Question 1

If net sales revenue and the average book value of fixed assets both rise 5%:

Accepted Answer

A)  the fixed asset turnover ratio will rise.
B)  the fixed asset turnover ratio will fall.
C)  the fixed asset turnover ratio will stay the same.
D)  the impact on the fixed asset turnover ratio cannot be determined since the beginning values are unknown.E) All of the above
F) A) and C)

Question 2

For which of the following types of equipment would the double-declining balance depreciation method make the most sense?

Accepted Answer

A)  Computer hardware.
B)  Automobile and trucks.
C)  Factory equipment.
D)  A warehouse building.E) A) and B)
F) A) and C)

Question 3

A declining fixed asset turnover ratio suggests that a:

Accepted Answer

A)  company is not as efficient in using its fixed assets as it was in previous periods.
B)  company's net sales must be increasing.
C)  company must have purchased some intangible assets.
D)  company's beginning fixed asset balance must be greater than its ending fixed asset balance.E) C) and D)
F) B) and C)

Question 4

The net amount shown on a balance sheet for an intangible asset with an unlimited life should be:

Accepted Answer

A)  the price for which it could be sold.
B)  its book value or impaired fair value,whichever is lower.
C)  its purchase price minus accumulated amortization.
D)  its purchase price adjusted for inflation.E) B) and D)
F) C) and D)

Question 5

Companies with the same asset may report different amounts of depreciation in a given year for all of the following reasons,except

Accepted Answer

A)  They use different residual values.
B)  They use different estimated useful lives.
C)  They use different depreciation methods.
D)  They are in different industries.E) A) and C)
F) A) and B)

Question 6

Accumulated depreciation is classified as an expense.

Accepted Answer

A) True 
 B)False

Question 7

Sneetch Inc.purchased a star-making machine on January 1,2014.The cost of the machine was $17,000.Its estimated residual value was $2,000 at the end of an estimated 10-year life.The company expects to produce a total of 20,000 units.
a.Calculate depreciation expense for 2014 and 2015 using the straight-line method.
b.Calculate depreciation expense for 2014 and 2015 using the double-declining balance method.
c.Calculate the depreciation expense for 2014 and 2015 using the units-of-production method.The company produced 1,500 units in 2014 and 2,200 units in 2015.

Accepted Answer

a.Straight-Line <img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> b.D...

Question 8

Use the information above to answer the following question.If the units-of-production method is used,the depreciation rate is:

Accepted Answer

A)  $0.95 per unit.
B)  $0.19 per unit.
C)  $0.05 per unit.
D)  $1.00 per unit.E) B) and D)
F) None of the above

Question 9

The primary difference between ordinary repairs and extraordinary repairs is:

Accepted Answer

A)  ordinary repairs cost less.
B)  ordinary repairs are expenditures for routine maintenance and upkeep,whereas extraordinary repairs increase an assets economic usefulness in the future through increased efficiency,capacity,or longer life.
C)  extraordinary repairs only maintain the asset for a short time,whereas ordinary repairs increase the usefulness of assets beyond their original condition.
D)  extraordinary repairs are expenditures,not expenses.E) B) and D)
F) A) and D)

Question 10

A trucking company sold its fleet of trucks for $55,000.The trucks had originally cost $1,410,000 and had accumulated depreciation of $1,269,000 through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

Accepted Answer

A)  Gain of $86,000.
B)  Gain of $55,000.
C)  Loss of $55,000.
D)  Loss of $86,000.E) A) and B)
F) A) and C) D

Question 11

Assume that,prior to preparing adjusting entries at the end of the year,Caterpillar Corporation has a fixed asset turnover ratio of 3.4 based on average net fixed assets of $500,000,000.Which of the following year-end adjustments would cause Caterpillar's fixed asset turnover ratio to increase?

Accepted Answer

A)  Caterpillar accrues and capitalizes $50,000 for self-constructed assets.
B)  Caterpillar accrues a liability for ordinary repair costs in the amount of $50,000.
C)  Caterpillar writes down an impaired piece of equipment by $50,000.
D)  Caterpillar increases the sales returns & allowances by $50,000.E) A) and B)
F) C) and D)

Question 12

Which of the following statements is true when the straight-line method is used to compute depreciation?

Accepted Answer

A)  The carrying value of an asset is a constant amount during the asset's useful life.
B)  Accumulated depreciation is a constant amount during the asset's estimated useful life.
C)  Depreciation is a constant amount each year.
D)  The book value of an asset is an increasing amount during the asset's useful life.E) A) and D)
F) B) and C) C

Question 13

Use the information above to answer the following question.What is the adjusted balance in the Accumulated Depreciation account at the end of 2015?

Accepted Answer

A)  $3,200.
B)  $4,800.
C)  $9,600.
D)  $12,800.E) A) and B)
F) C) and D) D

Question 14

The balance sheet category "intangible assets" includes:

Accepted Answer

A)  Patents,trademarks,and franchises.
B)  Equipment,land,and buildings.
C)  Investments,receivables,and cash.
D)  Goodwill,inventory,and vehicles.E) C) and D)
F) B) and D)

Question 15

The cost of developing a prototype would probably be capitalized by which of the following companies?

Accepted Answer

A)  Lego.
B)  Southwest Airlines.
C)  Walmart.
D)  Cedar Fair.E) None of the above
F) A) and B)

Question 16

If a truck's engine is overhauled for $8,000,the journal entry would normally include a debit to

Accepted Answer

A)  Truck
B)  Accounts Payable
C)  Depreciation Expense
D)  CashE) B) and D)
F) B) and C)

Question 17

A company acquired property that included land,building and equipment for a total cost of $163,000.The land was appraised at $87,500,the building at $35,000,and the equipment at $52,500.What should be the allocation of the total cost in the accounting records?

Accepted Answer

A)  Land $75,000;Building $30,000;Equipment $45,000.
B)  Land $75,000;Building $30,800;Equipment $46,200.
C)  Land $87,500;Building $35,000;Equipment $52,500.
D)  Land $81,500;Building $32,600;Equipment $48,900.E) B) and D)
F) All of the above

Question 18

Impairment occurs when the estimated future cash flows from a long-lived asset fall below its book value.

Accepted Answer

A) True 
 B)False

Question 19

The Gulp convenience store chain buys new soda machines for $450,000 and pays $50,000 for installation.One-half of the total cost is paid in cash;the other half is financed.How should the company record this transaction?

Accepted Answer

A)  Debit cash for $250,000,debit notes payable for $250,000 and credit equipment for $500,000.
B)  Debit equipment for $500,000,credit cash for $250,000 and credit notes payable for $250,000.
C)  Debit cash for $250,000,debit notes payable for $250,000 credit equipment for $450,000,and credit expenses for $50,000.
D)  Debit equipment for $450,000,debit expenses for $50,000,credit cash for $250,000 and credit notes payable for $250,000.E) A) and D)
F) C) and D)

Question 20

A truck costing $12,000,on which $9,000 of accumulated depreciation has been recorded was sold for $2,000 cash.The entry to record this event would include a:

Accepted Answer

A)  gain of $1,000.
B)  loss of $1,000.
C)  credit to the Truck account for $3,000.
D)  credit to Accumulated Depreciation for $9,000.E) A) and B)
F) A) and C)

Exam 9: Long-Lived Tangible and Intangible Assets

If net sales revenue and the average book value of fixed assets both rise 5%:

Correct Answer
verified

For which of the following types of equipment would the double-declining balance depreciation method make the most sense?

Correct Answer
verified

A declining fixed asset turnover ratio suggests that a:

Correct Answer
verified

The net amount shown on a balance sheet for an intangible asset with an unlimited life should be:

Correct Answer
verified

Companies with the same asset may report different amounts of depreciation in a given year for all of the following reasons,except

Correct Answer
verified

Accumulated depreciation is classified as an expense.

Correct Answer
verified

Correct Answer
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a.Straight-Line b.D...
View Answer

Use the information above to answer the following question.If the units-of-production method is used,the depreciation rate is:

Correct Answer
verified

The primary difference between ordinary repairs and extraordinary repairs is:

Correct Answer
verified

A trucking company sold its fleet of trucks for $55,000.The trucks had originally cost $1,410,000 and had accumulated depreciation of $1,269,000 through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

Correct Answer
verified
D

Assume that,prior to preparing adjusting entries at the end of the year,Caterpillar Corporation has a fixed asset turnover ratio of 3.4 based on average net fixed assets of $500,000,000.Which of the following year-end adjustments would cause Caterpillar's fixed asset turnover ratio to increase?

Correct Answer
verified

Which of the following statements is true when the straight-line method is used to compute depreciation?

Correct Answer
verified
C

Use the information above to answer the following question.What is the adjusted balance in the Accumulated Depreciation account at the end of 2015?

Correct Answer
verified
D

The balance sheet category "intangible assets" includes:

Correct Answer
verified

The cost of developing a prototype would probably be capitalized by which of the following companies?

Correct Answer
verified

If a truck's engine is overhauled for $8,000,the journal entry would normally include a debit to

Correct Answer
verified

A company acquired property that included land,building and equipment for a total cost of $163,000.The land was appraised at $87,500,the building at $35,000,and the equipment at $52,500.What should be the allocation of the total cost in the accounting records?

Correct Answer
verified

Impairment occurs when the estimated future cash flows from a long-lived asset fall below its book value.

Correct Answer
verified

The Gulp convenience store chain buys new soda machines for $450,000 and pays $50,000 for installation.One-half of the total cost is paid in cash;the other half is financed.How should the company record this transaction?

Correct Answer
verified

A truck costing $12,000,on which $9,000 of accumulated depreciation has been recorded was sold for $2,000 cash.The entry to record this event would include a:

Correct Answer
verified

Exam 9: Long-Lived Tangible and Intangible Assets

If net sales revenue and the average book value of fixed assets both rise 5%:

Correct AnswerverifiedShow Answer

For which of the following types of equipment would the double-declining balance depreciation method make the most sense?

Correct AnswerverifiedShow Answer

A declining fixed asset turnover ratio suggests that a:

Correct AnswerverifiedShow Answer

The net amount shown on a balance sheet for an intangible asset with an unlimited life should be:

Correct AnswerverifiedShow Answer

Companies with the same asset may report different amounts of depreciation in a given year for all of the following reasons,except

Correct AnswerverifiedShow Answer

Accumulated depreciation is classified as an expense.

Correct AnswerverifiedShow Answer

Correct Answerverifieda.Straight-Line b.D...View AnswerShow Answer

Use the information above to answer the following question.If the units-of-production method is used,the depreciation rate is:

Correct AnswerverifiedShow Answer

The primary difference between ordinary repairs and extraordinary repairs is:

Correct AnswerverifiedShow Answer

A trucking company sold its fleet of trucks for $55,000.The trucks had originally cost $1,410,000 and had accumulated depreciation of $1,269,000 through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

Correct AnswerverifiedD

Assume that,prior to preparing adjusting entries at the end of the year,Caterpillar Corporation has a fixed asset turnover ratio of 3.4 based on average net fixed assets of $500,000,000.Which of the following year-end adjustments would cause Caterpillar's fixed asset turnover ratio to increase?

Correct AnswerverifiedShow Answer

Which of the following statements is true when the straight-line method is used to compute depreciation?

Correct AnswerverifiedC

Use the information above to answer the following question.What is the adjusted balance in the Accumulated Depreciation account at the end of 2015?

Correct AnswerverifiedD

The balance sheet category "intangible assets" includes:

Correct AnswerverifiedShow Answer

The cost of developing a prototype would probably be capitalized by which of the following companies?

Correct AnswerverifiedShow Answer

If a truck's engine is overhauled for $8,000,the journal entry would normally include a debit to

Correct AnswerverifiedShow Answer

A company acquired property that included land,building and equipment for a total cost of $163,000.The land was appraised at $87,500,the building at $35,000,and the equipment at $52,500.What should be the allocation of the total cost in the accounting records?

Correct AnswerverifiedShow Answer

Impairment occurs when the estimated future cash flows from a long-lived asset fall below its book value.

Correct AnswerverifiedShow Answer

The Gulp convenience store chain buys new soda machines for $450,000 and pays $50,000 for installation.One-half of the total cost is paid in cash;the other half is financed.How should the company record this transaction?

Correct AnswerverifiedShow Answer

A truck costing $12,000,on which $9,000 of accumulated depreciation has been recorded was sold for $2,000 cash.The entry to record this event would include a:

Correct AnswerverifiedShow Answer

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a.Straight-Line b.D...
View Answer

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D

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C

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D

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