ACCN 2010 Quiz 9

ACCN 2010 Quiz 9 | Tulane University

Question 1

Which of the following methods of computing depreciation is production based?

·         Straight-line.

·         Declining-balance.

·         Units-of-activity.  

·         None of these answer choices are correct.

 

Question 2

The depreciation method that applies a constant percentage to depreciable cost in calculating depreciation is

·         straight-line.

·         units-of-activity.

·         sum-of-year's-digits.

·         None of these answer choices are correct.

 

Question 3

Ayayai Corp. bought equipment on January 1, 2022. The equipment cost $470000 and had an expected salvage value of $70000. The life of the equipment was estimated to be 6 years. The depreciable cost of the equipment is

·         $66667.

·         $70000.

·         $400000.  

·         $470000.

 

Question 4

Flint Corporation bought equipment on January 1, 2022. The equipment cost $340000 and had an expected salvage value of $25000. The life of the equipment was estimated to be 5 years. The company uses the straight-line method of depreciation. The book value of the equipment at the beginning of the third year would be

·         $126000.

·         $214000.  

·         $315000.

·         $340000.

 

Question 5

Wildhorse Co. purchased machinery with a list price of $106000. They were given a 9% discount by the manufacturer. They paid $600 for shipping and sales tax of $4100. Wildhorse estimates that the machinery will have a useful life of 10 years and a residual value of $25000. If Wildhorse uses straight-line depreciation, annual depreciation will be

·         $7146.

·         $7616.

·         $7574.

·         $10116.

 

Question 6

Machinery was purchased for $500000 on January 1, 2022. Freight charges amounted to $13000 and there was a cost of $32000 for building a foundation and installing the machinery. It is estimated that the machinery will have a $50000 salvage value at the end of its 4-year useful life. What is the amount of accumulated depreciation at December 31, 2023 if the straight-line method of depreciation is used?

·         $123750.

·         $227500.

·         $113750.

·         $247500.

 

Question 7

Expenditures that add to the utility of plant assets for more than one accounting period are

·         capital expenditures.  

·         revenue expenditures.

·         current expenditures.

·         committed expenditures.

 

Question 8

A gain or loss on disposal of a plant asset is determined by comparing the

·         book value of the asset with the asset's original cost.

·         replacement cost of the asset with the asset's original cost.

·         book value of the asset with the proceeds received from its sale.

·         original cost of the asset with the proceeds received from its sale.

 

Question 9

A company sells a plant asset that originally cost $350000 for $95000 on December 31, 2022. The accumulated depreciation account had a balance of $140000 after the current year's depreciation of $35000 had been recorded. The company should recognize a

·         $255000 loss on disposal.

·         $80000 loss on disposal.

·         $115000 loss on disposal.  

·         $115000 gain on disposal.

 

Question 10

Equipment that cost $93000 and on which $46000 of accumulated depreciation has been recorded was disposed of for $57000 cash. The entry to record this event would include a

·         gain of $10000.  

·         loss of $10000.

·         credit to Accumulated Depreciation for $9000.

·         credit to the Equipment account for $9000.

 

Question 11

If disposal of a plant asset occurs during the year, depreciation is

·         not recorded for the year.

·         recorded for the fraction of the year to the date of the disposal.

·         not recorded if the asset is scrapped.

·         recorded for the whole year.

 

Question 12

A loss on disposal of a plant asset is reported in the financial statements

·         as a direct increase to the capital account on the balance sheet.

·         as a direct decrease to the capital account on the balance sheet.

·         in the Other Expenses and Losses section of the income statement.  

·         in the Other Revenues and Gains section of the income statement.

 

Question 13

The following information is provided for Wildhorse Company and Blossom Corporation.

(in $ millions)     Wildhorse Company                       Blossom Corporation

Net income 2022                $150                                       $385    

Net sales 2022   1775                                       4770      

Total assets 12/31/20     1025                                       2000      

Total assets 12/31/21     1145                                       3110      

Total assets 12/31/22     1185                                       4000      

 

What is Wildhorse's return on assets for 2022? (Round answer to 1 decimal place, e.g. 15.2.)

·         129.0%

·         13.1%

·         12.9%

·         12.7%

 

Question 14

The following information is provided for Blossom Company and Ayayai Corporation.

(in $ millions)     Blossom Company                           Ayayai Corporation

Net income 2022                $120                                       $440    

Net sales 2022   1375                                       4510      

Total assets 12/31/20     1090                                       2300      

Total assets 12/31/21     1170                                       3060      

Total assets 12/31/22     1175                                       4000      

 

What is Blossom's asset turnover for 2022? (Round answer to 2 decimal places, e.g. 15.20.)

·         3.13 times

·         0.32 times

·         1.17 times  

·         0.58 times

 

Question 15

Plant assets are ordinarily presented in the balance sheet

·         at replacement costs.

·         in a separate section along with intangible assets.

·         at cost less accumulated depreciation.  

·         at current market values.

 

Question 16

A company has the following assets:

Buildings and Equipment,                            

    less accumulated depreciation of $5500000                      $24000000

Copyrights                          2200000

Patents                                15500000

Land                      17500000

 

The total amount reported under Property, Plant, and Equipment would be

·         $59200000.

·         $41500000.

·         $40500000.

·         $43700000.

 

Question 17

A factory machine was purchased for $162000 on January 1, 2022. It was estimated that it would have a $24000 salvage value at the end of its 5-year useful life. It was also estimated that the machine would be run 30000 hours in the 5 years. If the actual number of machine hours ran in 2022 was 3000 hours and the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2022 would be

·         $27600.

·         $13800.

·         $16200.

·         $32400.

 

Question 18

A company purchased land for $450000 cash. The real estate brokers' commission was $25000 and $45000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land is

·         $495000.

·         $475000.

·         $450000.

·         $520000.

 

Question 19

Which of the following assets does not decline in service potential over the course of its useful life?

·         Equipment

·         Fixtures

·         Land  

·         Furnishings

 

Question 20

Which one of the following items is not a consideration when recording periodic depreciation expense on plant assets?

·         Estimated useful life.

·         Cost.

·         Salvage value.

·         Cash needed to replace the plant asset.