Chapter 10 Practice Materials.docx

1、Chapter 10 Practice MaterialsChapter 10Fixed Assets and Intangible AssetsMULTIPLE CHOICE 1. A characteristic of a fixed asset is that it is a.intangibleb.used in the operations of a businessc.held for sale in the ordinary course of the businessd.a long term investmentANS: B DIF: Easy OBJ: 10-01NAT:

2、AACSB Analytic | AICPA FN-Measurement 2. Land acquired so it can be resold in the future is listed in the balance sheet as a(n) a.fixed assetb.current assetc.investmentd.intangible assetANS: C DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 3. Which of the following should be included

3、 in the acquisition cost of a piece of equipment?a.transportation costsb.installation costsc.testing costs prior to placing the equipment into productiond.all are correctANS: D DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 4. Which of the following is included in the cost of constru

4、cting a building?a.insurance costs during constructionb.cost of paving parking lotc.cost of repairing vandalism damage during constructiond.cost of removing the demolished building existing on the land when it was purchasedANS: A DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 5. Whic

5、h of the following is included in the cost of land?a.cost of paving a parking lotb.brokerage commissionc.outdoor parking lot lighting attached to the landd.fences on the landANS: B DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 6. Accumulated Depreciation a.is used to show the amount

6、 of cost expiration of intangiblesb.is the same as Depreciation Expensec.is a contra asset accountd.is used to show the amount of cost expiration of natural resourcesANS: C DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 7. A building with an appraisal value of $137,000 is made availa

7、ble at an offer price of $142,000. The purchaser acquires the property for $30,000 in cash, a 90-day note payable for $40,000, and a mortgage amounting to $60,000. The cost basis recorded in the buyers accounting records to recognize this purchase is a.$137,000b.$142,000c.$130,000d.$100,000ANS: C DI

8、F: Moderate OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 8. A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000, installation costs of $5,000, and special acquisition fees of $2,000, would have a cost basis of a.$92,000b.$91,000c.$87,000d.$86,000ANS: A DIF:

9、Moderate OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 9. A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $6,000, and special acquisition fees of $2,000, would have a cost basis of a.$ 96,000b.$108,000c.$102,000d.$110,000ANS: D DIF: M

10、oderate OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 10. Expenditures that add to the utility of fixed assets for more than one accounting period are mitted expendituresb.revenue expendituresc.current expendituresd.capital expendituresANS: D DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN

11、-Measurement 11. A capital expenditure results in a debit to a.an expense accountb.a capital accountc.a liability accountd.an asset accountANS: D DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 12. Which of the following below is an example of a capital expenditure?a.cleaning the carp

12、et in the front roomb.tune-up for a company truckc.replacing an engine in a company card.replacing all burned-out light bulbs in the factory ANS: C DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 13. In a lease contract, the party who legally owns the asset is the a.lesseeb.lessorc.op

13、eratord.bankerANS: B DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 14. All leases are classified as either a.capital leases or long-term leasesb.capital leases or operating leasesc.operating leases or current leasesd.long-term leases or current leasesANS: B DIF: Easy OBJ: 10-01NAT:

14、AACSB Analytic | AICPA FN-Measurement 15. The journal entry for recording an operating lease payment would a.be a memo entry onlyb.debit the fixed asset and credit Cashc.debit an expense and credit Cashd.debit a liability and credit CashANS: C DIF: Easy OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measu

15、rement 16. When determining whether to record an asset as a fixed asset, what two criteria must be met?a.Must be an investment and must be long lived.b.Must be long lived and must use the asset in a productive manner.c.Must be long lived and must be a tangible asset.d.Must be a tangible asset and mu

16、st be an investment.ANS: B DIF: Moderate OBJ: 10-01NAT: AACSB Analytic | AICPA FN-Measurement 17. Factors contributing to a decline in the usefulness of a fixed asset may be divided into the following two categories a.salvage and functionalb.physical and functionalc.residual and salvaged.functional

17、and residualANS: B DIF: Easy OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 18. A fixed assets estimated value at the time it is to be retired from service is called a.book valueb.residual valuec.market valued.carrying valueANS: B DIF: Easy OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement

18、19. All of the following below are needed for the calculation of depreciation except a.costb.residual valuec.estimated lifed.book valueANS: D DIF: Easy OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 20. The method of determining depreciation that yields successive reductions in the periodic de

19、preciation charge over the estimated life of the asset is a.units-of-productionb.declining-balancec.straight-lined.time-valuationANS: B DIF: Moderate OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 21. When the amount of use of a fixed asset varies from year to year, the method of determining d

20、epreciation expense that best matches allocation of cost with revenue is a.declining-balanceb.straight-linec.units-of-productiond.MACRSANS: C DIF: Moderate OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 22. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estim

21、ated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?a.$8,000b.$20,000c.$12,000d.$21,667ANS: B DIF: Difficult OBJ: 10-02NAT: AACSB Analytic | AICPA F

22、N-Measurement 23. Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an estimated life of 5 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300

23、hours?a.$30,000b.$32,500c.$34,000d.$40,000ANS: A DIF: Difficult OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 24. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full

24、 year, using the double declining-balance method ?a.$15,000b.$30,000c.$16,250d.$32,500ANS: C DIF: Difficult OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 25. The most widely used depreciation method is a.straight-lineb.sum-of-the-years-digitsc.declining-balanced.units-of-productionANS: A DIF:

25、 Easy OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 26. Equipment with a cost of $80,000, an estimated residual value of $5,000, and an estimated life of 15 years was depreciated by the straight-line method for 5 years. Due to obsolescence, it was determined that the useful life should be sho

26、rtened by 5 years and the residual value changed to zero. The depreciation expense for the current and future years is a.$5,500b.$11,000c.$10,000d.$5,000ANS: B DIF: Difficult OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 27. The depreciation method that does not use residual value in calculat

27、ing the first years depreciation expense is a.straight-lineb.units-of-productionc.double-declining-balanced.none of the aboveANS: C DIF: Easy OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 28. If a fixed asset, such as a computer, were purchased on January 1st for $1,950 with an estimated life

28、 of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is:(Note: EOM indicates the last day of each month.)a.EOM Depreciation Expense 50.00 Accumulated Depreciation 50.00b.EOM Depreciation Expense 600.00 Accumulated Depreciation 60

29、0.00c.EOM Accumulated Depreciation 600.00 Depreciation Expense 600.00d.EOM Accumulated Depreciation 50.00 Depreciation Expense 50.00ANS: A DIF: Easy OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 29. The proper journal entry to purchase a computer on account to be utilized within the business

30、would be:a.Jan 2 Office Supplies 1,250.00 Accounts Payable 1,250.00b.Jan 2 Office Equipment 1,250.00 Accounts Payable 1,250.00c.Jan 2 Office Supplies 1,250.00 Accounts Receivable 1,250.00d.Jan 2 Office Equipment 1,250.00 Accounts Receivable 1,250.00ANS: B DIF: Easy OBJ: 10-02NAT: AACSB Analytic | AICPA FN-Measurement 30. Residual value is also known as all of the following excepta.scrap valueb.trade in valuec.salvage book valueANS: D DIF: Easy OBJ: 10-02NAT: AACSB Analytic