Question 1

Which of the following statements regarding increases in the value of plant assets under U.S. GAAP and IFRS is true?

Accepted Answer

A)  U.S.GAAP allows companies to record increases in the value of plant assets.
B)  IFRS prohibits upward asset revaluations.
C)  Under GAAP, a company can reverse an impairment and record that increase in income.
D)  U.S.GAAP prohibits companies from recording increases in the value of plant assets.
E)  Under IFRS, an impairment increase beyond as asset's original cost is not recorded.F) C) and E)
G) C) and D)

Question 2

Salvage value is an estimate of an asset's value at the end of its benefit period.

Accepted Answer

A) True 
 B)False

Question 3

How is the cost principle applied to plant asset acquisitions, including lump-sum purchases?

Accepted Answer

Plant assets should be recorded at cost ...

Question 4

Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000 and expected salvage value of zero. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. Compute the depletion expense for the first year assuming 418,000 tons were mined.

Accepted Answer

A)  $1,233,100.
B)  $1,358,500.
C)  $1,300,000.
D)  $1,180,000.
E)  $1,280,000.F) B) and D)
G) A) and E)

Question 5

A company sold equipment that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the equipment was $40,000. The company should recognize a:

Accepted Answer

A)  $0 gain or loss.
B)  $20,000 gain.
C)  $20,000 loss.
D)  $40,000 loss.
E)  $60,000 gain.F) D) and E)
G) A) and E)

Question 6

On July 1 of the current year, Timberlake Company signed a contract to sublease space in a building for 7 years. Timberlake Company paid $56,000 for the right to sublease this space. After taking possession of the leased space, Timberlake pays $140,000 for improving the office portion of the lease space. The improvements are paid on July 6 of the current year, and are estimated to have a useful life equal to the 14 years remaining in the life of the building. Prepare entries for Timberlake to record (a) its payment for the right to sublease the building space, (b) its payment for the office improvements, (c) the December 31 year-end entry to amortize the cost of the sublease, (d) the December 31 year-end entry to amortize the office improvements.

Accepted Answer

The answer of On July 1 of the current year,...

Question 7

Gaston owns equipment that cost $90,500 with accumulated depreciation of $61,000. Gaston asks $30,000 for the equipment but sells the equipment for $26,000. Which of the following would not be part of the journal entry to record the disposal of the equipment?

Accepted Answer

A)  Debit Accumulated Depreciation $61,000.
B)  Credit Equipment $90,500.
C)  Debit Loss on Disposal of Equipment $3,500.
D)  Credit Gain on Disposal of Equipment $3,500.
E)  Debit Cash $6,000.F) A) and B)
G) A) and C)

Question 8

Cliff Company traded in an old 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?

Accepted Answer

A)  $15,000
B)  $75,000
C)  $113,000
D)  $125,000
E)  $128,000F) B) and D)
G) A) and B)

Question 9

On April 1, Year 1, Raines Co. purchased and placed a plant asset in service. The following information is available regarding the plant asset:  Make the necessary adjusting journal entries at December 31, Year 1, and December 31, Year 2 to record depreciation for each year under the double-declining balance depreciation method:

Accepted Answer

The answer of On April 1, Year 1, Raines Co....

Question 10

Machinery costing $123,000 with zero salvage value is no longer useful to the company and has no market value. If the machinery has been fully depreciated at the time of disposal, the entry to record the disposal would be:

Accepted Answer

A)   
B)   
C)   
D)   
E)   F) All of the above
G) C) and D)

Question 11

A plant asset's useful life is the length of time it is productively used in a company's operations.

Accepted Answer

A) True 
 B)False

Question 12

The first step in accounting for an asset disposal is to calculate the gain or loss on disposal.

Accepted Answer

A) True 
 B)False

Question 13

A company purchased land on which to construct a new building for a cost of $350,000. Additional costs incurred were:  What total dollar amount should be charged to Land and what amount should be charged to Building or other accounts?

Accepted Answer

All costs except landscaping, ...

Question 14

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the accumulated depreciation at the end of the second year of its useful life using the double-declining-balance method?

Accepted Answer

A)  $2,176.
B)  $544.
C)  $1,200.
D)  $600.
E)  $1,224.F) A) and B)
G) A) and E)

Question 15

Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. What journal entry would be needed to record the expense for the first year assuming 38,000 tons were removed?

Accepted Answer

A)  Debit Depletion Expense $112,100; credit Accumulated Depletion $112,100.
B)  Debit Amortization Expense $112,100; credit Natural Resources $112,100.
C)  Debit Depreciation Expense $93,158; credit Accumulated Depreciation $93,158.
D)  Debit Depletion Expense $93,158; credit Accumulated Depletion $93,158.
E)  Debit Depreciation Expense $98,333; credit Accumulated Depreciation $98,333.F) B) and E)
G) A) and E)

Exam 8: Reporting and Analyzing Long-Term Assets

A company sold equipment that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the equipment was $40,000. The company should recognize a:

Correct Answer
verified

Gaston owns equipment that cost $90,500 with accumulated depreciation of $61,000. Gaston asks $30,000 for the equipment but sells the equipment for $26,000. Which of the following would not be part of the journal entry to record the disposal of the equipment?

Correct Answer
verified

Correct Answer
verified

The first step in accounting for an asset disposal is to calculate the gain or loss on disposal.

Correct Answer
verified

A company purchased land on which to construct a new building for a cost of $350,000. Additional costs incurred were: What total dollar amount should be charged to Land and what amount should be charged to Building or other accounts?

Correct Answer
verified
All costs except landscaping, ...
View Answer

Which of the following statements regarding increases in the value of plant assets under U.S. GAAP and IFRS is true?

Correct Answer
verified

Correct Answer
verified

Machinery costing $123,000 with zero salvage value is no longer useful to the company and has no market value. If the machinery has been fully depreciated at the time of disposal, the entry to record the disposal would be:

Correct Answer
verified

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the accumulated depreciation at the end of the second year of its useful life using the double-declining-balance method?

Correct Answer
verified

Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. What journal entry would be needed to record the expense for the first year assuming 38,000 tons were removed?

Correct Answer
verified

Correct Answer
verified

How is the cost principle applied to plant asset acquisitions, including lump-sum purchases?

Correct Answer
verified
Plant assets should be recorded at cost ...
View Answer

Salvage value is an estimate of an asset's value at the end of its benefit period.

Correct Answer
verified

A plant asset's useful life is the length of time it is productively used in a company's operations.

Correct Answer
verified

Correct Answer
verified

Exam 8: Reporting and Analyzing Long-Term Assets

A company sold equipment that originally cost $100,000 for $60,000 cash. The accumulated depreciation on the equipment was $40,000. The company should recognize a:

Correct AnswerverifiedShow Answer

Gaston owns equipment that cost $90,500 with accumulated depreciation of $61,000. Gaston asks $30,000 for the equipment but sells the equipment for $26,000. Which of the following would not be part of the journal entry to record the disposal of the equipment?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The first step in accounting for an asset disposal is to calculate the gain or loss on disposal.

Correct AnswerverifiedShow Answer

A company purchased land on which to construct a new building for a cost of $350,000. Additional costs incurred were: What total dollar amount should be charged to Land and what amount should be charged to Building or other accounts?

Correct AnswerverifiedAll costs except landscaping, ...View AnswerShow Answer

Which of the following statements regarding increases in the value of plant assets under U.S. GAAP and IFRS is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Machinery costing $123,000 with zero salvage value is no longer useful to the company and has no market value. If the machinery has been fully depreciated at the time of disposal, the entry to record the disposal would be:

Correct AnswerverifiedShow Answer

Marlow Company purchased a point of sale system on January 1 for $3,400. This system has a useful life of 10 years and a salvage value of $400. What would be the accumulated depreciation at the end of the second year of its useful life using the double-declining-balance method?

Correct AnswerverifiedShow Answer

Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. What journal entry would be needed to record the expense for the first year assuming 38,000 tons were removed?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

How is the cost principle applied to plant asset acquisitions, including lump-sum purchases?

Correct AnswerverifiedPlant assets should be recorded at cost ...View AnswerShow Answer

Salvage value is an estimate of an asset's value at the end of its benefit period.

Correct AnswerverifiedShow Answer

A plant asset's useful life is the length of time it is productively used in a company's operations.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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All costs except landscaping, ...
View Answer

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Plant assets should be recorded at cost ...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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