Question 1
Which of the following estimates are required when calculating depreciation expense?
1.
Depreciation rate
2.
Useful life
3.
Expected maintenance costs
4.
Salvage value
Answer
A.
1, 2, 3, and 4
B.
2 and 4
C.
2, 3, and 4
D.
1, 2, and 4
1 points
Question 2
Which of the following is not necessary in calculating the depreciation expense for the first year for a newly purchased factory forklift?
Answer
A.
Total cost of the forklift at acquisition
B.
Market value of the forklift during its useful life
C.
Estimated salvage value
D.
Depreciation rate
E.
Estimated useful life
1 points
Question 3
At what point is an asset considered to be impaired?
Answer
A.
When the net book value is less than the sum of expected cash flows
B.
When the net book value is less than the market value
C.
When the net book value is greater than the sum of expected cash flows
D.
When the net book value is greater than the market value
1 points
Question 4
AT Company purchased a tractor at a cost of $60,000. The tractor has an estimated salvage value of $10,000 and an estimated life of 8 years, or 12,000 hours of operation. The tractor was purchased on January 1, 2012 and was used 2,400 hours in 2012 and 2,100 hours in 2013. What method of depreciation will produce the maximum depreciation expense in 2013?
Answer
A.
Double declining balance
B.
Straight line
C.
All methods produce the same expense in 2013
D.
Units of production
1 points
Question 5
AT Company purchased a tractor at a cost of $60,000 on January 1, 2012. The tractor has an estimated salvage value of $10,000 and an estimated life of 8 years. If AT uses the straight line method, what is the book value at January 1, 2016?
Answer
A.
$35,000
B.
$25,000
C.
$41,250
D.
Some other answer
1 points
Question 6
Goodwill can be recorded as an asset when:
Answer
A.
An offer is received to purchase the business at a price in excess of the value of the assets
B.
A business has above normal profitability compared to other businesses in its industry
C.
A business can determine that it has created customer goodwill and name recognition
D.
A business is purchased and payment is made in excess if the fair value of the identifiable net assets
1 points
Question 7
How should intangible assets be disclosed on the balance sheet?
Answer
A.
At cost in the current assets section
B.
As a reduction of stockholders’ equity
C.
At the estimated market value at the balance sheet date
D.
Net of the costs already amortized
1 points
Question 8
Which of the following is not a balance sheet category for long lived assets?
Answer
A.
Plant assets
B.
Revenue expenditures
C.
Intangible assets
D.
None of the above
1 points
Question 9
Which of the following plant assets is not depreciated?
Answer
A.
Leasehold improvements
B.
Equipment
C.
Land for site use
D.
Furniture
E.
All of these are depreciated
1 points
Question 10
Swain, Inc., acquired a machine that involved the following expenditures and related factors:
Gross invoice price
$28,500
Sales tax
1,425
Cash discount taken
570
Freight
675
Assembly of machine
900
Installation of machine
1,350
Assorted spare parts for future use
2,700
Tuning and adjusting machine before use
450
The initial accounting cost of the machine should be:
Answer
A.
$33,870
B.
$32,280
C.
$30,030
D.
$32,730
E.
None of the above
1 points
Question 11
A land site for a new office building is purchased for $180,000. A barn on the site will be razed at a net cost of $10,000. The $10,000 razing expenditure is properly debited to:
Answer
A.
Office Building
B.
Land
C.
Razing Expense
D.
Land Improvements
E.
None of the above
1 points
Question 12
For $5,550,000, Bale, Inc., purchased another company’s land, building, and equipment. Independent appraisals indicate the values of these assets as follows: land, $600,000; building, $3,600,000; and equipment, $1,800,000. How much should be recorded as the acquisition cost of each asset?
Answer
A.
Land, $600,000; building, $3,600,000; equipment, $1,800,000
B.
Land, $555,000; building, $3,330,000; equipment, $1,665,000
C.
Land, $525,000; building, $3,375,000; equipment, $1,650,000
D.
Land, $550,000; building, $3,200,000; equipment, $1,800,000
E.
None of the above
1 points
Question 13
What is the term identifying the expected net recovery from the disposal of a plant asset at the end of its useful life?
Answer
A.
Accumulated depreciation
B.
Salvage value
C.
Depreciation expense
D.
Market value
E.
None of the above
1 points
Question 14
On April 1, 2012, Flyer, Inc., acquired a new machine for $80,000. Its estimated useful life is eight years with an expected salvage value of $8,000. Assuming straight line depreciation, 2012 depreciation expense is:
Answer
A.
$ 9,000
B.
$ 6,750
C.
$ 7,500
D.
$10,000
E.
None of the above
1 points
Question 15
On January 1, 2012, Casler Company purchased a bottle capping machine for $80,000. During its useful life, the company expects that the machine will cap 1,500,000 bottles. The machine’s expected salvage value is $5,000. During 2012, the machine capped 250,000 bottles and during 2013, the machine capped 300,000 bottles. Assuming units of production depreciation, 2013 depreciation expense is:
Answer
A.
$12,500
B.
$13,333
C.
$15,000
D.
$16,000
E.
None of the above
1 points
Question 16
On January 1, 2012, Global, Inc., purchased a new machine for $60,000. Its estimated useful life is eight years with an expected salvage value of $6,000. Assuming double declining balance depreciation, 2012 depreciation expense is:
Answer
A.
$ 7,500
B.
$ 6,750
C.
$13,500
D.
$15,000
E.
None of the above
1 points
Question 17
On January 1, 2012, Vandell, Inc., purchased a new machine for $96,000. Its estimated useful life is 16 years with an expected salvage value of $16,000. Assuming double declining balance depreciation, 2012 depreciation expense is:
Answer
A.
$10,000
B.
$ 6,000
C.
$12,000
D.
$13,500
E.
None of the above
1 points
Question 18
At the end of the expected useful life of a depreciable asset with an estimated 15% salvage value, the accumulated depreciation would equal the original cost of the asset under which of the following depreciation methods?
Answer
A.
Straight Line
Units of Production
Double Declining Balance
No
Yes
Yes
B.
Straight Line
Units of Production
Double Declining Balance
Yes
Yes
Yes
C.
Straight Line
Units of Production
Double Declining Balance
No
No
No
D.
Straight Line
Units of Production
Double Declining Balance
No
Yes
No
E.
Straight Line
Units of Production
Double Declining Balance
Yes
No
Yes
1 points
Question 19
Barber, Inc., purchased a truck on January 1, 2010, for $36,000. At that time, the truck’s useful life was an estimated four years with no salvage value. Before the entry to record 2013 depreciation was made, the truck’s estimated useful life was changed to six years with a $900 salvage value. Using straight line deprecation, what is the 2013 depreciation expense?
Answer
A.
$2,700
B.
$6,000
C.
$3,000
D.
$1,350
E.
None of the above
1 points
Question 20
The book value of a depreciable asset is:
Answer
A.
The original cost of the asset
B.
The original cost of the asset less its accumulated depreciation
C.
The original cost of the asset less its salvage value
D.
The accumulated depreciation on the asset
E.
None of the above