ACCT; Chapter 9 Test Review – Flashcards

A company purchased land for $350,000 cash. Real estate brokers' commission was $25,000 and $35,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of the land would be recorded at A) $410,000 B) $375,000 C) $350,000 D) $385,000

Which of the following is not properly classified as property, plant and equipment? A) Building used as a factory B) Land improvement, such as parking lots and fences C) Land used in ordinary business operations D) A truck held for resale by an automobile dealership

A characteristic of a plant asset is that it is A) not currently used in the business but held for future use B) used in the operations of a business C) intangible D) held for sale in the ordinary course of the business

Which of the following would not be included in the Equipment account? A) Installation costs B) Freight costs C) Cost of trial runs D) Electricity used by the machine

The balance in the Accumulated Depreciation account represents the A) amount to be deducted from the cost of the plant assets to arrive at its fair market value B) amount charged to expense in the current period C) cash fund to be used to replace plant assets D) amount charged to expense since the acquisition of the plant asset

Which of the following items is not a consideration when recording periodic depreciation expense on plant assets? A) Salvage value B) Estimated useful life C) Cash needed to replace the plant asset D) Cost

The cost of a long-term asset is expensed A) in the period in which it is disposed of B) as the asset benefits the company C) when it is paid for D) in the period in which it is acquired

The book value of an asset is equal to the A) assets fair value less its historical cost B) assets cost less accumulated depreciation C) blue book value relied on by secondary markets D) replacement cost of the asset

A company purchased factory equipment on April 1, 2014 for $96,000. It is estimated that the equipment will have a $12,000 salvage value at the end of its 10 year useful life. Using the straight-line method of a depreciation, the amount to be recorded as depreciation expense at December 31, 2014 is A) $6,300 B) $9,600 C) $8,400 D) $7,200

A company purchased factory equipment on June 1, 2014 for $96,000. It is estimated that the equipment will have a $6,000 salvage value at the end of its 10 year useful life. Using the straight-line method of a depreciation, the amount to be recorded as depreciation expense at December 31, 2014 is A) $4,500 B) $9,000 C) $5,250 D) $3,750

On November 1, 2013, Love Company places a new asset into service. The cost of the asset is $45,000 with an estimated 5 year life and $5,000 salvage value at the end of its useful life. What is the depreciation expense for 2014 if Love Company uses the straight line method of depreciation? A) $1,333 B) $8,000 C) $4,500 D) $2,000

Which depreciation method is most frequently used in businesses today? A) Declining balance B) Double declining balance C) Units of activity D) Straight line

In 2014, Blanchard Corporation has plant equipment that originally cost $90,000 and has accumulate depreciation of $36,000. A new processing technique has rendered the equipment obsolete, so it is retired. Which of the following entries should Blanchard use to record the retirement of the equipment? A) Plant Equipment 90,000 >>>Accumulated Depreciation-Equipment 36,000 >>>Loss on Disposal of Plant Assets 54,000 B) Accumulated Depreciation-Equipment 36,000 Loss of Disposal of Plant Assets 54,000 >>>Equipment 90,000 C) Loss of Disposal of Plant Assets 54,000 >>>Equipment 54,000 D) Loss of Disposal of Plant Assets 54,000 >>>Accumulated Depreciation-Equipment 54,000

A gain or loss on disposal of a plant asset is determined by comparing the A) replacement cost of the asset with the assets original cost B) book value of the asset with the proceeds received from its sale C) book value of the asset with the assets original cost D) original cost of the asset with the proceeds received from its sale

A company sells a plant asset that originally cost $225,000 for $75,000 on December 31, 2014. The accumulated depreciation account had a balance of $90,000 after the current years depreciation of $22,500 had been recorded. The company should recognize a A) $150,000 loss on disposal B) $60,000 loss on disposal C) $37,500 loss on disposal D) $60,000 gain on disposal

Using the following data for Stevenson Industries, compute return on assets ratio Net income $150,000 Total assets 12/31/14 $2,410,000 Total assets 12/31/13 $1,980,000 Net Sales $250,000 A) 6.8% B) 10.4% C) 11.4% D) 6.2%

On July 1, 2014, Linden Company purchased the copyright to Norman Computer Tutorials for $140,000. It is estimated that the copyright will have a useful life of 5 years. The amount of amortization expense recognized for the year 2014 would be A) $28,000 B) $14,000 C) $13,125 D) $25,900

Which of the following is not an intangible asset that is reported on the balance sheet? A) Goodwill B) Trademark C) Employees D) Copyrights

A company has the following assets Buildings and Equipment, less accumulated depreciation of $5,000,000 $35,000,000 Copyrights $2,400,000 Patents $10,000,000 Land $12,000,000 The total amount reported under Property, Plant and Equipment would be A) $49,400,000 B) $59,400,000 C) $57,000,000 D) $47,000,000