# Exam 2 – Clicker Questions 3/23/17

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question
Which of the following subsequent expenditures would be capitalized? A. Ordinary repair B. Costs that increase the service life of an asset C. Routine maintenance D. Ordinary repair and routine maintenance
B. Costs that increase the service life of an asset
question
Which of the following subsequent expenditures would not be capitalized? A. Unsuccessful legal defense of intangible assets B. Additions C. Improvements D. Successful legal defense of intangible asset
A. Unsuccessful legal defense of intangible assets
question
Accumulated Depreciation is a liability account that is increased by credits A. True B. False
B. False Accumulated Depreciation is a contra-asset account; it reduces an asset account
question
Book value or carrying value is equal to the original cost of the asset minus the current balance in Accumulated Depreciation A. True B. False
A. True
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The factors used to compute depreciation expense are an asset's: A. Cost, residual value, and physical life B. Cost, residual value, and service life C. Fair market value, residual value, and economic life D. Cost, replacement value, and service life
B. Cost, residual value, and service life
question
Papercraft Corporation purchased equipment for \$60,000 on January 1, 2018. The equipment is expected to have a fiveâyear life, with a residual value of \$5,000 at the end of five years. Using the straightâ line method, depreciation expense for 2018 would be: A. \$12,000 B. \$11,000 C. \$60,000 D. None of these
B. \$11,000 (60,000 - 5,000)/5 years) = \$11,000
question
How much depreciation should be recorded for the first year for a delivery truck with a cost of \$30,000, an expected life of six years, and an estimated residual value of \$6,000? Assume the doubleâdecliningâbalance method is used. A. \$ 12,000 B. \$ 10,000 C. \$ 8,000 D. \$ 5,000
B. \$10,000 The straight-line rate for a six-year asset is 1/6. This rate would be doubled to 2/6 (or 33.33%) Depreciation the first year (rounded): \$10,000 = \$30,000 x 33.33%
question
During the first two years, Supplies, Inc. drove the company truck 15,000 and 22,000 miles, respectively, to deliver merchandise to its customers. The company originally purchased the truck for \$175,000. If the truck has an estimated life of 10 years or 300,000 miles, with an estimated residual value of \$25,000, what amount of deprecation expense should Supplies, Inc. record in the second year using the activityâbased method? A. \$11,000 B. \$18,500 C. \$7,500 D. \$16,000
A. \$11,000 Truck Cost: \$175,000 Less residual value: (25,000) Depreciable cost = \$150,000 Cost per mile (150,000/300,000 miles) = \$0.50 22,000 miles x \$0.50/mile = \$11,000
question
Which of the following intangible assets has an indefinite useful life? A. Patents B. Copyrights C. Franchises D. Goodwill
D. Goodwill
question
Bricktown Exchange purchases a copyright for \$50,000. The copyright has a remaining legal life of 25 years, but only an expected useful life of five years with no residual value. Assuming the company uses the straightâline method, what is the amortization expense for the first year? A. \$0 B. \$2,000 C. \$3,333 D. \$10,000