Question 1

Oregon Adventures purchased equipment at the beginning of 2012 for $80,000. They sold the equipment at the end of 2014 for $45,000. If the expected life of the equipment was seven years with a residual value of $10,000, and they use straight-line depreciation, which of the following is true regarding the entry to record the sale of the equipment?

Accepted Answer

A)   Debit Loss $5,000.
B)   Credit Gain $5,000.
C)   Credit Accumulated Depreciation $40,000.
D)   Credit Equipment $5,000.E) None of the above
F) A) and B)

Question 2

Straight-line produces a lower net income than accelerated methods in the earlier years of an asset's life.

Accepted Answer

A) True 
 B)False

Question 3

Leonard's Jewelry owns a patent with a carrying value of $50 million at the end of 2012. Due to adverse economic conditions, Leonard's management determined that it should assess whether an impairment should be recognized for the patent. The estimated future cash flows to be provided by the patent total $43 million, and its fair value at that point totals $35 million. Under these circumstances, Leonard:

Accepted Answer

A)   Would record no impairment loss on the patent.
B)   Would record a $7 million impairment loss on the patent.
C)   Would record a $15 million impairment loss on the patent.
D)   Would record a $31 million impairment loss on the patent.E) A) and C)
F) B) and C)

Question 4

A word, slogan, or symbol that distinctively identifies a company, product, or service is a:

Accepted Answer

A)   Patent.
B)   Copyright.
C)   Trademark.
D)   Franchise.E) None of the above
F) All of the above

Question 5

A building was purchased for $50,000. The asset has an expected useful life of 6 years and depreciation expense each year is $8,000 using the straight-line method. What is the residual value of the building?

Accepted Answer

A)   $0.
B)   $2,000.
C)   $4,000.
D)   $6,000.E) All of the above
F) A) and D)

Question 6

Impairment occurs when the future cash flows generated for a long-term asset fall below its fair value.

Accepted Answer

A) True 
 B)False

Question 7

Chubbyville purchases a delivery van for $23,500. Chubbyville estimates that at the end of its four-year service life, the van will be worth $2,500. During the four-year period, the company expects to drive the van 105,000 miles. Calculate annual depreciation for the four-year life of the van using each of the following methods. Round all amounts to the nearest dollar.
1. Straight line.
2. Double-declining-balance.
3. Activity-based.

Accepted Answer

Actual miles driven each year were 24,00...

Question 8

The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 at the beginning and end of the year, respectively. Net income and sales for the year are $100,000 and $800,000, respectively. What is Hidden Valley's profit margin?

Accepted Answer

A)   10%.
B)   12.5%.
C)   18%.
D)   22%.E) A) and B)
F) A) and C)

Question 9

The balance sheet of Cattleman's Steakhouse shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and the fair value of its liabilities is $15,000. Longhorn paid Cattleman's $95,000 to acquire it. Longhorn should record goodwill on this purchase of:

Accepted Answer

A)   $3,600.
B)   $5,000.
C)   $20,000.
D)   $23,600.E) A) and B)
F) A) and C)

Question 10

We record purchased intangible assets at their original cost plus all other costs necessary to get the asset ready for use.

Accepted Answer

A) True 
 B)False

Question 11

An impairment loss is equal to the amount by which book value exceeds the fair value of a long-term asset.

Accepted Answer

A) True 
 B)False

Question 12

Schager Company purchased a computer system on January 1, 2012, at a cost of $40,000. The estimated useful life is 10 years, and the estimated residual value is $5,000. Assuming the company will use the double-declining-balance method, what is the depreciation expense for the second year?

Accepted Answer

A)   $8,000.
B)   $7,000.
C)   $5,600.
D)   $6,400.E) A) and C)
F) B) and C)

Question 13

Match between columns
                        Premises:    Allocates an asset's cost based on its use. 
   The process of recording expense for natural resources. 
   Allocates an equal amount of depreciation to each year of the asset's service life. 
   An accelerated depreciation method that records more depreciation in earlier years and less depreciation in later years. 
   Allocating the cost of an intangible asset over its service life.

Accepted Answer

The Answer of  Depletion  and  Straight-line method is...

Question 14

Research and development costs should be capitalized when the:

Accepted Answer

A)   Future benefit is probable and the amount can be reasonably estimated.
B)   Future benefit is reasonably possible and the amount can be reasonably estimated.
C)   Future benefit is probable and the amount cannot be reasonably estimated.
D)   None of the above are correct as research and development costs are never capitalized under U.S. accounting rules.E) A) and D)
F) A) and B)

Question 15

The legal life of a patent is:

Accepted Answer

A)   Forty years.
B)   Twenty years.
C)   Life of the inventor plus fifty years.
D)   Indefinite.E) All of the above
F) B) and D)

Question 16

Bahama Catering purchased a commercial dishwasher by paying cash of $5,000. The dishwasher's fair value on the date of the purchase was $5,600. The company incurred $400 in transportation costs, $300 installation fees, and paid a $200 fine for illegal parking while the dishwasher was being delivered. For what amount will Bahama record the dishwasher?

Accepted Answer

A)   $5,600.
B)   $5,700.
C)   $5,900.
D)   $6,300.E) A) and B)
F) B) and D)

Question 17

Nate's Hot Dogs exchanges long-term assets with Lizzy's Lemonade. Nate receives a delivery truck and gives up a piece of machinery. The fair value and book value of the machinery were $27,000 and $25,000 (original cost of $35,000 less accumulated depreciation of $10,000), respectively. Since the delivery truck was worth $32,000, Nate paid an additional $5,000 in cash to Lizzy. Record the exchange for Nate's Hot Dogs.

Accepted Answer

The answer of Nate's Hot Dogs exchanges long-term assets with...

Question 18

Residual value, also referred to as salvage value, is the amount the company expects to receive from selling the asset at the end of its service life.

Accepted Answer

A) True 
 B)False

Question 19

The exclusive right to benefit from a creative work, such as a film, is a:

Accepted Answer

A)   Patent.
B)   Copyright.
C)   Trademark.
D)   Franchise.E) A) and D)
F) B) and C)

Question 20

Match between columns
                        Premises:    An exclusive right to manufacture a product or to use a process. 
   Payment for the exclusive right to use the company's name and to sell its products within a specified geographical area. 
   A word, slogan, or symbol that distinctively identifies a company, product, or service. 
   An exclusive right of protection given to the creator of a published work such as a song, film, painting, photograph, book, or computer software. 
   The purchase price of a company less the fair value of the net assets acquired.

Accepted Answer

The Answer of  Patent  and  Trademark  is...

Exam 7: Long-Term Assets

Schager Company purchased a computer system on January 1, 2012, at a cost of $40,000. The estimated useful life is 10 years, and the estimated residual value is $5,000. Assuming the company will use the double-declining-balance method, what is the depreciation expense for the second year?

Correct Answer
verified

Listed below are five terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the best term placing the number designating the term in the space provided.

Correct Answer
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Correct Answer
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Listed below are five terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the best term placing the number designating the term in the space provided.

The balance sheet of Cattleman's Steakhouse shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and the fair value of its liabilities is $15,000. Longhorn paid Cattleman's $95,000 to acquire it. Longhorn should record goodwill on this purchase of:

Correct Answer
verified

The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 at the beginning and end of the year, respectively. Net income and sales for the year are $100,000 and $800,000, respectively. What is Hidden Valley's profit margin?

Correct Answer
verified

Correct Answer
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The legal life of a patent is:

Correct Answer
verified

Research and development costs should be capitalized when the:

Correct Answer
verified

We record purchased intangible assets at their original cost plus all other costs necessary to get the asset ready for use.

Correct Answer
verified

Straight-line produces a lower net income than accelerated methods in the earlier years of an asset's life.

Correct Answer
verified

Correct Answer
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Actual miles driven each year were 24,00...
View Answer

An impairment loss is equal to the amount by which book value exceeds the fair value of a long-term asset.

Correct Answer
verified

The exclusive right to benefit from a creative work, such as a film, is a:

Correct Answer
verified

Residual value, also referred to as salvage value, is the amount the company expects to receive from selling the asset at the end of its service life.

Correct Answer
verified

Correct Answer
verified

Impairment occurs when the future cash flows generated for a long-term asset fall below its fair value.

Correct Answer
verified

A building was purchased for $50,000. The asset has an expected useful life of 6 years and depreciation expense each year is $8,000 using the straight-line method. What is the residual value of the building?

Correct Answer
verified

A word, slogan, or symbol that distinctively identifies a company, product, or service is a:

Correct Answer
verified

Exam 7: Long-Term Assets

Schager Company purchased a computer system on January 1, 2012, at a cost of $40,000. The estimated useful life is 10 years, and the estimated residual value is $5,000. Assuming the company will use the double-declining-balance method, what is the depreciation expense for the second year?

Correct AnswerverifiedShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the best term placing the number designating the term in the space provided.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Listed below are five terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the best term placing the number designating the term in the space provided.

The balance sheet of Cattleman's Steakhouse shows assets of $86,400 and liabilities of $15,000. The fair value of the assets is $90,000 and the fair value of its liabilities is $15,000. Longhorn paid Cattleman's $95,000 to acquire it. Longhorn should record goodwill on this purchase of:

Correct AnswerverifiedShow Answer

The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 at the beginning and end of the year, respectively. Net income and sales for the year are $100,000 and $800,000, respectively. What is Hidden Valley's profit margin?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The legal life of a patent is:

Correct AnswerverifiedShow Answer

Research and development costs should be capitalized when the:

Correct AnswerverifiedShow Answer

We record purchased intangible assets at their original cost plus all other costs necessary to get the asset ready for use.

Correct AnswerverifiedShow Answer

Straight-line produces a lower net income than accelerated methods in the earlier years of an asset's life.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedActual miles driven each year were 24,00...View AnswerShow Answer

An impairment loss is equal to the amount by which book value exceeds the fair value of a long-term asset.

Correct AnswerverifiedShow Answer

The exclusive right to benefit from a creative work, such as a film, is a:

Correct AnswerverifiedShow Answer

Residual value, also referred to as salvage value, is the amount the company expects to receive from selling the asset at the end of its service life.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Impairment occurs when the future cash flows generated for a long-term asset fall below its fair value.

Correct AnswerverifiedShow Answer

A building was purchased for $50,000. The asset has an expected useful life of 6 years and depreciation expense each year is $8,000 using the straight-line method. What is the residual value of the building?

Correct AnswerverifiedShow Answer

A word, slogan, or symbol that distinctively identifies a company, product, or service is a:

Correct AnswerverifiedShow Answer

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Correct Answer
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Actual miles driven each year were 24,00...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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