QUIZ chapter 4 home

Câu hỏi Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1, 2019 The amounts below are related to the equipment purchase Match the items below and explain why each revenue expenditure is not capitalized During the installation, the equipment was damaged and repair costs of $2,000 were incurred The company purchased a three-year liability insurance policy to cover possible damage caused by the new equipment at a Terms of the purchase were 2/10, net 30 Exeter paid for the purchase on March A state agency required that a pollution control device be installed on the equipment at a cost of $5,000 The company financed the equipment purchase with a bank loan Interest of $3,000 was paid on the loan during 2019 It was necessary for an architect to redesign the work space to accommodate the new equipment A fee of $6,000 was paid $3,000 freight costs were paid to ship the equipment from the manufacturer Câu hỏi For each of the following items, indicate whether each would be treated as a Costs incurred prior to using the asset, such as costs to prepare the asset for use, installation costs Costs incurred after putting the asset into service that keep the asset in normal operating condition Costs related to acquiring an asset, such as sales or excise taxes, transportation, insurance during shipment Costs incurred after putting the asset into service that would extend the asset's useful life Câu hỏi Given the following list of methods of depreciation, select the method that is best for the situation or purpose given Some answers may be used more than once, while others may not be used at all Early in the life of the asset, this method maximizes net income This method is the easiest to use This method is the best for management bonus plans This method minimizes taxable income (early in the asset's life) Câu hỏi Identify where each of the following accounts would be reported on Coca-Cola's financial statements Building Goodwill Total amortization since inception Accumulated depreciation Land improvements Research and development costs Amortization expense Accumulated amortization Patents Copyright Câu hỏi Select the account that would be increased to show each of the following costs The sales taxes paid related to a machine purchased The transportation charges related to the acquisition costs of a new piece of machinery The costs to pave a parking lot The annual painting costs of an office building The costs paid to clear land The interest costs incurred during the construction period of a new building built by a company for its own use Câu hỏi A building with an appraisal value of $250,000 is made available at an offer price of $180,000 The purchaser acquires the property for $35,000 in cash, a 90-day note payable for $65,000, and a mortgage amounting to $63,000 The cost basis recorded in the buyer's accounting records to recognize this purchase is Select one: a $180,000 b $100,000 c $250,000 d $163,000 Câu hỏi A company should choose a depreciation method that Select one: a saves the most taxes b best allocates the original cost of the asset to the periods benefited by the use of the asset c minimizes net income d shows the highest amount of net income Câu hỏi A gain is recognized on the disposal of plant assets when the sale price is Select one: a greater than the book value and less than the residual value b less than both the book value and the residual value c greater than the book value d less than the book value Câu hỏi A machine with a cost of $100,000 and accumulated depreciation of $80,000 was sold at a loss of $6,000 What amount of cash was received from the sale? Select one: a $20,000 b $26,000 c $14,000 d $94,000 Câu hỏi 10 All of the following are included in the acquisition cost of property, plant, and equipment except Select one: a taxes on the purchase b maintenance costs c transportation costs d installation costs Câu hỏi 11 All of the following are intangible assets except Select one: a accounts receivable b patents c goodwill d franchises Câu hỏi 12 Assets classified as property, plant, and equipment are reported at Select one: a each asset's estimated market value at the balance sheet date b each asset's original cost less depreciation since acquisition c the estimated depreciable cost at the balance sheet date d each asset's estimated salvage value at the balance sheet date Câu hỏi 13 At the end of 2017, Clock Products, Inc determined that one of its patents was worthless The patent had a cost of $300,000 The patent had been amortized for five years of its estimated 15-year legal life Which of the following statements is correct? Select one: a The remaining unamortized cost must be removed from the accounting records and treated as a loss on the income statement b The patent must be reduced to 5/15, or 33.3% of its original cost and amortized over the remaining ten years c Clock Products must continue to amortize the patent over its remaining ten years of life d Clock Products must correct its financial statements for the past five years, so that the entire cost is allocated to that five-year period Câu hỏi 14 At the end of 2017, Mirror Productions determined that one of its copyrights was worthless The copyright had a cost of $320,000 The copyright had been amortized for eight years of its estimated 25year legal life Which of the following statements is the justification for removing the remaining cost of the copyright from the accounting records? Select one: a The cost of the copyright represents an obligation to return capital contributions to the stockholders b The cost of the copyright has usefulness that will impact the net income of future accounting periods c The federal government does not allow copyrights to be recorded as assets once they are deemed worthless d The copyright no longer represents a future benefit to the company Câu hỏi 15 Biglersville Corp purchased equipment at the beginning of 2017 for $16,000 Biglersville Corp decided to depreciate the equipment over a five-year period using the straight-line method Biglersville Corp estimated the equipment's residual value at $1,000 The estimated fair market value at the end of 2017 was $15,000 Which of the following statements is correct concerning Biglersville Corp.'s financial statements at December 31, 2017? Select one: a The equipment will be reported on the balance sheet at it fair market value of $15,000 b The book value of the equipment is $30,000 c The book value of the equipment is $13,000 d The total accumulated depreciation is $1,000 Câu hỏi 16 Birken Co purchased a building for $500,000 in 2012 At the end of 2017, when it had a book value of $450,000, it was appraised for $1,000,000 A potential buyer offered $900,000 Birken rejected the offer What amount is in Birken's records at the end of 2017 in the Building account? Select one: a $800,000 b $2,000,000 c $350,000 d $500,000 Câu hỏi 17 Blanket Airlines acquires a new aircraft It has an estimated life of 15 years and should be used for 15,000 hours of flight What is the most appropriate method of depreciation to properly match revenues and expenses? Select one: a Double-declining-balance b Revenue expenditure method c Straight-line d Units-of-production Câu hỏi 18 Blanton Company bought equipment on January 1, 2013, with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years It was depreciated by the straight-line method for four years Due to obsolescence, it was determined at the beginning of 2017 that the useful life should be shortened by three years and the residual value changed to zero What is the accumulated depreciation at the end of 2016? Select one: a $32,000 b $40,000 c $8,000 d $42,667 Câu hỏi 19 Boalsburg Co purchased a truck on January 1, 2015, for $30,000 The truck had an estimated life of five years and an estimated residual value of $5,000 Boalsburg used the straight-line method to depreciate the asset On July 1, 2017, the truck was sold for $17,000 cash The journal entry to record the sale of the truck in 2017 Select one: a decreases total expenses b increases total assets c increases net income d decreases stockholders' equity Câu hỏi 20 Borden Company incurred the following costs to acquire and prepare land for a new parking lot: purchase price for land, cost to clear the land, cost of paving, lighting for the parking lot, and landscaping for the parking lot How should the company determine which costs should be recorded as Land Improvements and which cost should be recorded as Land? Select one: a The costs with an unlimited life will increase Land, and the costs with a limited useful life will increase Land Improvements b The costs with a limited life will increase Land, and the costs with an unlimited useful life will increase Land Improvements c Costs that are depreciable will increase Land Improvements, while other costs are expensed immediately because of a lack of definite life d The costs to be depreciated will increase Land, and the costs that will not be depreciated will increase Land Improvements Câu hỏi 21 Darrin Brown bought a pub The purchase price was $695,000 An appraiser provided the following appraisal values: land, $320,000; building, $370,000; and equipment, $60,000 What cost should be allocated to the building? Select one: a $370,000 b $399,281 c $342,867 d $695,000 Câu hỏi 22 Depreciation is Select one: a the difference between the original cost and salvage value of an asset b the cash allocated each period to maintain a plant asset c an effort to achieve proper matching of the cost of operating assets d an accumulation of funds to replace the related plant asset Câu hỏi 23 Depreciation is a process by which Select one: a replacement funds are accumulated for plant and equipment b the decline in market value of plant and equipment is determined and recorded c the cost of plant and equipment is allocated to expense over the time periods which benefit from the use of the asset d the difference between current market value and historical cost of plant and equipment is determined Câu hỏi 24 Fall Corp uses plant assets that are subject to rapid decreases in value due to obsolescence and physical deterioration Which of the following depreciation methods is most appropriate to measure the decline in the usefulness of the company's assets? Select one: a Double-declining-balance b Units-of-production c Revenue expenditure method d Straight-line Câu hỏi 25 GAAP require that research and development costs to develop a new product be Select one: a expensed in the period incurred b amortized over the expected economic life of the new product c capitalized in the research and development costs account d capitalized in the patents account Câu hỏi 26 Given the following list of methods of depreciation, select the method that is best for the situation or purpose given (Select all that apply.) Which method is used in situations where technological advances are rapid? Select one or more: a Units-of-production b MACRS c Straight-line d Double-declining-balance Câu hỏi 27 Goodwill can be recorded as an asset when a(n) Select one: a business can determine that it has created customer goodwill and name recognition b offer is received to purchase the business at a price in excess of the value of the assets c business has above normal profitability compared to other businesses in its industry d business is purchased and payment is made in excess of the value of the net assets Câu hỏi 28 Greer Company purchased land for $256,000 Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence, and a legal fee of $8,500 What is the cost of the land? Select one: a $281,000 b $256,000 c $284,600 d $282,200 Câu hỏi 29 Grove City Corp On January 1, 2017, Grove City Corp purchased a ship for $2,000,000 It has a ten-year useful life and a residual value of $50,000 The company uses the double-declining-balance method What was the depreciation expense for Grove City Corp for the year ended December 31, 2017? Select one: a $400,000 b $0 c $390,000 d $195,000 Câu hỏi 30 Grove City Corp On January 1, 2017, Grove City Corp purchased a ship for $2,000,000 It has a ten-year useful life and a residual value of $50,000 The company uses the double-declining-balance method What was the depreciation expense for Grove City Corp for the year ended December 31, 2018? Select one: a $160,000 b $400,000 c $320,000 d $0 Câu hỏi 31 Grove City Corp On January 1, 2017, Grove City Corp purchased a ship for $2,000,000 It has a ten-year useful life and a residual value of $50,000 The company uses the double-declining-balance method If Grove City Corp continues to use the ship in its eleventh year, what is the correct accounting procedure? Select one: a Continue to depreciate it b The company may not use it any longer c Take the asset off the books and record a gain on the disposal d No longer depreciate it but leave it on the records at its book value at the end of its useful life Câu hỏi 32 Grove City Corp On January 1, 2017, Grove City Corp purchased a ship for $2,000,000 It has a ten-year useful life and a residual value of $50,000 The company uses the double-declining-balance method What was the book value of the ship for Grove City Corp at the end of its useful life? Select one: a $0 b Need more information to determine this answer c $50,000 d $214,400 Câu hỏi 33 Many companies use accelerated depreciation for Select one: a financial reporting purposes because depreciation is not allowed for tax purposes b financial reporting purposes and a different method for tax purposes c tax purposes because of a desire to report higher expenses in early years in order to pay lower taxes d tax purposes because it results in a larger net income in the early years of a plant asset's life Câu hỏi 34 Harkin Company purchased a building on a tract of land and allocated the entire cost of the purchase to building Normally, it depreciates buildings over 20 years using the straight-line method with zero residual value and does not depreciate land Because of its accounting treatment of the purchase, Harkin's income before taxes for the next 20 years will be Select one: a unaffected b overstated c understated d in conformance with GAAP Câu hỏi 35 How should intangible assets be disclosed on the balance sheet? Select one: a At cost in the Current Assets section b Net of the costs already amortized c At the estimated market value at the balance sheet date d As a reduction of stockholders' equity Câu hỏi 36 If a company constructs an asset over a period of time and borrows money, the amount of interest incurred during construction on the borrowed money is Select one: a capitalized as part of the cost of the plant asset b amortized over the construction period c reported as depletion on the income statement d reported as interest expense on the income statement Câu hỏi 37 If technology changes rapidly, a firm should Select one: a consider an accelerated rate of depreciation b depreciate plant assets over long periods of time c use the straight-line method of depreciation as it is the easiest d expense plant assets immediately because of the uncertainty of future benefits Câu hỏi 38 In 2013, Blanton Company bought equipment with a cost of $160,000, an estimated residual value of $40,000, and an estimated life of 15 years It was depreciated by the straight-line method for four years Due to obsolescence, it was determined at the beginning of 2017 that the useful life should be shortened by three years and the residual value changed to zero The depreciation expense for 2017 is Select one: a $11,000 b $8,000 c $11,636 d $16,000 Câu hỏi 39 Interest is capitalized when incurred in connection with the construction of plant assets because Select one: a the decision to purchase a plant asset is a business decision separate from the financing decision b many plant assets last longer than 20 years c interest is considered an expense of the period d interest is considered a part of the acquisition cost of the related plant asset Câu hỏi 40 Land is not depreciated because it Select one: a has a useful life that is limited to the period of time a company is in business b appreciates in value c does not have an established depreciable life d has an unlimited life Previous page ... $6,000 What amount of cash was received from the sale? Select one: a $20,000 b $26,000 c $ 14, 000 d $ 94, 000 Câu hỏi 10 All of the following are included in the acquisition cost of property, plant,... zero What is the accumulated depreciation at the end of 2016? Select one: a $32,000 b $40 ,000 c $8,000 d $42 ,667 Câu hỏi 19 Boalsburg Co purchased a truck on January 1, 2015, for $30,000 The truck... to a broker, a survey fee of $2 ,40 0, $1,750 to construct a fence, and a legal fee of $8,500 What is the cost of the land? Select one: a $281,000 b $256,000 c $2 84, 600 d $282,200 Câu hỏi 29 Grove