QUIZ chapter 4

Select one: True False Câu hỏi 2 The book value of a fixed asset reported on the balance sheet represents its market value on that date.. Select one: True False Câu hỏi 6 Which of the fo

QUIZ chapter 4 Câu hỏi 1

The depreciable cost of a building is the same as its acquisition cost

Select one:

True

False

Câu hỏi 2

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

True

False

Câu hỏi 3

A machine with a cost of $120,000 has an estimated residual value of $15,000 and an estimated life of 5 years or 15,000 hours It is to be depreciated by the units-of-output method What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

Select one:

a $21,000

b $35,000

c $5,000

d $45,000

Câu hỏi 4

The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use

Select one:

True

False

Câu hỏi 5

When a plant asset is traded for another similar asset, losses on the asset traded are not recognized.

Select one:

True

False

Câu hỏi 6

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

Select one:

a cost of repairing vandalism damage during construction

b cost of paving the parking lot

c cost of removing the demolished building existing on the land when it was purchased

d insurance costs during construction

Câu hỏi 7

Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories

Select one:

a physical and functional

b functional and residual

c salvage and functional

d residual and salvage

Câu hỏi 8

When land is purchased to construct a new building, the cost of removing any structures on the land should be charged to the building account

Select one:

True

False

Câu hỏi 9

Falcon Company acquired an adjacent lot to construct a new warehouse, paying $40,000 and giving a short-term note for $410,000 Legal fees paid were $13,275, delinquent taxes assessed were $14,500, and fees paid to remove an old building from the land were $15,800 Materials salvaged from the demolition

of the building were sold for $6,800 A contractor was paid $890,000 to construct the new warehouse What is the cost of the land to be reported on the balance sheet?

Select one:

a $450,000

b $486,775

c $493,575

d $443,200

Câu hỏi 10

When the amount of use of a fixed asset varies from year to year, the method of determining depreciation expense that best matches allocation of cost with revenue is

Select one:

a double-declining-balance method

b units-of-output method

c straight-line method

d MACRS

Câu hỏi 11

When depreciation estimates are revised, all years of the asset's life are affected

Select one:

True

False

Câu hỏi 12

When a company establishes an outstanding reputation and has a competitive advantage because of it, the company should record goodwill on its financial statements

Select one:

True

False

Câu hỏi 13

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

double-declining-balance method

Select one:

True

False

Câu hỏi 14

What is the depreciation, for the year of acquisition and for the following year of a fixed asset acquired on October 1 for $500,000, with an estimated life of 5 years, and residual value of $50,000, using the

straight-line method Assume a fiscal year ending December 31

Select one:

a Yr of acquisition: $90,000; following year: $90,000

b Yr of acquisition: $50,000; following year: $90,000

c Yr of acquisition: $22,500; following year: $180,000

d Yr of acquisition: $22,500; following year: $90,000

Câu hỏi 15

Assume the following facts related to a land purchase:

Payment for demolition and removal of 5,000

existing building

Cash received from the sale of

materials salvaged from the demolished

building

2,000

Select one:

a $178,000

b $180,000

c $196,000

d $193,000

Câu hỏi 16

An asset was purchased for $58,000 and originally estimated to have a useful life of 10 years with a residual value of $3,000 After two years of straight-line depreciation, it was determined that the remaining useful life of the asset was only 2 years with a residual value of $2,000 What will be the annual depreciation for the asset?

Select one:

a $23,500

b $5,800

c $5,500

d $22,500

Câu hỏi 17

Which of the following is an example of a capital expenditure?

Select one:

a replacing an engine in a company car

b tune-up for a company truck

c replacing all burned-out light bulbs in the factory

d cleaning the carpet in the front room

Câu hỏi 18

The proper journal entry to purchase a computer costing $975 on account to be utilized within the business would be

Select one:

a Office Equipment 975

Accounts Payable 975

b Office Equipment 975

Accounts Receivable 975

c Office Supplies 975

Accounts Payable 975

d Office Supplies 975

Accounts Receivable 975

Câu hỏi 19

When a company discards machinery that is fully depreciated, this transaction would be recorded with the following entry

Select one:

a debit Cash; credit Accumulated Depreciation

b debit Depreciation Expense; credit Accumulated Depreciation

c debit Accumulated Depreciation; credit Machinery

d debit Machinery; credit Accumulated Depreciation

Câu hỏi 20

On April 15, Compton Co paid $2,800 to upgrade a delivery truck and $125 for an oil change What account(s) would be debited for the upgrade to delivery truck and oil change?

Select one:

a Delivery Truck and Repairs and Maintenance Expense

b Repairs and Maintenance Expense and Truck Repairs Expense

c Repairs and Maintenance Expense

d Delivery Truck

Câu hỏi 21

The cost of replacing an engine in a truck is an example of ordinary maintenance

Select one:

True

False

Câu hỏi 22

The following information was taken from a recent annual report of Harrison Company (in millions):

Current Year Preceding Year

Machinery, equipment, and internal-use software 595 470

Other fixed assets related to leases 760 569

Accumulated depreciation and amortization 894 644

Select one:

a Current year: $1,281; preceding year: $837

b Current year: $1,281; preceding year: $1,481

c Current year: $2,175; preceding year: $1,481

d Current year: $2,175; preceding year: $837

Câu hỏi 23

The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000, with an estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the straight-line method Select one:

True

False

Câu hỏi 24

The difference between the balance in a fixed asset account and its related accumulated depreciation account is the asset's book value

Select one:

True

False

Câu hỏi 25

Which of the following should be included in the acquisition cost of a piece of equipment?

Select one:

a testing costs prior to placing the equipment into production

b transportation costs

c all of these

d installation costs

Câu hỏi 26

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

Select one:

a $9,000

b $10,800

c $11,400

d $9,500

Câu hỏi 27

Equipment purchased at the beginning of the fiscal year for $360,000 is expected to have a useful life of 5 years, or 14,000 operating hours, and a residual value of $10,000 Assume 1,200 hours were used the first

year and 2,250, the second year What is the first-year depreciation for straight-line (SL),

double-declining balance (DDB) and units-of-output (UOO) methods?

Select one:

a SL: $72,000; DDB: $140,000; UOO: $56,250

b SL: $70,000, DDB: $144,000; UOO: $30,000

c SL: $72,000; DDB: $144,000; UOO: $30,000

d SL: $70,000; DDB: $140,000; UOO: $30,000

Câu hỏi 28

Though a piece of equipment is still being used, the equipment should be removed from the accounts if it has been fully depreciated

Select one:

True

False

Câu hỏi 29

A machine with a cost of $75,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours What is the amount of depreciation for the second full year, using the double-declining-balance method?

Select one:

a $37,500

b $17,500

c $16,667

d $18,750

Câu hỏi 30

The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future

Select one:

True

False

Câu hỏi 31

On December 31, Strike Company sold one of its batting cages for $50,000 The equipment had an original cost of $310,000 and has accumulated depreciation of $260,000 Depreciation has been recorded

up to the end of the year What is the amount of the gain or loss on this transaction?

Select one:

a gain of $50,000

b loss of $50,000

c cannot be determined

d no gain or loss

Câu hỏi 32

Classify each of the following as:

Adding refrigerant to an air conditioning system Answer 1

Installing a new air conditioning system in an old

building

Answer 2

Overhauling an engine in a large truck Answer 3

Exterior and interior painting Answer 5

Fixing damage due to a car accident Answer 6

Resurfacing a pool in an apartment building Answer 8

Câu hỏi 33

When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are less than the book value of the asset

Select one:

True

False

Câu hỏi 34

A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs

of $5,000, and special acquisition fees of $3,000, would have a cost basis of

Select one:

a $93,000

b $90,000

c $85,000

d $82,000

Câu hỏi 35

Ordinary maintenance and repairs

Asset improvements

Extraordinary repairs

Asset improvements

Ordinary maintenance and repairs

Ordinary maintenance and repairs

Asset improvements

Extraordinary repairs

On June 1, Aaron Company purchased equipment at a cost of $120,000 that has a depreciable cost of

$90,000 and an estimated useful life of 3 years and 30,000 hours, which ends on December 31

Using straight-line depreciation, calculate depreciation expense for the final (partial) year of service

Select one:

a $30,000

b $12,500

c $40,000

d $17,500

Câu hỏi 36

Fixed assets are ordinarily presented on the balance sheet

Select one:

a in a separate section along with intangible assets

b at cost less accumulated depreciation

c at current market values

d at replacement costs

Câu hỏi 37

If a fixed asset, such as a computer, were purchased on January 1 for $3,750 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is

Select one:

a Accumulated Depreciation 100

Depreciation Expense 100

b Depreciation Expense 1,200

Accumulated Depreciation 1,200

c Depreciation Expense 100

Accumulated Depreciation 100

d Accumulated Depreciation 1,200

Depreciation Expense 1,200

Câu hỏi 38

Copy equipment was acquired at the beginning of the year at a cost of $72,000 that has an estimated residual value of $9,000 and an estimated useful life of 5 years It is estimated that the machine will output an estimated 1,000,000 copies This year, 315,000 copies were made What is the units-of-output depreciation for the year?

Select one:

a $22,050

b $18,900

c $22,680

d $19,845

Câu hỏi 39

The amount of depreciation expense for a fixed asset costing $95,000, with an estimated residual value of

$5,000 and a useful life of 5 years or 20,000 operating hours, is $21,375 by the units-of-output method during a period when the asset was used for 4,500 hours

Select one:

True

False

Câu hỏi 40

On June 1, Michael Company purchased equipment at a cost of $120,000 that has a depreciable cost of

$90,000 and an estimated useful life of 3 years or 30,000 hours

Using straight-line depreciation, calculate depreciation expense for the second year

Select one:

a $17,500

b $12,500

c $40,000

d $30,000