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Chapter 10
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Questions in this quiz (16)
1Erin Danielle Company purchased equipment and incurred the following costs.
Cash price... $24,000
Sales tax... $1,200
Insurance during transit... $200
Installation and testing... $400
Total costs... $25,800
What amount should be recorded as the cost of the equipment?- A$24,000.
- B$25,200.
- C$25,400.
- D$25,800.
2Depreciation is a process of:
- Avaluation.
- Bcost allocation.
- Ccash accumulation.
- Dappraisal.
3Micah Bartlett Company purchased equipment on January 1, 2013, at a total invoice cost of $400,000. The equipment has an estimated salvage value of $10,000 and an estimated useful life of 5 years. The amount of accumulated depreciation at December 31, 2014, if the straight-line method of depreciation is used, is:
- A$80,000.
- B$160,000.
- C$78,000.
- D$156,000.
4Ann Torbert purchased a truck for $11,000 on January 1, 2013. The truck will have an estimated salvage value of $1,000 at the end of 5 years. Using the units-of-activity method, the balance in accumulated depreciation at December 31, 2014, can be computed by the following formula:
- A($11,000 / Total estimated activity) x Units of activity for 2014
- B($10,000 / Total estimated activity) x Units of activity for 2014
- C($11,000 / Total estimated activity) x Units of activity for 2013 and 2014
- D($10,000 / Total estimated activity) x Units of activity for 2013 and 2014
5Jefferson Company purchased a piece of equipment on January 1, 2014. The equipment cost $60,000 and has an estimated life of 8 years and a salvage value of $8,000. What was the depreciation expense for the asset for 2015 under the double-declining-balance method?
- A$6,500.
- B$11,250.
- C$15,000.
- D$6,562.
6When there is a change in estimated depreciation:
- Aprevious depreciation should be corrected.
- Bcurrent and future years' depreciation should be revised.
- Conly future years' depreciation should be revised.
- DNone of the above.
7Able Towing Company purchased a tow truck for $60,000 on January 1, 2012. It was originally depreciated on a straight-line basis over 10 years with an assumed salvage value of $12,000. On December 31, 2014, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2014) and the salvage value to $2,000. What was the depreciation expense for 2014?
- A$6,000.
- B$4,800.
- C$15,000.
- D$12,100.
8Additions to plant assets are:
- Arevenue expenditures.
- Bdebited to the Maintenance and Repairs Expense account.
- Cdebited to the Purchases account.
- Dcapital expenditures.
9Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30, 2014. The machine was purchased for $80,000 on January 1, 2010, and was depreciated on a straight-line basis for 10 years assuming no salvage value. If the machine was sold for $26,000, what was the amount of the gain or loss recorded at the time of the sale?
- A$18,000.
- B$54,000.
- C$22,000.
- D$46,000.
10Maggie Sharrer Company expects to extract 20 million tons of coal from a mine that cost $12 million. If no salvage value is expected and 2 million tons are mined and sold in the first year, the entry to record depletion will include a:
- Adebit to Accumulated Depletion of $2,000,000.
- Bcredit to Depletion Expense of $1,200,000.
- Cdebit to Depletion Expense of $1,200,000.
- Dcredit to Accumulated Depletion of $2,000,000.
11Which of the following statements is false?
- AIf an intangible asset has a finite life, it should be amortized.
- BThe amortization period of an intangible asset can exceed 20 years.
- CGoodwill is recorded only when a business is purchased.
- DResearch and development costs are expensed when incurred, except when the research and development expenditures result in a successful patent.
12Martha Beyerlein Company incurred $150,000 of research and development costs in its laboratory to develop a patent granted on January 2, 2014. On July 31, 2014, Beyerlein paid $35,000 for legal fees in a successful defense of the patent. The total amount debited to Patents through July 31, 2014, should be:
- A$150,000.
- B$35,000.
- C$185,000.
- D$170,000.
13Indicate which of the following statements is true.
- ASince intangible assets lack physical substance, they need be disclosed only in the notes to the financial statements.
- BGoodwill should be reported as a contra account in the owner's equity section.
- CTotals of major classes of assets can be shown in the balance sheet, with asset details disclosed in the notes to the financial statements.
- DIntangible assets are typically combined with plant assets and natural resources and shown in the property, plant, and equipment section.
14Lake Coffee Company reported net sales of $180,000, net income of $54,000, beginning total assets of $200,000, and ending total assets of $300,000. What was the company's asset turnover?
- A0.90.
- B0.20.
- C0.72.
- D1.39.
15Schopenhauer Company exchanged an old machine, with a book value of $39,000 and a fair value of $35,000, and paid $10,000 cash for a similar new machine. The transaction has commercial substance. At what amount should the machine acquired in the exchange be recorded on Schopenhauer's books?
- A$45,000.
- B$46,000.
- C$49,000.
- D$50,000.
16In exchanges of assets in which the exchange has commercial substance:
- Aneither gains nor losses are recognized immediately.
- Bgains, but not losses, are recognized immediately.
- Closses, but not gains, are recognized immediately.
- Dboth gains and losses are recognized immediately.
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- 221 Principles of Accounting I Quiz on Chapter 10, created by Emily Christisen on 11/05/2016.
- Author
- Emily Christisen
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- English
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