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| 1 | |
A company purchased for cash a machine with a list price of $90,000. The machine was shipped FOB shipping point at a cost of $5,000. Installation and test runs of the machine cost $3,000. The recorded acquisition cost of the machine is which amount? |
| | A) | $98,000 |
| | B) | $128,000 |
| | C) | $90,000 |
| | D) | $93,000 |
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| 2 | |
Small, ordinary repairs made to keep a truck running over its useful life have been debited to the Vehicles account. As a result of this, which of the following occurred? |
| | A) | The balance in the Vehicles account was correctly stated. |
| | B) | The balance in the Vehicles account was overstated. |
| | C) | The expenses for the period were overstated. |
| | D) | The net income for the period was understated. |
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| 3 | |
What is the annual straight-line depreciation for an asset that cost $34,600, has an estimated service life of 8 years, and an estimated salvage value of $1,400? |
| | A) | $4,150 |
| | B) | $1,450 |
| | C) | $4,325 |
| | D) | $4,500 |
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| 4 | |
An asset cost $50,000, has an estimated salvage value of $1,500, and an estimated useful life of 8 years. What is the double-declining-balance depreciation rate? |
| | A) | 20.0% |
| | B) | 25.0% |
| | C) | 16.0% |
| | D) | 32.5% |
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| 5 | |
An asset having a four-year service life and a salvage value of $5,000 was acquired for $45,000 cash on June 20. Ignore the half-year convention and calculate the depreciation expense at the end of the first year, December 31? |
| | A) | $10,000, under the straight-line method |
| | B) | $22,500, under the double-declining-balance method |
| | C) | $7,000, under the straight-line method |
| | D) | $11,250, under the double-declining-balance method |
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| 6 | |
Publicly traded companies can use a depreciation method that does not conform to generally accepted accounting principles but is based on a declining-balance method. What is the name of this accelerated depreciation method? |
| | A) | Asset Cost Recovery Statement |
| | B) | Asset Cost Recognition System |
| | C) | Modified Accelerated Cost Recovery System |
| | D) | Accelerated Cost Recovery System |
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| 7 | |
On June 28, 2015, a business sold for $1,500 a plant asset that cost $5,000. The asset had a 5-year useful life, no salvage value, and had been used by the business since January 1, 2008. Straight-line depreciation was used. The fiscal year ends on December 31. What was the result of selling the plant asset? |
| | A) | No gain or loss on the disposal of plant assets |
| | B) | A $1,000 gain on the disposal of plant assets |
| | C) | A $500 loss on the disposal of plant assets |
| | D) | A $500 unrecognized gain on the sale of a plant asset. |
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| 8 | |
Your company currently is generating normal earnings that are equal to a 12% return on net identifiable assets of $450,000. A comparable company is generating normal earnings that are equal to 10% return on net identifiable assets of $450,000. What is the estimated goodwill of your company, when compared to the other company? |
| | A) | $90,000 |
| | B) | $45,000 |
| | C) | $9,000 |
| | D) | $15,000 |
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| 9 | |
The Baker Mining Company acquired an iron ore deposit for $2,000,000. The company's geologist estimated the deposit to contain 1,500,000 tons of iron ore. At the end of the first year, 60,000 tons had been extracted. The end-of-year journal entry to record the depletion of the iron ore would include which of the following? |
| | A) | A credit to Iron Ore Inventory of $45,000 |
| | B) | A credit to Accumulated Depletion of $80,000 |
| | C) | A debit to Iron Ore Inventory of $50,000 |
| | D) | None the above, until all of the ore is extracted |
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| 10 | |
Which of the following are investing activities? |
| | A) | Selling a plant asset |
| | B) | Exchanging an old asset and cash for a new plant asset |
| | C) | Depreciating or amortizing an asset |
| | D) | Both (A) and (B) |
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