Question 1

Mo Bounce Company's delivery truck, which originally cost $ 28,000, was destroyed by fire. At the time of the fire, the balance of the accumulated depreciation account amounted to $ 19,000. The company received $ 16,000 reimbursement from its insurance company. The gain or loss as a result of the fire was

Accepted Answer

A)   $ 12,000 loss.
B)   $ 7,000 loss.
C)   $ 12,000 gain.
D)   $ 7,000 gain.E) B) and C)
F) A) and D)

Question 2

Asset turnover is calculated as follows:

Accepted Answer

A)   net sales divided by average total assets.
B)   property, plant and equipment divided by total assets.
C)   long-lived assets divided by total sales.
D)   net sales divided by net long-lived assets.E) B) and C)
F) A) and D)

Question 3

A company purchases a remote site building for computer operations. The building will be suitable for operations after some expenditures. The wiring must be replaced to computer specifications. The roof is leaky and must be replaced. All rooms must be repainted and re-carpeted and there will also be some plumbing work done. Which of the following statements is true?

Accepted Answer

A)   The cost of the building will not include the repainting and re-carpeting costs.
B)   The cost of the building will include the cost of replacing the roof.
C)   The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as building improvements.
D)   The wiring is part of the computer costs, not the building cost.E) A) and B)
F) A) and C)

Question 4

Revaluation model is allowed under IFRS mainly because it is useful in countries where

Accepted Answer

A)   there is a high inventory turnover.
B)   companies cannot estimate fair value of assets.
C)   there is a high inflation rates.
D)   companies cannot determine an appropriate method of depreciation.E) A) and B)
F) A) and C)

Question 5

If a long-lived asset is sold before it is fully depreciated, and the proceeds received is less than the asset's carrying amount,

Accepted Answer

A)   a gain on disposal occurs.
B)   a loss on disposal occurs.
C)   there is no gain or loss on disposal.
D)   additional depreciation expense must be recorded.E) A) and D)
F) A) and C)

Question 6

Match between columns
                        Premises: Licence
Copyrights
Trademarks
Goodwill
Franchise
Development Costs
Patents

Accepted Answer

The Answer of considered finite life and indefinite life is...

Question 7

A patent can be renewed

Accepted Answer

A)   every twenty years.
B)   only after its economic life has been exhausted.
C)   only if significantly defended in an infringement suit.
D)   A patent can never be renewed.E) A) and B)
F) None of the above

Question 8

Which of the following methods of depreciation results in the highest cash flow?

Accepted Answer

A)   straight-line
B)   diminishing-balance
C)   units-of-production
D)   all of these result in the same cash flowE) A) and B)
F) B) and D)

Question 9

The Accumulated Depreciation account represents a cash fund available to replace long-lived assets.

Accepted Answer

A) True 
 B)False

Question 10

The carrying amount of a long-lived asset is the difference between the

Accepted Answer

A)   replacement cost of the asset and its cost.
B)   cost of the asset and the amount of depreciation expense for the year.
C)   cost of the asset and the accumulated depreciation to date.
D)   proceeds received from the sale of the asset and its original cost.E) A) and B)
F) C) and D)

Question 11

Which of the following methods of calculating depreciation uses measures other than time?

Accepted Answer

A)   straight-line
B)   diminishing-balance
C)   units-of-production
D)   none of theseE) All of the above
F) A) and C)

Question 12

If an intangible asset with an indefinite life becomes impaired, the asset must be

Accepted Answer

A)   written down to cost.
B)   written down to fair value.
C)   sold at its net realizable value.
D)   No adjustment is required and a loss will be recorded when the intangible asset is sold.E) A) and B)
F) All of the above

Question 13

Winningham Company sold the following two machines in 2021:  Instructions
Journalize all entries required to update depreciation and record the sales of the two assets in 2021. The company has recorded depreciation on the machine to December 31, 2020.

Accepted Answer

The answer of Winningham Company sold the following two machines...

Question 14

Equipment was purchased for $ 15,000. Freight charges amounted to $ 700, and there was a cost of $ 2,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $ 3,000 residual value at the end of its 5-year useful life. Depreciation expense each year using the straight-line method will be

Accepted Answer

A)   $ 3,540.
B)   $ 2,940.
C)   $ 2,460.
D)   $ 2,400.E) C) and D)
F) A) and D)

Question 15

The carrying amount of an asset is equal to the

Accepted Answer

A)   asset's fair value less its cost.
B)   asset's cost less depreciation expense.
C)   replacement cost of the asset.
D)   asset's cost less accumulated depreciation.E) B) and D)
F) All of the above

Question 16

A truck costing $ 47,000 was destroyed during a flood. At the date of the flood, the accumulated depreciation on the truck was $ 22,000. An insurance cheque for $ 35,000 was received based on the replacement cost of the truck. The entry to record the insurance proceeds and the disposition of the truck will include a

Accepted Answer

A)   gain on disposal of $ 10,000.
B)   credit to the Truck account of $ 12,000.
C)   credit to the Accumulated Depreciation account for $ 22,000.
D)   gain on disposal of $ 25,000.E) B) and C)
F) A) and B)

Question 17

Which of the following items should NOT be capitalized?

Accepted Answer

A)   insurance paid while item is in transit
B)   land surveying fees
C)   building permits
D)   truck licenseE) A) and D)
F) A) and B)

Question 18

Which of the following is NOT a characteristic of property, plant, and equipment?

Accepted Answer

A)   physical substance
B)   used in operations of business
C)   not intended for sale
D)   held for saleE) B) and C)
F) A) and D)

Question 19

On October 1, 2021, Marshwinds Wind Turbine Company places a new asset into service. The cost of the asset is $ 8,000 with an estimated 5-year life and $ 2,000 residual value at the end of its useful life. What is the depreciation expense for 2021 if Marshwinds Wind Turbine Company uses the straight-line method of depreciation?

Accepted Answer

A)   $ 300
B)   $ 1,600
C)   $ 400
D)   $ 800E) None of the above
F) All of the above

Question 20

Beaches Ltd. reviews its assets every fiscal year for potential asset impairments. In the current year Beaches realized through its impairment assessment that a specialized machine has a recoverable amount of $ 360,500. This asset carries a cost of $ 890,000 and up-to-date accumulated depreciation of $ 549,200. What amount would be reported as an impairment loss on Beaches Ltd. current income statement at year end?

Accepted Answer

A)   $ 0
B)   $ 340,800
C)   $ 360,500
D)   $ 19,700E) C) and D)
F) A) and B)

Exam 1: Long-Lived Assets

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The carrying amount of a long-lived asset is the difference between the

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If a long-lived asset is sold before it is fully depreciated, and the proceeds received is less than the asset's carrying amount,

Correct Answer
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Winningham Company sold the following two machines in 2021: Instructions Journalize all entries required to update depreciation and record the sales of the two assets in 2021. The company has recorded depreciation on the machine to December 31, 2020.

Correct Answer
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Which of the following items should NOT be capitalized?

Correct Answer
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Asset turnover is calculated as follows:

Correct Answer
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Which of the following methods of calculating depreciation uses measures other than time?

Correct Answer
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If an intangible asset with an indefinite life becomes impaired, the asset must be

Correct Answer
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Which of the following is NOT a characteristic of property, plant, and equipment?

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Which of the following methods of depreciation results in the highest cash flow?

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A patent can be renewed

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The carrying amount of an asset is equal to the

Correct Answer
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The Accumulated Depreciation account represents a cash fund available to replace long-lived assets.

Correct Answer
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Revaluation model is allowed under IFRS mainly because it is useful in countries where

Correct Answer
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Identify whether the following intangible assets are considered finite life or indefinite life

Exam 1: Long-Lived Assets

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The carrying amount of a long-lived asset is the difference between the

Correct AnswerverifiedShow Answer

If a long-lived asset is sold before it is fully depreciated, and the proceeds received is less than the asset's carrying amount,

Correct AnswerverifiedShow Answer

Winningham Company sold the following two machines in 2021: Instructions Journalize all entries required to update depreciation and record the sales of the two assets in 2021. The company has recorded depreciation on the machine to December 31, 2020.

Correct AnswerverifiedShow Answer

Which of the following items should NOT be capitalized?

Correct AnswerverifiedShow Answer

Asset turnover is calculated as follows:

Correct AnswerverifiedShow Answer

Which of the following methods of calculating depreciation uses measures other than time?

Correct AnswerverifiedShow Answer

If an intangible asset with an indefinite life becomes impaired, the asset must be

Correct AnswerverifiedShow Answer

Which of the following is NOT a characteristic of property, plant, and equipment?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following methods of depreciation results in the highest cash flow?

Correct AnswerverifiedShow Answer

A patent can be renewed

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The carrying amount of an asset is equal to the

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Accumulated Depreciation account represents a cash fund available to replace long-lived assets.

Correct AnswerverifiedShow Answer

Revaluation model is allowed under IFRS mainly because it is useful in countries where

Correct AnswerverifiedShow Answer

Identify whether the following intangible assets are considered finite life or indefinite life

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