Question 1

The book value or carrying value of an asset is equal to:

Accepted Answer

A)  its acquisition cost less the accumulated depreciation from the acquisition date to the balance sheet date.
B)  its acquisition cost plus accumulated depreciation from the acquisition date to the balance sheet date.
C)  the amount that could be obtained for the asset on the balance sheet date if it were sold.
D)  the annual cost of carrying the asset in inventory.E) None of the above
F) C) and D)

Question 2

Furniture with a $3,000 sticker price is purchased for $2,500 on account.Which of the following entries would properly record this purchase?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) C) and D)
F) All of the above

Question 3

Companies within the same industry do not always use the same depreciation method,but will use the same expected useful life for the same piece of equipment.

Accepted Answer

A) True 
 B)False

Question 4

The undepreciated cost of an asset is referred to as

Accepted Answer

A)  residual value.
B)  book value.
C)  market value.
D)  sales value.E) B) and C)
F) B) and D)

Question 5

The costs assigned to the individual assets acquired in a basket purchase is based on their relative

Accepted Answer

A)  historical costs.
B)  market values.
C)  book values.
D)  depreciable costs.E) C) and D)
F) All of the above

Question 6

Use the information above to answer the following question.Which of the following is true about the depreciation recorded?

Accepted Answer

A)  Accumulated depreciation will be debited for $266,667.
B)  The net book value of the computer system at December 31,2013 will be $1,225,000.
C)  Depreciation expense will be debited for $245,000.
D)  The depreciable cost of the computer system is $1,600,000.E) A) and B)
F) A) and C)

Question 7

A declining fixed asset turnover ratio can actually be caused by acquiring additional assets in the current period in preparation for greater future sales.

Accepted Answer

A) True 
 B)False

Question 8

Your company rents out computers to local businesses and schools.You have 1,000 computers with a net book value of $160,000.As a result of changing technology,your computers are more difficult to rent so you must severely reduce your rental price,which causes a decrease in estimated future cash flows.The fair value of the computers is estimated to be $125,000 because of their outdated technology.Your company should report an asset impairment loss of:

Accepted Answer

A)  $160,000.
B)  $125,000.
C)  $35,000.
D)  $0E) C) and D)
F) B) and C)

Question 9

Paul Hauling has a fleet of 10 large trucks that cost a total of $1,410,000.The fleet is expected to provide 1,000,000 miles of transportation during an estimated 10-year life,and be sold for 10% of the original cost at the end of that time.If the fleet traveled 125,000 miles in the current twelve-month period,what would be the depreciation expense under the straight-line (SL) and units-of-production (U-of-P) methods?

Accepted Answer

A)  SL = $158,625 and U-of-P = $141,000.
B)  SL = $141,000 and U-of-P = $158,625.
C)  SL = $126,900 and U-of-P = $176,250.
D)  SL = $126,900 and U-of-P = $158,625.E) A) and D)
F) B) and C)

Question 10

Long-lived assets found on a company's balance sheet may include some which have no physical substance.

Accepted Answer

A) True 
 B)False

Question 11

Accumulated depreciation is classified as a(an)

Accepted Answer

A)  expense.
B)  contra-asset.
C)  liability.
D)  stockholders' equity.E) B) and C)
F) A) and B)

Question 12

Once the depreciation expense for a long-lived asset is calculated:

Accepted Answer

A)  it cannot be changed because of the cost principle.
B)  it may be revised based on new information.
C)  any changes are not recognized until the date the asset is sold.
D)  it cannot be changed due to the consistency principle.E) A) and D)
F) All of the above

Question 13

Identify the category to which each of the following assets belongs.
T - tangible long-lived asset
I - intangible long-lived asset
N - not a long-lived asset
______ Warehouse
______ Licensing rights
______ Supplies
______ Patents
______ Production equipment
______ Goodwill
______ Land
______ Office computer

Accepted Answer

The answer of Identify the category to which each of...

Question 14

Some analysts compare companies by focusing on earnings before interest,taxes,depreciation,and amortization (EBITDA),rather than net income.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true?

Accepted Answer

A)  Amortization of intangible assets is always recorded in a contra asset account.
B)  Items in a company's inventory that are not expected to be sold in the next year are considered long-lived assets.
C)  All long-lived intangible assets must be amortized over a period of 40 years or less.
D)  Intangible assets with unlimited or indefinite lives are not amortized.E) All of the above
F) B) and C)

Question 16

After the early years of an asset's life,accelerated depreciation methods:

Accepted Answer

A)  cause an asset to be carried at a higher book value than the straight-line method.
B)  cause an asset to be carried at a lower book value than the straight-line method.
C)  cause an asset to be carried at the same book value as the straight-line method.
D)  cannot be used if the resulting book value will be significantly different from that which would result from using the straight-line method.E) None of the above
F) All of the above

Question 17

Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

Accepted Answer

A)  has a greater amount invested in fixed assets than a company with a lower fixed asset turnover ratio.
B)  has less invested in fixed assets than a company with a lower fixed asset turnover ratio.
C)  generates less sales revenue than a company with a lower fixed asset turnover ratio.
D)  makes better use of its fixed assets to generate revenues than a company with a lower fixed asset turnover ratio.E) A) and B)
F) B) and C)

Question 18

The journal entry to record the increase in the value of a long-lived asset would include which of the following?

Accepted Answer

A)  A credit to Gain on Asset Value Increase.
B)  A debit to the long-lived asset account.
C)  A credit to Non-Impairment of Asset.
D)  No entry would be made according to GAAP.E) A) and C)
F) All of the above

Question 19

A company purchased office equipment for $24,500 and paid $1,470 in sales tax,$550 for installation,$3,200 for a needed adjustment to the equipment,and $2,600 for supplies that will be used for periodic routine maintenance.What is the journal entry to record this purchase?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) None of the above
F) All of the above

Question 20

Which of the following statements regarding asset impairment is correct?

Accepted Answer

A)  Asset impairment losses appear on a company's income statement every year.
B)  When a company records an asset impairment loss,it will increase net income for that period.
C)  Impairment occurs when an asset's book value is less than its current value.
D)  Asset impairment losses are reported on the income statement as an operating expense.E) C) and D)
F) B) and C)

Exam 9: Long-Lived Tangible and Intangible Assets

After the early years of an asset's life,accelerated depreciation methods:

Correct Answer
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Correct Answer
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Use the information above to answer the following question.Which of the following is true about the depreciation recorded?

Correct Answer
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Correct Answer
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Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

Correct Answer
verified

A company purchased office equipment for $24,500 and paid $1,470 in sales tax,$550 for installation,$3,200 for a needed adjustment to the equipment,and $2,600 for supplies that will be used for periodic routine maintenance.What is the journal entry to record this purchase?

Correct Answer
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Some analysts compare companies by focusing on earnings before interest,taxes,depreciation,and amortization (EBITDA),rather than net income.

Correct Answer
verified

Which of the following statements is true?

Correct Answer
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Identify the category to which each of the following assets belongs. T - tangible long-lived asset I - intangible long-lived asset N - not a long-lived asset Warehouse Licensing rights Supplies Patents Production equipment Goodwill Land Office computer

Correct Answer
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The costs assigned to the individual assets acquired in a basket purchase is based on their relative

Correct Answer
verified

Accumulated depreciation is classified as a(an)

Correct Answer
verified

The undepreciated cost of an asset is referred to as

Correct Answer
verified

The book value or carrying value of an asset is equal to:

Correct Answer
verified

Companies within the same industry do not always use the same depreciation method,but will use the same expected useful life for the same piece of equipment.

Correct Answer
verified

Once the depreciation expense for a long-lived asset is calculated:

Correct Answer
verified

A declining fixed asset turnover ratio can actually be caused by acquiring additional assets in the current period in preparation for greater future sales.

Correct Answer
verified

Furniture with a $3,000 sticker price is purchased for $2,500 on account.Which of the following entries would properly record this purchase?

Correct Answer
verified

Which of the following statements regarding asset impairment is correct?

Correct Answer
verified

The journal entry to record the increase in the value of a long-lived asset would include which of the following?

Correct Answer
verified

Long-lived assets found on a company's balance sheet may include some which have no physical substance.

Correct Answer
verified

Exam 9: Long-Lived Tangible and Intangible Assets

After the early years of an asset's life,accelerated depreciation methods:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the information above to answer the following question.Which of the following is true about the depreciation recorded?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

Correct AnswerverifiedShow Answer

A company purchased office equipment for $24,500 and paid $1,470 in sales tax,$550 for installation,$3,200 for a needed adjustment to the equipment,and $2,600 for supplies that will be used for periodic routine maintenance.What is the journal entry to record this purchase?

Correct AnswerverifiedShow Answer

Some analysts compare companies by focusing on earnings before interest,taxes,depreciation,and amortization (EBITDA),rather than net income.

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The costs assigned to the individual assets acquired in a basket purchase is based on their relative

Correct AnswerverifiedShow Answer

Accumulated depreciation is classified as a(an)

Correct AnswerverifiedShow Answer

The undepreciated cost of an asset is referred to as

Correct AnswerverifiedShow Answer

The book value or carrying value of an asset is equal to:

Correct AnswerverifiedShow Answer

Companies within the same industry do not always use the same depreciation method,but will use the same expected useful life for the same piece of equipment.

Correct AnswerverifiedShow Answer

Once the depreciation expense for a long-lived asset is calculated:

Correct AnswerverifiedShow Answer

A declining fixed asset turnover ratio can actually be caused by acquiring additional assets in the current period in preparation for greater future sales.

Correct AnswerverifiedShow Answer

Furniture with a $3,000 sticker price is purchased for $2,500 on account.Which of the following entries would properly record this purchase?

Correct AnswerverifiedShow Answer

Which of the following statements regarding asset impairment is correct?

Correct AnswerverifiedShow Answer

The journal entry to record the increase in the value of a long-lived asset would include which of the following?

Correct AnswerverifiedShow Answer

Long-lived assets found on a company's balance sheet may include some which have no physical substance.

Correct AnswerverifiedShow Answer

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