Accounting Ch 9

Land improvements should be depreciated over the useful life of the: a. land improvements. b. buildings on the land. c. land. d. land or land improvements, whichever is longer.

Depreciation is the process of allocating the cost of a plant asset over its service life in: a. a systematic and rational manner. b. an accelerated and accurate manner. c. an equal and equitable manner. d. a conservative market-based manner.

The four subdivisions for plant assets are: a. intangibles, land, buildings, and equipment: b. land, land improvements, buildings, and equipment. c. furnishings and fixtures, land, buildings, and equipment. d. property, plant, equipment, and land.

All of the following intangible assets are amortized except a. trademarks. b. limited-life franchises. c. copyrights. d. patents.

When estimating the useful life of an asset, accountants do not consider a. expected repairs and maintenance. b. obsolescence factors. c. the cost to replace the asset at the end of its useful life. d. the intended use of the asset.

Research and development costs: a. are capitalized and then amortized over a period not to exceed 40 years. b. must be expensed when incurred under generally accepted accounting principles. c. are classified as intangible assets. d. should be included in the cost of the patent they relate to.

Management should select the depreciation method that: a. has been used most often in the past by the company. b. best measures the plant asset's contribution to revenue over its useful life. c. is easiest to apply. d. best measures the plant asset's market value over its useful life.

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets? a. Cash needed to replace the plant asset b. Estimated useful life c. Salvage value d. Cost

In computing depreciation, salvage value is a. ignored in all the depreciation methods. b. an estimate of a plant asset's value at the end of its useful life. c. subtracted from accumulated depreciation to determine the plant asset's depreciable cost. d. the fair value of a plant asset on the date of acquisition.

The depreciation method that applies a constant percentage to depreciable cost in calculating depreciation is a. declining-balance. b. straight-line. c. units-of-activity. d. None of these answers are correct

On July 4, 2018, Wyoming Mining Company purchased the mineral rights to a granite deposit for $1,600,000. It is estimated that the recoverable granite will be 400,000 tons. During 2018, 100,000 tons of granite was extracted and 60,000 tons were sold. The amount of the Depletion charged to Cost of Goods Sold for 2018 would be Select one: a. $200,000. b. $400,000. c. $120,000. d. $240,000.

Which one of the following items is not considered a part of the cost of a truck purchased for business use? Select one: a. Sales tax b. Cost of lettering on side of truck c. Truck license d. Freight charges

Sargent Corporation bought equipment on January 1, 2018. The equipment cost $360,000 and had an expected salvage value of $60,000. The life of the equipment was estimated to be 6 years. The depreciation expense using the straight-line method of depreciation is Select one: a. $70,000. b. $50,000. c. None of these answer choices are correct. d. $72,000.

A company purchased factory equipment on June 1, 2018, for $160,000. It is estimated that the equipment will have a $10,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2018, is Select one: a. $6,250. b. $15,000. c. $7,500. d. $8,750.

A company purchased factory equipment on April 1, 2018 for $160,000. It is estimated that the equipment will have a $20,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2018 is Select one: a. $12,000. b. $14,000. c. $16,000. d. $10,500.

Engler Company purchases a new delivery truck for $55,000. The sales taxes are $4,000. The logo of the company is painted on the side of the truck for $1,600. The truck license is $160. The truck undergoes safety testing for $290. What does Engler record as the cost of the new truck? Select one: a. $60,890 b. $61,050 c. $59,000 d. $60,600

Carey Company buys land for $50,000 on 12/31/17. As of 3/31/18, the land has appreciated in value to $50,700. On 12/31/18, the land has an appraised value of $51,800. By what amount should the Land account be increased in 2018? Select one: a. $0 b. $1,800 c. $700 d. $1,100

A company purchased factory equipment for $700,000. It is estimated that the equipment will have a $70,000 salvage value at the end of its estimated 5-year useful life. If the company uses the double-declining-balance method of depreciation, the amount of annual depreciation recorded for the second year after purchase would be Select one: a. $168,000. b. $120,960. c. $280,000. d. $252,000.

Wesley Hospital installs a new parking lot. The paving cost $40,000 and the lights to illuminate the new parking area cost $25,000. Which of the following statements is true with respect to these additions? Select one: a. $25,000 should be debited to Land Improvements. b. $65,000 should be debited to Land Improvements. c. $40,000 should be debited to the Land account. d. $65,000 should be debited to the Land account.

Which of the following methods of computing depreciation is production based? Select one: a. None of these answer choices are correct. b. Declining-balance c. Straight-line d. Units-of-activity