recording the disposal of plant assets

Question 7

A company bought a new display case for $42,000 and was given a trade-in of $2,000 on an old display case,so the company paid $40,000 cash with the trade-in.The old case had an original cost of $37,000 and accumulated depreciation of $34,000.The company should record the value of new display case at:

Accepted Answer

A)  $2,000
B)  $3,000
C)  $40,000
D)  $42,000
E)  $43,000F) None of the above
G) B) and C)

Question 8

Explain the impact,if any,on depreciation when depreciation estimates change.

Accepted Answer

Depreciation is revised when changes in estimates such as salvage value and useful life occur.For example,if the useful life of a plant asset changes,the remaining cost to be depreciated is spread over the remaining revised useful life of the asset.

Question 9

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Accepted Answer

Revenue expenditures do not materially i...

Question 10

Plant assets are:

Accepted Answer

A)  Current assets
B)  Used in operations
C)  Natural resources
D)  Long-term investments
E)  IntangibleF) C) and E)
G) A) and B)

Question 11

A company entered into the following transactions concerning its computer system:
On January 1,2009 purchased a computer system that cost $1,480,000.The estimated useful life of the computer is 3 years and salvage value is $40,000.Straight-line depreciation is to be used.On January 1,2010 the company determined that the estimated useful life of the computer would be 4 years instead of 3 years.The estimated salvage value will only be $10,000.
a. Prepare the journal entry to record depreciation expense for 2010.
b. Prepare the journal entry to record depreciation expense for 2010.

Accepted Answer

a.
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Question 12

A plant asset's useful life might not be the same as its productive life.

Accepted Answer

A) True 
 B)False

Question 13

A company purchased a machine for $75,000 that was expected to last 6 years and have a salvage value of $6,000.At the beginning of the machine's fourth year the company decided that the machine's estimated useful life should be revised to a total of 10 years instead of 6 years.Also,the salvage value was re-estimated to be $5,500.Straight-line depreciation was used throughout the machine's life.Calculate the depreciation expense for the fourth year of the machine's useful life.

Accepted Answer

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Question 14

Once the estimated depreciation expense for an asset is calculated:

Accepted Answer

A)  It cannot be changed due to the historical cost principle
B)  It may be revised based on new information
C)  Any changes are accumulated and recognized when the asset is sold
D)  The estimate itself cannot be changed; however,new information should be disclosed in financial statement footnotes
E)  It cannot be changed due to the consistency principleF) A) and D)
G) A) and C)

Question 15

Match between columns
                        Premises:    Patent 
   Salvage value 
   Book value 
   Inadequacy 
   Copyright 
   Depletion 
   Extraordinary repairs 
   Obsolescence 
   Amortization 
   Land improvements

Accepted Answer

The Answer of  The insufficient capacity of plant assets is...

Question 16

Explain (in detail)how to compute each of the following depreciation methods: straight-line,units-of-production and double-declining-balance.

Accepted Answer

Straight-line depreciation is calculated...

Question 17

Blanket Corporation sold equipment for cash of $40,500.Accumulated depreciation on the sale date amounted to $34,000 and a loss of $1,800 was recognized on the sale.
What was the original cost of the asset?

Accepted Answer

A)  $72,300
B)  $75,900
C)  $4,700
D)  $76,300
E)  $42,300F) D) and E)
G) B) and E)

Question 18

Both the straight-line depreciation method and the double-declining-balance depreciation method:

Accepted Answer

A)  Produce the same total depreciation over an asset's useful life
B)  Produce the same depreciation expense each year
C)  Produce the same book value each year
D)  Are acceptable for tax purposes only
E)  Are the only acceptable methods of depreciation for financial reportingF) C) and D)
G) A) and B)

Question 19

A company sold a machine that originally cost $100,000 for $60,000 cash.The accumulated depreciation on the machine was $40,000.The company should recognize a:

Accepted Answer

A)  $0 gain or loss
B)  $20,000 gain
C)  $20,000 loss
D)  $40,000 loss
E)  $60,000 gainF) A) and C)
G) A) and B) A

Question 20

_______________________ are expenditures that extend an asset's useful life beyond its original estimate.

Accepted Answer

Extraordin...

Exam 8: Reporting and Analyzing Long-Term Assets

Total asset turnover is used to evaluate:

Correct Answer
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Correct Answer
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View Answer

The total cost of an asset less its accumulated depreciation is called:

Correct Answer
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Gain or loss on the disposal of an asset is determined by comparing "value given" (book value)to "value received".

Correct Answer
verified

Ordinary repairs are expenditures that keep assets in normal,good operating condition.

Correct Answer
verified

The four main accounting issues for plant assets are: (1)_________, (2)_, (3)_, (4)_________________.

Correct Answer
verified
Computing of the costs of plant assets,Allocating the costs of plant assets against revenues for the periods they benefit,Accounting for repairs and expenditures,Recording the disposal of plant assets

Correct Answer
verified

Explain the impact,if any,on depreciation when depreciation estimates change.

Correct Answer
verified
Depreciation is revised when changes in estimates such as salvage value and useful life occur.For example,if the useful life of a plant asset changes,the remaining cost to be depreciated is spread over the remaining revised useful life of the asset.

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Correct Answer
verified
Revenue expenditures do not materially i...
View Answer

Plant assets are:

Correct Answer
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Correct Answer
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a.
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View Answer

A plant asset's useful life might not be the same as its productive life.

Correct Answer
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Correct Answer
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View Answer

Once the estimated depreciation expense for an asset is calculated:

Correct Answer
verified

Match each of the following terms with the appropriate definitions.

Explain (in detail)how to compute each of the following depreciation methods: straight-line,units-of-production and double-declining-balance.

Correct Answer
verified
Straight-line depreciation is calculated...
View Answer

Blanket Corporation sold equipment for cash of $40,500.Accumulated depreciation on the sale date amounted to $34,000 and a loss of $1,800 was recognized on the sale. What was the original cost of the asset?

Correct Answer
verified

Both the straight-line depreciation method and the double-declining-balance depreciation method:

Correct Answer
verified

A company sold a machine that originally cost $100,000 for $60,000 cash.The accumulated depreciation on the machine was $40,000.The company should recognize a:

Correct Answer
verified
A

_______________________ are expenditures that extend an asset's useful life beyond its original estimate.

Correct Answer
verified
Extraordin...
View Answer

Exam 8: Reporting and Analyzing Long-Term Assets

Total asset turnover is used to evaluate:

Correct AnswerverifiedShow Answer

Correct Answerverified\[\begin{array} { | c | r | r ...View AnswerShow Answer

The total cost of an asset less its accumulated depreciation is called:

Correct AnswerverifiedShow Answer

Gain or loss on the disposal of an asset is determined by comparing "value given" (book value)to "value received".

Correct AnswerverifiedShow Answer

Ordinary repairs are expenditures that keep assets in normal,good operating condition.

Correct AnswerverifiedShow Answer

The four main accounting issues for plant assets are: (1)_________________________, (2)_____________________________, (3)_________________________, (4)_____________________________.

Correct AnswerverifiedComputing of the costs of plant assets,Allocating the costs of plant assets against revenues for the periods they benefit,Accounting for repairs and expenditures,Recording the disposal of plant assets

Correct AnswerverifiedShow Answer

Explain the impact,if any,on depreciation when depreciation estimates change.

Correct AnswerverifiedDepreciation is revised when changes in estimates such as salvage value and useful life occur.For example,if the useful life of a plant asset changes,the remaining cost to be depreciated is spread over the remaining revised useful life of the asset.

Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.

Correct AnswerverifiedRevenue expenditures do not materially i...View AnswerShow Answer

Plant assets are:

Correct AnswerverifiedShow Answer

Correct Answerverified a. \[\begin{array} { | l | c | c | c | ...View AnswerShow Answer

A plant asset's useful life might not be the same as its productive life.

Correct AnswerverifiedShow Answer

Correct Answerverified\[\begin{array} { | l | r | l | } \hlin...View AnswerShow Answer

Once the estimated depreciation expense for an asset is calculated:

Correct AnswerverifiedShow Answer

Match each of the following terms with the appropriate definitions.

Explain (in detail)how to compute each of the following depreciation methods: straight-line,units-of-production and double-declining-balance.

Correct AnswerverifiedStraight-line depreciation is calculated...View AnswerShow Answer

Blanket Corporation sold equipment for cash of $40,500.Accumulated depreciation on the sale date amounted to $34,000 and a loss of $1,800 was recognized on the sale. What was the original cost of the asset?

Correct AnswerverifiedShow Answer

Both the straight-line depreciation method and the double-declining-balance depreciation method:

Correct AnswerverifiedShow Answer

A company sold a machine that originally cost $100,000 for $60,000 cash.The accumulated depreciation on the machine was $40,000.The company should recognize a:

Correct AnswerverifiedA

_______________________ are expenditures that extend an asset's useful life beyond its original estimate.

Correct AnswerverifiedExtraordin...View AnswerShow Answer

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The four main accounting issues for plant assets are: (1)_________, (2)_, (3)_, (4)_________________.

Correct Answer
verified
Computing of the costs of plant assets,Allocating the costs of plant assets against revenues for the periods they benefit,Accounting for repairs and expenditures,Recording the disposal of plant assets

Correct Answer
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Correct Answer
verified
Depreciation is revised when changes in estimates such as salvage value and useful life occur.For example,if the useful life of a plant asset changes,the remaining cost to be depreciated is spread over the remaining revised useful life of the asset.

Correct Answer
verified
Revenue expenditures do not materially i...
View Answer

Correct Answer
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Correct Answer
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a.
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Straight-line depreciation is calculated...
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A

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Extraordin...
View Answer