Question 1

When a company replaces a component of property, plant and equipment, which statement below does not account for one of the steps in the process?

Accepted Answer

A)   book value of the replaced component is written off to depreciation expense
B)   the asset cost of the replaced component is credited
C)   any cost to remove the old component is charged to expense
D)   the identifiable direct costs associated with the new component are capitalizedE) C) and D)
F) None of the above

Question 2

A capital expenditure results in a debit to

Accepted Answer

A)   an expense account
B)   a capital account
C)   a liability account
D)   an asset accountE) All of the above
F) B) and C)

Question 3

The accumulated depletion account is

Accepted Answer

A)   an expense account
B)   an intangible asset account
C)   reported on the income statement as other expense
D)   reported on the balance sheet as a deduction from the cost of the mineral depositE) C) and D)
F) A) and D)

Question 4

When a major corporation develops its own trademark and over time it becomes very valuable, the trademark may be shown on their balance sheet due to lack of a material cost.

Accepted Answer

A) True 
 B)False

Question 5

A double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate. Assuming that an asset has a useful life of 25 years, determine the rate to be used if using the double-declining balance method.

Accepted Answer

The answer of A double-declining balance rate for calculating depreciation...

Question 6

The formula for depreciable cost is

Accepted Answer

A)   initial cost + residual value
B)   initial cost - residual value
C)   initial cost - accumulated depreciation
D)   depreciable cost = initial costE) A) and D)
F) B) and C)

Question 7

Costs associated with normal research and development activities should be treated as intangible assets.

Accepted Answer

A) True 
 B)False

Question 8

The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate.

Accepted Answer

A) True 
 B)False

Question 9

The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in usefulness is called amortization.

Accepted Answer

A) True 
 B)False

Question 10

Equipment acquired at a cost of $126,000 has a book value of $42,000. Journalize the disposal of the equipment under the following independent assumptions.
 Journal

Accepted Answer

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Question 11

When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use, this amount is known as boot.

Accepted Answer

A) True 
 B)False

Question 12

The exclusive right to use a certain name or symbol is called a

Accepted Answer

A)   goodwill
B)   patent
C)   trademark
D)   copyrightE) C) and D)
F) A) and B)

Question 13

Machinery acquired at a cost of $80,000 and on which there is accumulated depreciation of $55,000 (including depreciation for the current year to date) is exchanged for similar machinery. For financial reporting purposes, present entries to record the disposition of the old machinery and the acquisition of new machinery under each of the following assumptions:

Accepted Answer

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Question 14

Assets may be grouped according to common traits and depreciated by using a single composite rate.

Accepted Answer

A) True 
 B)False

Question 15

An intangible asset is one that has a physical existence.

Accepted Answer

A) True 
 B)False

Question 16

Residual value is also known as all of the following except

Accepted Answer

A)   scrap value
B)   trade in value
C)   salvage value
D)   net book valueE) A) and B)
F) None of the above

Question 17

When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded for depreciation expense in the past should be corrected.

Accepted Answer

A) True 
 B)False

Question 18

The book value of a fixed asset reported on the balance sheet represents its market value on that date.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is included in the cost of constructing a building?

Accepted Answer

A)   insurance costs during construction
B)   cost of paving parking lot
C)   cost of repairing vandalism damage during construction
D)   cost of removing the demolished building existing on the land when it was purchasedE) All of the above
F) None of the above

Question 20

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1, 2015. Compute the yearly depreciation expense using straight-line depreciation.

Accepted Answer

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Exam 10: Fixed Assets and Intangible Assets

When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded for depreciation expense in the past should be corrected.

Correct Answer
verified

When a major corporation develops its own trademark and over time it becomes very valuable, the trademark may be shown on their balance sheet due to lack of a material cost.

Correct Answer
verified

The formula for depreciable cost is

Correct Answer
verified

The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in usefulness is called amortization.

Correct Answer
verified

A capital expenditure results in a debit to

Correct Answer
verified

Residual value is also known as all of the following except

Correct Answer
verified

An intangible asset is one that has a physical existence.

Correct Answer
verified

The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate.

Correct Answer
verified

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1, 2015. Compute the yearly depreciation expense using straight-line depreciation.

Correct Answer
verified
$54,000 F1F...
View Answer

The accumulated depletion account is

Correct Answer
verified

Which of the following is included in the cost of constructing a building?

Correct Answer
verified

Assets may be grouped according to common traits and depreciated by using a single composite rate.

Correct Answer
verified

A double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate. Assuming that an asset has a useful life of 25 years, determine the rate to be used if using the double-declining balance method.

Correct Answer
verified

Correct Answer
verified
_TB2085_00...
View Answer

The exclusive right to use a certain name or symbol is called a

Correct Answer
verified

When a company replaces a component of property, plant and equipment, which statement below does not account for one of the steps in the process?

Correct Answer
verified

Costs associated with normal research and development activities should be treated as intangible assets.

Correct Answer
verified

When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use, this amount is known as boot.

Correct Answer
verified

The book value of a fixed asset reported on the balance sheet represents its market value on that date.

Correct Answer
verified

Equipment acquired at a cost of $126,000 has a book value of $42,000. Journalize the disposal of the equipment under the following independent assumptions. Journal

Correct Answer
verified

_TB2085_0...
View Answer

Exam 10: Fixed Assets and Intangible Assets

When minor errors occur in the estimates used in the determination of depreciation, the amounts recorded for depreciation expense in the past should be corrected.

Correct AnswerverifiedShow Answer

When a major corporation develops its own trademark and over time it becomes very valuable, the trademark may be shown on their balance sheet due to lack of a material cost.

Correct AnswerverifiedShow Answer

The formula for depreciable cost is

Correct AnswerverifiedShow Answer

The transfer to expense of the cost of intangible assets attributed to the passage of time or decline in usefulness is called amortization.

Correct AnswerverifiedShow Answer

A capital expenditure results in a debit to

Correct AnswerverifiedShow Answer

Residual value is also known as all of the following except

Correct AnswerverifiedShow Answer

An intangible asset is one that has a physical existence.

Correct AnswerverifiedShow Answer

The amount of the depreciation expense for the second full year of use of a fixed asset costing $100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate.

Correct AnswerverifiedShow Answer

A machine costing $57,000 with a 6-year life and $54,000 depreciable cost was purchased January 1, 2015. Compute the yearly depreciation expense using straight-line depreciation.

Correct Answerverified$54,000 F1F...View AnswerShow Answer

The accumulated depletion account is

Correct AnswerverifiedShow Answer

Which of the following is included in the cost of constructing a building?

Correct AnswerverifiedShow Answer

Assets may be grouped according to common traits and depreciated by using a single composite rate.

Correct AnswerverifiedShow Answer

A double-declining balance rate for calculating depreciation expense is determined by doubling the straight-line rate. Assuming that an asset has a useful life of 25 years, determine the rate to be used if using the double-declining balance method.

Correct AnswerverifiedShow Answer

Correct Answerverified_TB2085_00...View AnswerShow Answer

The exclusive right to use a certain name or symbol is called a

Correct AnswerverifiedShow Answer

When a company replaces a component of property, plant and equipment, which statement below does not account for one of the steps in the process?

Correct AnswerverifiedShow Answer

Costs associated with normal research and development activities should be treated as intangible assets.

Correct AnswerverifiedShow Answer

When a seller allows a buyer an amount for old equipment that is traded in for new equipment of similar use, this amount is known as boot.

Correct AnswerverifiedShow Answer

The book value of a fixed asset reported on the balance sheet represents its market value on that date.

Correct AnswerverifiedShow Answer

Equipment acquired at a cost of $126,000 has a book value of $42,000. Journalize the disposal of the equipment under the following independent assumptions. Journal

Correct Answerverified_TB2085_0...View AnswerShow Answer

Correct Answer
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$54,000 F1F...
View Answer

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View Answer

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View Answer