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Chapter_10_MCQs

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Question;True / False Questions;1. Plant assets are assets held for sale.;2. Plant assets refer to intangible assets that are used in;the operations of a business.;3. Plant assets are used in operations and have useful lives;that extend over more than one accounting period.;4. Land held for future expansion is an intangible;asset.;5. Depreciation is the process of allocating the cost of a;plant asset to expense in the accounting periods benefiting from its use.;6. Salvage value is an estimate of an asset's value at the;end of its benefit period.;7. Inadequacy refers to the insufficient capacity of a;company's plant assets to meet the company's growing productive demands.;8. Depreciation should be recorded on the date an asset is;purchased.;9. Depreciation measures the actual decline in market;value of an asset.;10. A plant asset's useful life might not be the same as its;productive life.;11. It is not necessary to report both the cost and the;accumulated depreciation of plant assets in the financial statements.;12. Depreciation expense is calculated using estimates of an;asset's salvage value and useful life.;13. Accumulated depreciation represents funds set aside;to buy new assets when the assets currently owned are replaced.;14. When an asset is purchased (or disposed of) at a time;other than the beginning or the end of an accounting period, depreciation is;recorded for part of a year so that the year of purchase or the year of;disposal is charged with its share of the asset's depreciation.;15. Revising an estimate;of the useful life or salvage value of a plant asset is referred to as a change;in accounting estimate, and is reflected in the past, current, and future;financial statements.;16. The going concern;assumption supports the reporting of plant assets at book value rather than;market value.;17. Total depreciation;expense over an asset's useful life will be identical under all methods of;depreciation.;18. Financial accounting;and tax accounting require the same recordkeeping and there should be no;difference in results between the two accounting system;19. Most companies use;accelerated depreciation for tax purposes because it reduces taxable income due;to higher depreciation expense in the early years of an asset's life.;20. The book value;of an asset when using double-declining-balance depreciation is always greater;than the book value from using straight-line depreciation, except at the;beginning and the end of the asset's useful life, when it is the same.;21. The modified;accelerated cost recovery system (MACRS) is a depreciation method used for tax;reporting.;22. Decision makers;and other users of financial statements are especially interested in evaluating;a company's ability to use its assets in generating sales.;23. Asset turnover is;computed by dividing average total assets by cost of sales.;24. Capital;intensive companies have a relatively large amount invested in assets to generate;a given level of sales.;25. Coors reported;net sales of $2,463 million and average total assets of $1,546 million. Its total;asset turnover equals 1.59.;26. Anheiser-Busch;reported average total assets of $10,965 million and net sales of $11,430;million. Its total asset turnover equals.96.;27. An asset's cost;includes all normal and reasonable expenditures necessary to get the asset in;place and ready for its intended use.;28. If a machine is;damaged during unpacking, the repairs are added to its cost.;29. An expenditure must be;normal, reasonable, and necessary in preparing an asset for its intended use to;be charged to and reported as part of the cost of a plant asset.;30. The purchase of;a property that included land, building, and improvements is called a lump-sum;purchase.;31. When a company;constructs a building, the cost of the building includes materials and labor;design fees, building permits, and insurance during construction.;32. Land is not;subject to depreciation because it has an unlimited life. This means that items;which increase the usefulness of the land such as parking lots are not;depreciated.;33. The cost of fees for;insuring the title and any accrued property taxes are included in the cost of;land.;34. The most frequently;used method of depreciation is the straight-line method.;35. Total asset cost plus;depreciation expense equals book value.;36. The units-of-production;method of depreciation charges a varying amount of expense for each period of;an asset's useful life depending on its usage.;37. An accelerated;depreciation method yields smaller depreciation expense in the early years of;an asset's life and larger depreciation expense in later years.;38. The;double-declining balance method is applied by (1) computing the asset's;straight-line depreciation rate, (2) doubling it, (3) subtracting salvage value;from cost, and (4) multiplying the rate times the net value.;39. A company;purchased a plant asset for $45,000. The asset has an estimated salvage value;of $6,000, and an estimated useful life of 10 years. The annual depreciation;expense using the straight-line method is $3,900 per year.;40. Revenue expenditures;are additional costs of plant assets that materially increase the assets' life;or productive capabilities.;41. Ordinary repairs are;expenditures that keep assets in normal, good operating condition.;42. Extraordinary;repairs are expenditures extending the asset's useful life beyond its original;estimate, and are capital expenditures because they benefit future;periods.;43. Capital expenditures;are also called balance sheet expenditures.;44. Betterments are a type;of capital expenditure.;45. Treating capital;expenditures of a small dollar amount as revenue expenditures is likely to;mislead users of financial statements. FALSE;46. Plant assets can be;disposed of by discarding, selling, or exchanging them.;47. The first step;in accounting for an asset disposal is to calculate the gain or loss on;disposal.;48. Accounting for the exchange;of assets depends on whether the transaction has commercial substance;commercial substance implies that it alters the company's future cash;flows.;49. If an asset is;sold above its book value, the selling company records a loss.;50. Gain or loss on;the disposal of assets is determined by comparing the disposed asset's book;value to the market value of any assets received.;51. A loss on disposal of;a plant asset can only occur if the cash proceeds received from the asset sale;is less than the asset's book value.;52. Natural resources are;assets that include standing timber, mineral deposits, and oil and gas fields.;53. Amortization is;the process of allocating the cost of natural resources to periods when they;are consumed.;54. Natural resources are;often called wasting assets because they are physically consumed when;used.;55. Natural;resources are reported on the balance sheet at cost plus accumulated;depletion.;56. When the;usefulness of plant assets used to extract natural resources is directly;related to the depletion of a natural resource, their costs are depreciated;using the units-of-production method of depreciation, as long as the assets;will not be moved to and used at another site when extraction of the natural;resources is complete.;57. An ore deposit;costing $800,000 is expected to produce 1,600,000 tons of ore. A total of;70,000 tons are mined and sold in the current year. The depletion expense for;the current year is $35,000.;58. The cost of an;intangible asset must be systematically allocated to depreciation expense over;its estimated useful life.;59. Intangible;assets are certain nonphysical assets used in operations that confer on their owners;long-term rights, privileges, or competitive advantage.;60. Goodwill is the amount by which a company's value exceeds;the value of its individual assets and liabilities.;61. The cost of an intangible is systematically allocated to;expense over its estimated useful life through the process of depletion.;62. Since goodwill is an;intangible, it is amortized each year using the straight-line method, the same;as other intangibles are amortized.;63. A patent is an exclusive right granted to its owner to;manufacture and sell a patented device or to use a process for 20 years.;64. A copyright gives its;owner the exclusive right to publish and sell a musical, literary, or artistic;work during the life of the creator plus 17 years.;65. The cost of;developing, maintaining, or enhancing the value of a trademark is always added;to the value of the asset when incurred.;Multiple Choice Questions;66. Plant assets;are;A. Tangible assets used in;the operation of a business that have a useful life of more than one accounting;period.;B. Current;assets.;C. Held for sale.;D. Intangible;assets used in the operations of a business that have a useful life of more;than one accounting period.;E. Tangible;assets used in the operation of business that have a useful life of less than;one accounting period.;67. A main accounting issue for plant assets is;A. Computing the;cost of the plant assets.;B. Matching the;costs of plant assets against revenues for the periods they benefit.;C. Accounting for;repairs and improvements to plant assets.;D. The disposal;of plant assets.;E. All of these.;68. Plant assets are;A. Current;assets.;B. Used in operations.;C. Natural;resources.;D. Long-term;investments.;E. Intangible.;69. The relevant factor(s) in computing depreciation;include;A. Cost.;B. Salvage value.;C. Useful life.;D. Depreciation;method.;E. All of these.;70. Salvage value is;A. Also called;residual value.;B. Also called;scrap value.;C. An estimate of;the asset's value at the end of its benefit period.;D. A factor;relevant to determining depreciation.;E. All of these.;71. Depreciation;A. Measures the;decline in market value of an asset.;B. Measures;physical deterioration of an asset.;C. Is the process of;allocating to expense the cost of a plant asset.;D. Is an outflow;of cash from the use of a plant asset.;E. Is applied to;land.;72. The useful life of a;plant asset is;A. The length of time it is;productively used in a company's operations.;B. Never related;to its physical life.;C. Its productive;life, but not to exceed one year.;D. Determined by;the FASB.;E. Determined by;law.;73. Inadequacy;refers to;A. The insufficient;capacity of a company's plant assets to meet the company's growing production;demands.;B. An asset that;is worn out.;C. An asset that;is no longer useful in producing goods and services.;D. The condition;where the salvage value is too small to replace the asset.;E. The condition;where the asset's salvage value is less than its cost.;74. Obsolescence;A. Occurs when an;asset is at the end of its useful life.;B. Refers to a plant asset;that is no longer useful in producing goods and services.;C. Refers to the;insufficient capacity of a company's plant assets to meet the company's;productive demands.;D. Occurs when an;asset's salvage value is less than its replacement cost.;E. Does not;affect plant assets.;75. Once the;estimated depreciation expense for an asset is calculated;A. It cannot be;changed due to the historical cost principle.;B. It may be revised based;on new information.;C. Any changes;are accumulated and recognized when the asset is sold.;D. The estimate;itself cannot be changed, however, new information should be disclosed in;financial statement footnotes.;E. It cannot be;changed due to the consistency principle.;76. A machine;originally had an estimated useful life of 5 years, but after 3 complete years;it was decided that the original estimate of useful life should have been 10;years. At that point the remaining cost to be depreciated should be allocated;over the remaining;A. 2 years.;B. 5 years.;C. 7 years. (10 year revised life - 3 years depreciated;= 7 remaining);D. 8 years.;E. 10 years.;77. A change in an accounting estimate;is;A. Reflected in;past financial statements.;B. Reflected in;future financial statements and also requires modification of past statements.;C. A change in a calculated;amount that is included in current and future years' financial statements as a;result of new information or subsequent developments and from better insight or;improved judgment.;D. Not allowed;under current accounting rules.;E. Considered an;error in the financial statements.;78. When originally;purchased, a vehicle had an estimated useful life of 8 years. The vehicle cost;$23,000 and its estimated salvage value is $1,500. After 4 years of;straight-line depreciation, the asset's total estimated useful life was revised;from 8 years to 6 years and there was no change in the estimated salvage value.;The depreciation expense in year 5 equals;A. $ 5,375.00.;B. $ 2,687.50.;C. $ 5,543.75.;D. $10,750.00.;E. $ 2,856.25.;79. A company used;straight-line depreciation for an item of equipment that cost $12,000, had a;salvage value of $2,000, and had a five-year useful life. After depreciating;the asset for three complete years, the salvage value was reduced to $1,200 and;its total useful life was increased from 5 years to 6 years. Determine the;amount of depreciation to be charged against the machine during each of the;remaining years of its useful life;A. $1,000.;B. $1,800.;C. $1,467.;D. $1,600.;E. $2,160.;80. Nelson Company;purchased equipment on July 1 for $27,500 and decided to depreciate the;equipment on the straight-line method over its useful life of five years.;Assuming the equipment's salvage value is $3,500, the amount of monthly;depreciation expense Nelson should recognize is;A. $2,400;B. $ 200;C. $4,800;D. $ 400;E. $ 450;81. Thomas Enterprises;purchased a depreciable asset on October 1, 2008 at a cost of $100,000.;The asset is expected to have a salvage value of $15,000 at the end of its;five-year useful life. If the asset is depreciated on the;double-declining-balance method, the asset's book value on December 31, 2010;will be;A. $27,540;B. $21,600;C. $32,400;D. $18,360;E. $90,000;82. Based on the;information provided in question #81, Thomas Enterprises should recognize what;amount of depreciation expense in 2012?;A. $4,440;B. $6,610;C. $1,524;D. $5,520;E. $2,000;83. Lomax Enterprises;purchased a depreciable asset for $22,000 on March 1, 2008. The asset will be;depreciated using the straight-line method over its four-year useful life.;Assuming the asset's salvage value is $2,000, what will be the amount of;accumulated depreciation on this asset on December 31, 2011?;A. $5,000.00;B. $4,166.67;C. $16,666.68;D. $20,000.00;E. $19,166.67;84. Based on the;information provided in question # 83, Lomax Enterprises should recognize;depreciation expense in 2011 in the amount of;A. $19,166.67;B. $5,000.00;C. $5,500.00;D. $20,000.00;E. $4,166.67;85. The following;information is available on a depreciable asset owned by First Bank;Trust;The asset's book value is $70,000 on October 1, 2010. On that date, management;determines that the asset's salvage value should be $5,000 rather than the;original estimate of $10,000. Based on this information, the amount of;depreciation expense the company should recognize during the last three months;of 2010 would be;A. $2,187.50;B. $1,718.75;C. $2,031.25;D. $2,321.43;E. $1,964.29;86. Many companies use an accelerated depreciation method because;A. It is required;by the tax code.;B. It is required;by financial reporting rules.;C. It yields larger;depreciation expense in the early years of an asset's life.;D. It yields a;higher income in the early years of the asset's useful life.;E. The results;are identical to straight-line depreciation.;87. The modified;accelerated cost recovery system (MACRS);A. Is included in the U.S.;federal income tax rules for depreciating assets.;B. Is an;out-dated system that is no longer used by companies.;C. Is required;for financial reporting.;D. Is identical;to units of production depreciation.;E. All of these.;88. The;straight-line depreciation method and the double-declining-balance depreciation;method;A. Produce the same total;depreciation over an asset's useful life.;B. Produce the;same depreciation expense each year.;C. Produce the;same book value each year.;D. Are acceptable;for tax purposes only.;E. Are the only;acceptable methods of depreciation for financial reporting.;89. Total asset turnover is used to evaluate;A. The efficiency of;management's use of assets to generate sales.;B. The necessity;for asset replacement.;C. The number of;times operating assets were sold during the year.;D. The cash flows;used to acquire assets.;E. The relation;between asset cost and book value.;90. A total asset turnover ratio of 3.5 indicates that;A. For every $1;in sales, the firm acquired $3.50 in assets during the period.;B. For every $1 in assets;the firm produced $3.50 in net sales during the period.;C. For every $1;in assets, the firm earned gross profit of $3.50 during the period.;D. For every $1;in assets, the firm earned $3.50 in net income.;E. For every $1;in assets, the firm paid $3.50 in expenses during the period.;91. Total asset;turnover is calculated by dividing;A. Gross profit;by average total assets.;B. Average total;assets by gross profit.;C. Net sales by average total;assets.;D. Average total;assets by net sales.;E. Net assets by;total assets.;92. A company had average;total assets of $897,000. Its gross sales were $1,090,000 and its net sales;were $1,000,000. The company's total asset turnover equals;A. 0.82.;B. 0.90.;C. 1.09.;D. 1.11.;E. 1.26.;93. Dell had net sales of;$35,404 million. Its average total assets for the period were $14,502 million.;Dell's total asset turnover equals;A. 0.40.;B. 0.35.;C. 1.45.;D. 2.44.;E. 3.50.;94. Land improvements;are;A. Assets that;increase the usefulness of land, and like land, are not depreciated.;B. Assets that increase the;usefulness of land, but that have a limited useful life and are subject to;depreciation.;C. Included in;the cost of the land account.;D. Expensed in;the period incurred.;E. Also called;basket purchases.;95. Plant assets;include;A. Land.;B. Land;improvements.;C. Buildings.;D. Machinery and;equipment.;E. All of these.;96. The cost of land can;include;A. Purchase;price.;B. Assessments by;local governments.;C. Costs of;removing existing structures.;D. Fees for;insuring the title.;E. All of these.;97. A company paid;$150,000, plus a 6% commission and $4,000 in closing costs for a property. The;property included land appraised at $87,500, land improvements appraised at;$35,000, and a building appraised at $52,500. What should be the allocation of;this property's costs in the company's accounting records?;A. Land $75,000;Land Improvements, $30,000, Building, $45,000.;B. Land $75,000;Land Improvements, $30,800, Building, $46,200.;C. Land $81,500, Land;Improvements, $32,600, Building, $48,900.;D. Land $79,500;Land Improvements, $32,600, Building, $47,700.;E. Land $87,500;Land Improvements, $35,000, Building, $52,500.;98. A company purchased;property for a building site. The costs associated with the property were;What portion of these costs should be allocated to the cost of the land and;what portion should be allocated to the cost of the new building?;A. $175,800 to;Land, $18,800 to Building.;B. $190,000 to;Land, $3,800 to Building.;C. $190,800 to;Land, $1,000 to Building.;D. $192,800 to;Land, $0 to Building.;E. $193,800 to Land, $0 to;Building.;99. A company purchased;property for $100,000. The property included a building, a parking lot, and;land. The building was appraised at $62,000, the land at $45,000, and the;parking lot at $18,000. Land should be recorded in the accounting records with;an allocated cost of;A. $ 0.;B. $ 36,000.;C. $ 42,000.;D. $ 45,000.;E. $100,000.;100. The formula for;computing annual straight-line depreciation is;A. Depreciable;cost divided by useful life in units.;B. Cost plus;salvage value divided by the useful life in years.;C. Cost less salvage value;divided by the useful life in years.;D. Cost;multiplied by useful life in years.;E. Cost divided;by useful life in units.;101. The total cost of an;asset less its accumulated depreciation is called;A. Historical;cost.;B. Book value.;C. Present value.;D. Current;(market) value.;E. Replacement;cost.;102. A method that;charges the same amount of expense to each period of the asset's useful life is;called;A. Accelerated;depreciation.;B. Declining-balance;depreciation.;C. Straight-line;depreciation.;D. Units-of-production;depreciation.;E. Modified;accelerated cost recovery system (MACRS) depreciation.;103. A method that;allocates an equal portion of the total depreciable cost for a plant asset to;each unit produced is called;A. Accelerated;depreciation.;B. Declining-balance;depreciation.;C. Straight-line;depreciation.;D. Units-of-production;depreciation.;E. Modified;accelerated cost recovery system (MACRS) depreciation.;104. A depreciation method;in which a plant asset's depreciation expense for a period is determined by;applying a constant depreciation rate to the asset's beginning-of-period book;value is called;A. Book value;depreciation.;B. Declining-balance;depreciation.;C. Straight-line;depreciation.;D. Units-of-production;depreciation.;E. Modified;accelerated cost recovery system (MACRS) depreciation.;105. A depreciation;method that produces larger depreciation expense during the early years of an;asset's life and smaller expense in the later years is a (an);A. Accelerated depreciation;method.;B. Book value;depreciation method.;C. Straight-line;depreciation method.;D. Units-of-production;depreciation method.;E. Unrealized;depreciation method.;106. A company purchased a;delivery van for $23,000 with a salvage value of $3,000 on September 1, 2008.;It has an estimated useful life of 5 years. Using the straight-line method, how;much depreciation expense should the company recognize on December 31;2008?;A. $1,000.;B. $1,333.;C. $1,533.;D. $4,000.;E. $4,600.;107. A company purchased a cash register on January 1 for;$5,400. This register has a useful life of 10 years and a salvage value of;$400. What would be the depreciation expense for the second-year of its;useful life using the double-declining-balance method?;A. $ 500.;B. $ 800.;C. $ 864.;D. $1,000.;E. $1,080.;108. A company purchased a;rope braiding machine for $190,000. The machine has a useful life of 8 years;and a residual value of $10,000. It is estimated that the machine could produce;750,000 units of climbing rope over its useful life. In the first year, 105,000;units were produced. In the second year, production increased to 109,000 units.;Using the units-of-production method, what is the amount of depreciation that;should be recorded for the second year?;A. $25,200.;B. $26,160.;C. $26,660.;D. $27,613.;E. $53,160.;109. Revenue expenditures;A. Are additional costs of;plant assets that do not materially increase the asset's life or its productive;capabilities.;B. Are known as;balance sheet expenditures.;C. Extend the;asset's useful life.;D. Substantially;benefit future periods.;E. Are debited to;asset accounts.;110. Another name for a capital expenditure is;A. Revenue;expenditure.;B. Asset;expenditure.;C. Long-term;expenditure.;D. Contributed;capital expenditure.;E. Balance sheet;expenditure.;111. Extraordinary repairs;A. Are revenue;expenditures.;B. Extend an asset's useful;life beyond its original estimate.;C. Are credited;to accumulated depreciation.;D. Are additional;costs of plants assets that do not materially increase the asset's life.;E. Are expensed;as incurred.;112. Ordinary repairs;A. Are;expenditures to keep an asset in normal operating condition.;B. Are necessary;if an asset is to perform to expectations over its useful life.;C. Are treated as;expenses.;D. Include;cleaning, lubricating, and normal adjusting.;E. All of these.;113. Betterments;A. Are;expenditures making a plant asset more efficient or productive.;B. Are also;called improvements.;C. Do not always;increase an asset's life.;D. Are capital;expenditures.;E. All of these.;114. An asset's book value is $18,000 on June 30, 2008. The;asset is being depreciated at an annual rate of $3,000 on the straight-line;method. Assuming the asset is sold on December 31, 2009 for $15,000, the;company should record;A. A loss on sale;of $1,500.;B. A gain on sale of;$1,500.;C. Neither a gain;nor a loss is recognized on this type of transaction.;D. A gain on sale;of $3,000.;E. A loss on sale;of $3,000.;115. An asset's book value is $36,000 on January 1, 2008. The;asset is being depreciated $500 per month using the straight-line method.;Assuming the asset is sold on July 1, 2009 for $25,000, the company should;record;A. Neither a gain;or loss is recognized on this type of transaction.;B. A gain on sale;of $2,000.;C. A loss on sale;of $1,000.;D. A gain on sale;of $1,000.;E. A loss on sale of;$2,000.;116. Information on a depreciable asset owned by Wilson;Engineering is as follows;If the asset is sold on July 1, 2012 for $20,000, the journal entry to record;the sale will include;A. A credit to;cash for $20,000.;B. A debit to accumulated;depreciation for $22,500.;C. A debit to;loss on sale for $10,000.;D. A credit to;loss on sale for $10,000.;E. A debit to;gain on sale for $2,500.;117. Information on a depreciable asset is as follows;If the asset is sold on January 1, 2011 for $13,000, the journal entry to;record the sale will include;A. A credit to;gain on sale for $8,000.;B. A debit to loss on sale;for $2,625.;C. A credit to;accumulated depreciation for $59,375.;D. A debit to;loss on sale for $3,042.;E. A credit to;gain on sale for $4,979.;118. An asset can be disposed of by;A. Discarding it.;B. Selling it.;C. Exchanging it;for another asset.;D. Donating it to;charity.;E. All of these.;119. A company sold a;machine that originally cost $100,000 for $60,000 cash. The accumulated;depreciation on the machine was $40,000. The company should recognize a;A. $0 gain or loss.;B. $20,000 gain.;C. $20,000 loss.;D. $40,000 loss.;E. $60,000 gain.;120. A company discarded a;display case originally purchased for $8,000. The accumulated depreciation was;$7,200. The company should recognize a (an);A. $0 gain or;loss.;B. $800 loss.;C. $800 gain.;D. $8,000 loss.;E. $7,200 loss.;121. A company had a bulldozer destroyed by fire. The;bulldozer originally cost $125,000 with accumulated depreciation of $60,000.;The proceeds from the insurance company were $90,000. The company should;recognize;A. A loss of;$25,000.;B. A gain of $25,000.;C. A loss of;$65,000.;D. A gain of;$65,000.;E. A gain of;$90,000.;122. Natural;resources;A. Include;standing timber, mineral deposits, and oil and gas fields.;B. Are also;called wasting assets.;C. Are long-term;assets.;D. Are depleted.;E. All of these.;123. Depletion;A. Is the process of;allocating the cost of natural resources to periods in which they are consumed.;B. Is also called;depreciation.;C. Is also called;amortization.;D. Is an;unrealized expense reported in equity.;E. Is the process;of allocating the cost of intangibles to periods in which they are used.;124. A company purchased a;tract of land for its natural resources at a cost of $1,500,000. It expects to;mine 2,000,000 tons of ore from this land. The salvage value of the land is;expected to be $250,000. The depletion expense per ton of ore is;A. $0.75.;B. $0.625.;C. $0.875.;D. $6.00.;E. $8.00.;125. A company;purchased a mineral deposit for $800,000. It expects this property to produce;1,200,000 tons of ore and to have a salvage value of $50,000. In the current;year, the company mined and sold 90,000 tons of ore. Its depletion expense for;the current period equals;A. $ 15,000.;B. $ 60,000.;C. $150,000.;D. $ 56,250.;E. $139,500.;126. Intangible;assets include;A. Patents.;B. Copyrights.;C. Trademarks.;D. Goodwill.;E. All of these.;127. Amortization;A. Is the systematic;allocation of the cost of an intangible asset to expense over its estimated;useful life.;B. Is the process;of allocating to expense the cost of a plant asset to the accounting periods;benefiting from its use.;C. Is the process;of allocating the cost of natural resources to periods when they are consumed.;D. Is an;accelerated form of expensing an asset's cost.;E. Is also called;depletion.;128. A patent;A. Gives its;owner the exclusive right to publish and sell a musical or literary work during;the life of the creator plus 70 years.;B. Gives its owner an;exclusive right to manufacture and sell a patented item or to use a process for;20 years.;C. Gives its;owner an exclusive right to manufacture and sell a device or to use a process;for 50 years.;D. Is the amount;by which the value of a company exceeds the fair market value of a company's;net assets if purchased separately.;E. Gives its;owner the exclusive right to publish and sell a musical or literary work during;the life of the creator plus 17 years.;129. A;copyright;A. Gives its owner the;exclusive right to publish and sell a musical or literary work during the life;of the creator plus 70 years.;B. Gives its;owner an exclusive right to manufacture and sell a patented item or to use a;process for 20 years.;C. Gives its;owner an exclusive right to manufacture and sell a device or to use a process;for 50 years.;D. Is the amount;by which the value of a company exceeds the fair market value of a company's;net assets if purchased separately.;E. Gives its;owner the exclusive right to publish and sell a musical or literary work during;the life of the creator plus 20 years.;130. A leasehold;A. Is a;short-term rental agreement.;B. Is the same as;a patent.;C. Are the rights granted;to the lessee by the lessor of a lease.;D. Is recorded as;revenue expenditure when paid.;E. Is an;investment asset.;131. Goodwill;A. Is not amortized, but is;tested annually for impairment.;B. Is amortized;using the straight-line method.;C. Is amortized;using the units-of-production method.;D. May be;amortized using either the straight-line or units-of-production method.;E. Is never;amortized or tested for impairment.;132. A company's old machine that cost $40,000 and had;accumulated depreciation of $30,000 was traded in on a new machine having an;estimated 20-year life with an invoice price of $50,000. The company also paid;$43,000 cash, along with its old machine to acquire the new machine. If this;transaction has commercial substance, the new machine should be recorded;at;A. $40,000.;B. $47,000.;C. $50,000.;D. $53,000.;E. $10,000.;133. Endor Fishing Company exchanged an old boat for a new;one. The old boat had a cost of $260,000 and accumulated depreciation of;$200,000. The new boat had an invoice price of $400,000. Endor received a trade;in allowance of $100,000 on the old boat, which meant the company paid $300,000;in addition to the old boat to acquire the new boat. If this transaction lacks;commercial substance, what amount of gain or loss should be recorded on this;exchange?;A. $0 gain or loss.;B. $40,000 gain.;C. $40,000 loss.;D. $60,000 loss;E. $100,000 loss.;134. Huffington Company traded in an old delivery truck for a;new one. The old truck had a cost of $75,000 and accumulated depreciation of;$60,000. The new truck had an invoice price of $125,000. Huffington was given a;$12,000 trade-in allowance on the old truck, which meant they paid $113,000 in;addition to the old truck to acquire the new truck. If this transaction has;commercial substance, what is the recorded value of the new truck?;A. $15,000;B. $75,000;C. $113,000;D. $125,000;E. $128,000;135. A company bought a;new display case for $42,000 and was given a trade-in of $2,000 on an old;display case, so the company paid $40,000 cash with the trade-in. The old case;had an original cost of $37,000 and accumulated depreciation of $34,000. If the;transaction has commercial substance, the company should record the new display;case at;A. $ 2,000.;B. $ 3,000.;C. $40,000.;D. $42,000.;E. $43,000.;136. A company purchased a;machine valued at $66,000. It traded in an old machine for a $9,000 trade-in;allowance and the company paid $57,000 cash with the trade-in. The old machine;cost $44,000 and had accumulated depreciation of $36,000. This transaction has;commercial substance. What is the recorded value of the new machine?;A. $ 8,000.;B. $ 9,000.;C. $57,000.;D. $65,000.;E. $66,000.

 

Paper#37316 | Written in 18-Jul-2015

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