Question 1

Madison Company owned an asset that had cost $44,000.The company sold the asset for $16,000.Accumulated depreciation on the day of sale amounted to $32,000.Which of the following statements is true?

Accepted Answer

A)  A $16,000 cash inflow in the investing activities section of the cash flow statement.
B)  A $16,000 increase in total assets.
C)  A $4,000 gain in the investing activities section of the statement of cash flows.
D)  A $4,000 cash inflow in the financing activities section of the cash flow statement.E) A) and D)
F) All of the above

Question 2

Flagler Company purchased equipment that cost $90,000.The equipment had a useful life of 5 years and a $10,000 salvage value.Flagler uses the double-declining-balance method.Which of the following choices accurately reflects how the recognition of the first year's depreciation would affect the elements of the financial statements?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) All of the above
F) B) and D)

Question 3

Which of the following industries would most likely have the highest value for the ratio of sales to property,plant,and equipment?

Accepted Answer

A)  Airline
B)  Consumer product manufacturing company
C)  Electric utility
D)  Stock brokerageE) All of the above
F) A) and C)

Question 4

Good Company paid cash to purchase mineral rights on a large parcel of land.Which of the following choices accurately reflects how this event would affect the elements of the financial statements?

Accepted Answer

A)  Option A
B)  Option B
C)  Option C
D)  Option DE) B) and C)
F) None of the above

Question 5

Z Company purchased an asset for $24,000 on January 1,Year 1.The asset was expected to have a four-year life and a $4,000 salvage value.What is the amount of depreciation expense for Year 1 using the double-declining-balance method?

Accepted Answer

A)  $2,000
B)  $3,000
C)  $6,000
D)  $12,000E) B) and C)
F) All of the above

Question 6

On January 1,Year 2 Boothe Company paid $12,000 cash to extend the useful life of a machine.Which of the following general journal entries would be required to recognize this expenditure?

Accepted Answer

A)   
B)   
C)   
D)   E) All of the above
F) C) and D)

Question 7

[The following information applies to the questions displayed below.]

On January 1, Year 1, Jing Company purchased office equipment that cost $34,000 cash. The equipment was delivered under terms FOB shipping point, and transportation cost was $2,000. The equipment had a five-year useful life and a $12,000 expected salvage value.

-Assume that Jing Company earned $30,000 cash revenue and incurred $19,000 in cash expenses in Year 3.The company uses the straight-line method.The office equipment was sold on December 31,Year 3 for $16,000.What is the company's net income (loss) for Year 3?

Accepted Answer

A)  ($6,600) 
B)  $6,600
C)  $600
D)  $5,400E) All of the above
F) None of the above

Question 8

On January 1,Year 1,Friedman Company purchased a truck that cost $48,000.The truck had an expected useful life of 8 years and an $8,000 salvage value.Friedman uses the double-declining-balance method.What is the book value of the truck at the end of Year 1?

Accepted Answer

A)  $43,000
B)  $38,000
C)  $40,000
D)  $36,000E) C) and D)
F) A) and B)

Question 9

Goodwill may be recorded in which of the following circumstances?

Accepted Answer

A)  When the property,plant and equipment of a business increase in value
B)  When a business earns a very high net income
C)  When a business sells property for more than its book value
D)  When one business acquires another businessE) None of the above
F) C) and D)

Question 10

Emir Company purchased equipment that cost $110,000 cash on January 1,Year 1.The equipment had an expected useful life of six years and an estimated salvage value of $8,000.Emir depreciates its assets under the straight-line method.What are the amounts of depreciation expense during Year 3 and the accumulated depreciation at December 31,Year 3,respectively?

Accepted Answer

A)  $17,000 and $17,000
B)  $17,000 and $68,000
C)  $68,000 and $17,000
D)  $17,000 and $51,000E) A) and D)
F) C) and D)

Exam 8: Accounting for Long-Term Operational Assets

Correct Answer
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Which of the following industries would most likely have the highest value for the ratio of sales to property,plant,and equipment?

Correct Answer
verified

Correct Answer
verified

Good Company paid cash to purchase mineral rights on a large parcel of land.Which of the following choices accurately reflects how this event would affect the elements of the financial statements?

Correct Answer
verified

On January 1,Year 2 Boothe Company paid $12,000 cash to extend the useful life of a machine.Which of the following general journal entries would be required to recognize this expenditure?

Correct Answer
verified

Correct Answer
verified

Z Company purchased an asset for $24,000 on January 1,Year 1.The asset was expected to have a four-year life and a $4,000 salvage value.What is the amount of depreciation expense for Year 1 using the double-declining-balance method?

Correct Answer
verified

Madison Company owned an asset that had cost $44,000.The company sold the asset for $16,000.Accumulated depreciation on the day of sale amounted to $32,000.Which of the following statements is true?

Correct Answer
verified

Goodwill may be recorded in which of the following circumstances?

Correct Answer
verified

On January 1,Year 1,Friedman Company purchased a truck that cost $48,000.The truck had an expected useful life of 8 years and an $8,000 salvage value.Friedman uses the double-declining-balance method.What is the book value of the truck at the end of Year 1?

Correct Answer
verified

Exam 8: Accounting for Long-Term Operational Assets

Correct AnswerverifiedShow Answer

Which of the following industries would most likely have the highest value for the ratio of sales to property,plant,and equipment?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Good Company paid cash to purchase mineral rights on a large parcel of land.Which of the following choices accurately reflects how this event would affect the elements of the financial statements?

Correct AnswerverifiedShow Answer

On January 1,Year 2 Boothe Company paid $12,000 cash to extend the useful life of a machine.Which of the following general journal entries would be required to recognize this expenditure?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Z Company purchased an asset for $24,000 on January 1,Year 1.The asset was expected to have a four-year life and a $4,000 salvage value.What is the amount of depreciation expense for Year 1 using the double-declining-balance method?

Correct AnswerverifiedShow Answer

Madison Company owned an asset that had cost $44,000.The company sold the asset for $16,000.Accumulated depreciation on the day of sale amounted to $32,000.Which of the following statements is true?

Correct AnswerverifiedShow Answer

Goodwill may be recorded in which of the following circumstances?

Correct AnswerverifiedShow Answer

On January 1,Year 1,Friedman Company purchased a truck that cost $48,000.The truck had an expected useful life of 8 years and an $8,000 salvage value.Friedman uses the double-declining-balance method.What is the book value of the truck at the end of Year 1?

Correct AnswerverifiedShow 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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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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