Last set of questions!!
| Question 1.1.The term applied to the periodic transfer of a plant asset’s cost to expense is_______. (Points : 1) |
amortization
depreciation
depletion
capitalization |
| Question 2.2.A characteristic of a plant asset is that it_______. (Points : 1) |
is used in the production of income for a business
is available for resale to customers in the ordinary course of business
lacks physical form
both a and b are correct |
Question 3.3.Erosion Tech manufactures erosion control products. In 20X5, they purchased a straw mat machine from Germany. They had the following costs associated with the machine:
| Price of straw mat machine |
$450,000 |
| Discounts received |
$9000 |
| Travel cost from German to the U.S. |
$40,000 |
| Insurance on equipment while en route |
$3,000 |
| Insurance on equipment while in operation |
$2,000 |
| Installation costs |
$20,000 |
| Property taxes assessed on machine during the second year of operation |
$4120 |
What amount should be recorded as the capitalized cost of the equipment? (Points : 1) |
$504,000
$493,000
$510,120
$495,000 |
| Question 4.4.Which of the following accounting methods is the method used to compute depletion? (Points : 1) |
Straight-line
Declining-balance
Units-of-production
capitalization |
| Question 5.5.When the amount of use of a plant asset varies from year to year, the method of determining depreciation that matches revenues and expenses would be the_______. (Points : 1) |
straight-line method
double-declining balance method
units-of-production method
either straight-line method or the double-declining balance method |
| Question 6.6.Accumulated depreciation_______. (Points : 1) |
is a contra liability account
is an expense account
is a contra asset account
is a contra equity account |
| Question 7.7.The double-declining-balance method will provide the greatest tax advantage during the first year of an asset’s life because it yields the ________ compared to the use of other depreciation methods. (Points : 1) |
highest net income
lowest net income
highest gross profit
lowest operating expenses |
| Question 8.8.To measure depreciation for a plant asset, all of the following must be known except_______. (Points : 1) |
estimated useful life
historical cost
current market value
estimated residual value |
| Question 9.9.Primm Industrial Contractors purchased a new truck on January 1st for $35,000. The truck is expected to have a useful life of five years with a salvage value of $4,500. It is estimated that the truck will be able to operate for 200,000 miles. In year one, Primm Industrial Contractors put 46,000 miles on the truck. What amount should be recorded in year two for depreciation expense if the double-declining-balance method is used? (Points : 1) |
$14,000
$12,200
$ 8,400
$9,120 |
| Question 10.10.Which of the following would be expensed rather than capitalized? (Points : 1) |
Oil change and lubrication
Major engine overhaul
Modification for new use
Addition to storage capacity |
| Question 11.11.A patent would be an example of a(n) ________. (Points : 1) |
real asset
tangible asset
natural resource
intangible asset |
| Question 12.12.Which of the following is the expected cash value of an asset at the end of its useful life? (Points : 1) |
Book value
Residual value
Carrying value
Market value |
| Question 13.13.On February 1st, the Heathman Company purchased 275 acres of land with timber. The timber was valued at approximately $365,000 with no residual value. The Heathman Company clear-cut 25 acres on August 9th that sold for $2,000 an acre. What should the Heathman Company report as the value of natural resources net of accumulated depletion at year-end? (Points : 1) |
$331,819
$315,000
$33,181
$50,000 |
| Question 14.14.In 2011, a company’s accountant expenses a payment that should be recorded as equipment. In 2012, which of the following is TRUE? (Points : 1) |
Assets are overstated.
Revenue is overstated.
Liabilities are overstated.
Expenses are understated. |
|
Question 15.15.Which of the following isNOTdefined as an intangible asset under international financial reporting standards? (Points : 1)
|
goodwill
leaseholds
patents
research and development costs |
|
