Question 1

Which of the following is a characteristic of a plant asset?

Accepted Answer

A)   The asset is used in the production of income for the business.
B)   The asset is available for resale to customers in the ordinary course of business.
C)   The asset lacks physical form.
D)   Both A and B are characteristics of a plant asset. A

Question 2

patent is an exclusive right to reproduce and sell a book, musical composition, film, other work of art, or computer program, and must be amortized over the useful life of the patent.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following depreciation methods allocates a fixed amount of depreciation to each: miles driven, copies made, or some other number of components?

Accepted Answer

A)   Straight-line
B)   Declining-balance
C)   Units-of-production
D)   All of the above

Question 4

of the following items is a factor to consider when computing depreciation expense?

Accepted Answer

A)   The useful life of the asset
B)   The residual value of the asset
C)   The cost of the asset
D)   All of the above

Question 5

Which of the following is the purpose of accumulated depreciation?

Accepted Answer

A)   Accumulated depreciation's purpose is to provide details about the cost expiration of natural assets.
B)   Accumulated depreciation's purpose is to provide details about the cost expiration of intangible assets.
C)   Accumulated depreciation is an expense.
D)   Accumulated depreciation's purpose is to capture all the depreciation taken to date on plant assets.

Question 6

On January 1, 2011, Zane Manufacturing Company purchased a machine for $40,000. The company expects to use the machine a total of 24,000 hours over the next 6 years. The estimated sales price of the machine at the end of 6 years is $4,000. The company used the machine 8,000 hours in 2011 and 12,000 in 2012.
What is depreciation expense for 2011 if the company uses straight-line depreciation?

Accepted Answer

A)   $6,667
B)   $13,333
C)   $12,000
D)   $6,000

Question 7

Lowery Food Market owns refrigeration equipment that cost $10,000 and has accumulated depreciation of $7,400. The company exchanges the equipment for new equipment worth $12,000. In addition to the old equipment, the company pays $10,000 for the new equipment. Which of the following is the correct entry to record the transaction?

Accepted Answer

A)    Refrigeration equipment 10,000 Accumulated depreciation 10,000 Gain on exchange of  equipment 600 Cash 12,000 Refrigeration equipment 7,400\begin{array} { | l | l | l | l | } \hline 	ext { Refrigeration equipment } & & 10,000 & \\hline 	ext { Accumulated depreciation } & & 10,000 & \\hline \begin{array} { l } 	ext { Gain on exchange of } \	ext { equipment }\end{array} & & 600 & \\hline & 	ext { Cash } & & 12,000 \\hline & 	ext { Refrigeration equipment } & & 7,400 \\hline\end{array} Refrigeration equipment  Accumulated depreciation  Gain on exchange of  equipment ​​ Cash  Refrigeration equipment ​10,00010,000600​12,0007,400​​ 
B)    Refrigeration equipment 12,000 Accumulated depreciation 7,400 Cash 10,000 Refrigeration equipment 9,400\begin{array} { | l | l | l | l | } \hline 	ext { Refrigeration equipment } & & 12,000 & \\hline 	ext { Accumulated depreciation } & & 7,400 & \\hline & 	ext { Cash } & & 10,000 \\hline & 	ext { Refrigeration equipment } & & 9,400 \\hline\end{array} Refrigeration equipment  Accumulated depreciation ​ Cash  Refrigeration equipment ​12,0007,400​10,0009,400​​ 
C)    Refrigeration equipment 12,000 Accumulated depreciation 7,400 Loss on exchange of  equipment 600 Cash 10,000 Refrigeration equipment 10,000\begin{array} { | l | l | l | l | } \hline 	ext { Refrigeration equipment } & & 12,000 & \\hline 	ext { Accumulated depreciation } & & 7,400 & \\hline \begin{array} { l } 	ext { Loss on exchange of } \	ext { equipment }\end{array} & & 600 & \\hline & 	ext { Cash } & & 10,000 \\hline & 	ext { Refrigeration equipment } & & 10,000 \\hline\end{array} Refrigeration equipment  Accumulated depreciation  Loss on exchange of  equipment ​​ Cash  Refrigeration equipment ​12,0007,400600​10,00010,000​​ 
D)   None of the above

Question 8

Which of the following depreciation methods is commonly used by companies for their financial statements?

Accepted Answer

A)   Declining-balance
B)   Units-of-production
C)   Straight-line
D)   All of the above methods are used about equally

Question 9

Goodwill of $20,000 was recorded upon the purchase of Smith Repair Parts. The company has been very successful and has increased in value during its first year of operation under its new management. How much amortization should be recorded for the first year?

Accepted Answer

A)   $4,000
B)   $-0-
C)   $1,000
D)   $2,000

Question 10

asset was purchased for $12,000. The asset's estimated useful life was 3 years and its residual value was $2,000. How much gain or loss is reported if the asset is sold for $3,000 at the end of the fourth year?

Accepted Answer

A)   $1,000 loss
B)   $1,000 gain
C)   $2,000 loss
D)   No gain or loss

Question 11

Which of the following depreciation methods does NOT use a residual value in the depreciation formula?

Accepted Answer

A)   Units-of-production
B)   Declining-balance
C)   Straight-line
D)   All of the above

Question 12

Which depreciation method is used most often for tax purposes?

Accepted Answer

A)   Units of production
B)   Straight-line
C)   Double-declining-balance
D)   None of the above

Question 13

Costs that are not part of the land account costs include:

Accepted Answer

A)   flood prevention.
B)   streets.
C)   park.
D)   installing fences.

Question 14

is a loss on disposal of an asset recorded?

Accepted Answer

A)   A loss is recorded when the asset is sold for a price greater than the asset's book value.
B)   A loss is recorded when accumulated depreciation is less than the cash received.
C)   A loss is recorded when the asset's residual value is less than the cash received.
D)   A loss is recorded when the asset is sold for a price less than the asset's book value.

Question 15

A _________ bars other manufacturers from using the same name for a product.

Accepted Answer

A)   trademark
B)   patent
C)   copyright
D)   cease and desist order

Question 16

In 2011, a company's accountant expenses a payment that should be recorded as equipment. In 2012, which of the following is TRUE?

Accepted Answer

A)   Assets are overstated.
B)   Revenue is overstated.
C)   Liabilities are overstated.
D)   Expenses are understated. D

Question 17

is a gain on disposal of an asset recorded?

Accepted Answer

A)   A gain is recorded when accumulated depreciation is less than the cash received.
B)   A gain is recorded when the asset's residual value is less than the cash received.
C)   A gain is recorded when the asset is sold for a price less than the asset's book value.
D)   A gain is recorded when the asset is sold for a price greater than the asset's book value.

Question 18

Hastings Company has purchased a group of assets for $350,000. The assets and their market values are listed as follows:
  Land $125,000 Equipment 75,000 Building 200,000\begin{array} { | l | r | } \hline 	ext { Land } & \$ 125,000 \\hline 	ext { Equipment } & 75,000 \\hline 	ext { Building } & 200,000 \\hline\end{array} Land  Equipment  Building ​$125,00075,000200,000​​  Which of the following amounts would be debited to the Land account?

Accepted Answer

A)   $125,000
B)   $109,375
C)   $ 65,625
D)   $175,000  B

Question 19

To determine if there is a gain or loss on a disposal of an asset, you must compare:

Accepted Answer

A)   market value and book value.
B)   market value and salvage value.
C)   market value and cost.
D)   book value and salvage cost.

Question 20

A company purchased a truck for $50,000 on July 1, 2009. The truck has an estimated useful life of 5 years and will have no salvage value. It is estimated that the truck can be driven for 150,000 miles. The truck was driven for 18,000 miles during 2009. If the goal is to reduce taxable income to the lowest amount, which method should be elected and how much depreciation can be deducted in 2009?

Accepted Answer

A)   Units-of-production, $6,000
B)   Only straight-line can be elected
C)   Double declining-balance, $10,000
D)   Straight-line, $5,000

Exam 9: Plant Assets and Intangibles

Which of the following is a characteristic of a plant asset?

Correct Answer
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A

patent is an exclusive right to reproduce and sell a book, musical composition, film, other work of art, or computer program, and must be amortized over the useful life of the patent.

Correct Answer
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Which of the following depreciation methods allocates a fixed amount of depreciation to each: miles driven, copies made, or some other number of components?

Correct Answer
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of the following items is a factor to consider when computing depreciation expense?

Correct Answer
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Which of the following is the purpose of accumulated depreciation?

Correct Answer
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Which of the following depreciation methods is commonly used by companies for their financial statements?

Correct Answer
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Goodwill of $20,000 was recorded upon the purchase of Smith Repair Parts. The company has been very successful and has increased in value during its first year of operation under its new management. How much amortization should be recorded for the first year?

Correct Answer
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asset was purchased for $12,000. The asset's estimated useful life was 3 years and its residual value was $2,000. How much gain or loss is reported if the asset is sold for $3,000 at the end of the fourth year?

Correct Answer
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Which of the following depreciation methods does NOT use a residual value in the depreciation formula?

Correct Answer
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Which depreciation method is used most often for tax purposes?

Correct Answer
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Costs that are not part of the land account costs include:

Correct Answer
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is a loss on disposal of an asset recorded?

Correct Answer
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A _________ bars other manufacturers from using the same name for a product.

Correct Answer
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In 2011, a company's accountant expenses a payment that should be recorded as equipment. In 2012, which of the following is TRUE?

Correct Answer
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D

is a gain on disposal of an asset recorded?

Correct Answer
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B

To determine if there is a gain or loss on a disposal of an asset, you must compare:

Correct Answer
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Exam 9: Plant Assets and Intangibles

Which of the following is a characteristic of a plant asset?

Correct AnswerverifiedA

patent is an exclusive right to reproduce and sell a book, musical composition, film, other work of art, or computer program, and must be amortized over the useful life of the patent.

Correct AnswerverifiedShow Answer

Which of the following depreciation methods allocates a fixed amount of depreciation to each: miles driven, copies made, or some other number of components?

Correct AnswerverifiedShow Answer

of the following items is a factor to consider when computing depreciation expense?

Correct AnswerverifiedShow Answer

Which of the following is the purpose of accumulated depreciation?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following depreciation methods is commonly used by companies for their financial statements?

Correct AnswerverifiedShow Answer

Goodwill of $20,000 was recorded upon the purchase of Smith Repair Parts. The company has been very successful and has increased in value during its first year of operation under its new management. How much amortization should be recorded for the first year?

Correct AnswerverifiedShow Answer

asset was purchased for $12,000. The asset's estimated useful life was 3 years and its residual value was $2,000. How much gain or loss is reported if the asset is sold for $3,000 at the end of the fourth year?

Correct AnswerverifiedShow Answer

Which of the following depreciation methods does NOT use a residual value in the depreciation formula?

Correct AnswerverifiedShow Answer

Which depreciation method is used most often for tax purposes?

Correct AnswerverifiedShow Answer

Costs that are not part of the land account costs include:

Correct AnswerverifiedShow Answer

is a loss on disposal of an asset recorded?

Correct AnswerverifiedShow Answer

A _________ bars other manufacturers from using the same name for a product.

Correct AnswerverifiedShow Answer

In 2011, a company's accountant expenses a payment that should be recorded as equipment. In 2012, which of the following is TRUE?

Correct AnswerverifiedD

is a gain on disposal of an asset recorded?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedB

To determine if there is a gain or loss on a disposal of an asset, you must compare:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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A

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D

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B

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