Question 1

Which of the following statements regarding tangible long-lived assets is not correct?

Accepted Answer

A)  Depreciation and maintenance are expenses associated with the use of tangible long-lived assets.
B)  Assuming no additions,replacements,or extraordinary repairs,the carrying value of a long-lived asset is never more than its original cost.
C)  The cost of a long-lived asset minus the accumulated depreciation is called the carrying value of the asset.
D)  All long-lived assets are depreciated as they are used in the business.E) B) and C)
F) A) and C)

Question 2

Which of the following assets would be amortized?

Accepted Answer

A)  Land improvements.
B)  Trademarks.
C)  Goodwill.
D)  Franchise.E) None of the above
F) B) and C)

Question 3

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right on its balance sheet?

Accepted Answer

A)  Tangible asset
B)  Research and development
C)  Intangible asset
D)  Fixed assetE) A) and D)
F) All of the above

Question 4

If average net fixed assets decrease,then the fixed asset turnover ratio will increase,assuming nothing else changes.

Accepted Answer

A) True 
 B)False

Question 5

When an asset is sold and its book value exceeds its selling price,net income will increase.

Accepted Answer

A) True 
 B)False

Question 6

When estimated useful life of an asset is revised:

Accepted Answer

A)  depreciation will continue at the current rate.
B)  depreciation expense reported in previous years would be changed retroactively.
C)  the depreciation expense in subsequent years will be changed but previous calculations will not be changed.
D)  generally accepted accounting principles have been violated.E) A) and C)
F) B) and D)

Question 7

Your company buys a computer server which it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

Accepted Answer

A)  eight years.
B)  eleven years.
C)  five years.
D)  three years.E) None of the above
F) A) and B)

Question 8

The useful life of an asset is always measured in units of time,such as years or months.

Accepted Answer

A) True 
 B)False

Question 9

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

Accepted Answer

A)  A smaller fixed asset turnover ratio and a smaller gain on asset disposal.
B)  A larger fixed asset turnover ratio and a larger gain on asset disposal.
C)  A smaller fixed asset turnover ratio and a larger gain on asset disposal.
D)  A larger fixed asset turnover ratio and a smaller gain on asset disposal.E) A) and B)
F) B) and C)

Question 10

Extraordinary repairs

Accepted Answer

A)  are revenue expenditures.
B)  extend an asset's life beyond the original estimate.
C)  are expensed as incurred.
D)  are credited to accumulated depreciation.E) A) and B)
F) A) and C)

Question 11

A company purchased property for $100,000.The property included a building,equipment and land.The building was appraised at $62,000,the land at $45,000,and the equipment at $18,000.What is the amount of cost to be allocated to the building in the accounting records?

Accepted Answer

A)  $0.
B)  $49,600.
C)  $62,000.
D)  $100,000E) A) and D)
F) B) and C)

Question 12

Martinez,Inc.acquired a patent on January 1,2014 for $40,000 cash.The patent was estimated to have a useful life of 10 years.At the end of 2016 it appeared that the total useful life would be only 7 years and the amortization rate was revised accordingly.On June 30,2018,the patent was sold for $20,000.
a.Prepare the journal entry to record the acquisition of the patent on January 1,2014.
b.Prepare the journal entry to record the annual amortization for 2015.
c.Compute the amount of amortization that would be recorded in 2017.
d.Record the sale of the patent on June 30,2018.

Accepted Answer

The answer of Martinez,Inc.acquired a patent on January 1,2014 for...

Question 13

Purrfect Pets has a facility that originally cost $375,000.The balance of the accumulated depreciation account for the facility is $258,000.The company expects to be able to sell the facility for $107,000 at the end of its useful life.The residual value of the facility is:

Accepted Answer

A)  $117,000.
B)  $151,000.
C)  $268,000.
D)  $107,000.E) A) and B)
F) B) and C)

Question 14

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Other things being equal,which of the following is true?

Accepted Answer

A)  Company A will have higher net income in the early years,but Company B will have higher net income towards the end of the asset's useful life.
B)  Company A will consistently have the larger net income until residual value is reached.
C)  Company B will have higher net income in the early years,but Company A will have higher net income towards the end of the asset's useful life.
D)  Company B will consistently have the larger net income until residual value is reached.E) A) and D)
F) C) and D)

Question 15

A real estate management company buys an abandoned apartment complex for $4.5 million.It pays a construction company $500,000 to demolish the entire building.Which of the following is true?

Accepted Answer

A)  The company would record $5 million as the cost of the land.
B)  The company would record $4.5 million as the cost of the land.
C)  The company would record $4 million as the cost of the land.
D)  The company would record $500,000 as demolition expense.E) All of the above
F) None of the above

Question 16

If a company produces the same number of units per period over an asset's useful life,straight-line depreciation expense per period will be the same as the depreciation expense recorded using the units-of-production method.

Accepted Answer

A) True 
 B)False

Question 17

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

Accepted Answer

A)  debit amortization expense for $62,000 and credit accumulated depreciation for $62,000.
B)  debit intangible assets and credit accumulated amortization for an amount equal to 20% of book value.
C)  debit amortization expense for $62,000 and credit patent for $62,000.
D)  report no amortization expense because patents are not subject to amortization.E) B) and C)
F) A) and D)

Question 18

A company buys equipment for $48,000 and expects to use it for ten years and then sell it for $6,000.Using the straight-line method,the company should report depreciation for the equipment of:

Accepted Answer

A)  $4,200 per year.
B)  $8,400 per year.
C)  $4,800 per year.
D)  $9,600 per year.E) C) and D)
F) A) and B)

Question 19

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

Accepted Answer

A) True 
 B)False

Question 20

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Which of the following statements is true?

Accepted Answer

A)  Company A will have higher depreciation expense in the early years,but Company B will have the higher expense towards the end of the asset's useful life.
B)  Company A will consistently have higher depreciation expense until residual value is reached.
C)  Company B will have higher depreciation expense in the early years,but Company A will have the higher expense towards the end of the asset's useful life.
D)  Company B will consistently have higher depreciation expense until residual value is reached.E) B) and C)
F) All of the above

Exam 9: Long-Lived Tangible and Intangible Assets

If average net fixed assets decrease,then the fixed asset turnover ratio will increase,assuming nothing else changes.

Correct Answer
verified

The useful life of an asset is always measured in units of time,such as years or months.

Correct Answer
verified

Extraordinary repairs

Correct Answer
verified

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Which of the following statements is true?

Correct Answer
verified

When estimated useful life of an asset is revised:

Correct Answer
verified

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

Correct Answer
verified

Your company buys a computer server which it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

Correct Answer
verified

If a company produces the same number of units per period over an asset's useful life,straight-line depreciation expense per period will be the same as the depreciation expense recorded using the units-of-production method.

Correct Answer
verified

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

Correct Answer
verified

A company buys equipment for $48,000 and expects to use it for ten years and then sell it for $6,000.Using the straight-line method,the company should report depreciation for the equipment of:

Correct Answer
verified

Correct Answer
verified

Purrfect Pets has a facility that originally cost $375,000.The balance of the accumulated depreciation account for the facility is $258,000.The company expects to be able to sell the facility for $107,000 at the end of its useful life.The residual value of the facility is:

Correct Answer
verified

When an asset is sold and its book value exceeds its selling price,net income will increase.

Correct Answer
verified

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

Correct Answer
verified

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right on its balance sheet?

Correct Answer
verified

A real estate management company buys an abandoned apartment complex for $4.5 million.It pays a construction company $500,000 to demolish the entire building.Which of the following is true?

Correct Answer
verified

A company purchased property for $100,000.The property included a building,equipment and land.The building was appraised at $62,000,the land at $45,000,and the equipment at $18,000.What is the amount of cost to be allocated to the building in the accounting records?

Correct Answer
verified

Which of the following assets would be amortized?

Correct Answer
verified

Which of the following statements regarding tangible long-lived assets is not correct?

Correct Answer
verified

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Other things being equal,which of the following is true?

Correct Answer
verified

Exam 9: Long-Lived Tangible and Intangible Assets

If average net fixed assets decrease,then the fixed asset turnover ratio will increase,assuming nothing else changes.

Correct AnswerverifiedShow Answer

The useful life of an asset is always measured in units of time,such as years or months.

Correct AnswerverifiedShow Answer

Extraordinary repairs

Correct AnswerverifiedShow Answer

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Which of the following statements is true?

Correct AnswerverifiedShow Answer

When estimated useful life of an asset is revised:

Correct AnswerverifiedShow Answer

Company A uses an accelerated depreciation method while Company B uses the straight-line method.All other things being equal,during the first few years of the asset's use,Company B will show which of the following compared to Company A?

Correct AnswerverifiedShow Answer

Your company buys a computer server which it expects to use for eight years and then sell when it upgrades to a more powerful model.The server would probably be used by the business that buys it at that time for another three years.The useful life of the server for your company is:

Correct AnswerverifiedShow Answer

If a company produces the same number of units per period over an asset's useful life,straight-line depreciation expense per period will be the same as the depreciation expense recorded using the units-of-production method.

Correct AnswerverifiedShow Answer

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

Correct AnswerverifiedShow Answer

A company buys equipment for $48,000 and expects to use it for ten years and then sell it for $6,000.Using the straight-line method,the company should report depreciation for the equipment of:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Purrfect Pets has a facility that originally cost $375,000.The balance of the accumulated depreciation account for the facility is $258,000.The company expects to be able to sell the facility for $107,000 at the end of its useful life.The residual value of the facility is:

Correct AnswerverifiedShow Answer

When an asset is sold and its book value exceeds its selling price,net income will increase.

Correct AnswerverifiedShow Answer

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

Correct AnswerverifiedShow Answer

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right on its balance sheet?

Correct AnswerverifiedShow Answer

A real estate management company buys an abandoned apartment complex for $4.5 million.It pays a construction company $500,000 to demolish the entire building.Which of the following is true?

Correct AnswerverifiedShow Answer

A company purchased property for $100,000.The property included a building,equipment and land.The building was appraised at $62,000,the land at $45,000,and the equipment at $18,000.What is the amount of cost to be allocated to the building in the accounting records?

Correct AnswerverifiedShow Answer

Which of the following assets would be amortized?

Correct AnswerverifiedShow Answer

Which of the following statements regarding tangible long-lived assets is not correct?

Correct AnswerverifiedShow Answer

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Other things being equal,which of the following is true?

Correct AnswerverifiedShow Answer

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