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A loss on disposal of a capital asset is reported in the financial statements 1. On July 1, 2001 Lars Kennels sells equipment for $22,000. The equipment originally cost $60,000, had an estimated 5-year life and an expected residual value of $10,000. The accumulated amortization account had a balance of $35,000 on January 1, 2001, using the straight-line method. The gain or loss on disposal is a. $3,000 gain. b. $2,000 loss. c. $3, ...

Other / Other 20 Apr 2016

Use of straight-line amortization in comparison to the doubledeclining-balance method 1. The net book value of a capital asset is the difference between the a. replacement cost of the asset and its historical cost. b. cost of the asset and the amount of amortization expense for the year. c. cost of the asset and the accumulated amortization to date. d. proceeds received from the sale of the asset and its original cost. 2. I ...

Other / Other 20 Apr 2016

The calculation of amortization using the declining-balance method 1. Vickers Company uses the units-of-activity method in calculating amortization. A new plant asset is purchased for $18,000 that will produce an estimated 100,000 units over its useful life. Estimated residual value at the end of its useful life is $2,000. What is the amortization cost per unit? a. $1.60. b. $1.80. c. $ .16. d. $ .18. 2. Units of activity ...

Other / Other 20 Apr 2016

Land improvements are generally charged to the Land account TRUE OR FALSE: 1. Land improvements are generally charged to the Land account . 2. Once cost is established for a capital asset, it becomes the basis of accounting for the asset unless the asset appreciates in value, in which case, market value becomes the basis for accountability. 3. The net book value of a capital asset is always equal to its fair market value. 4. ...

Other / Other 20 Apr 2016

Copyrights give the owners an exclusive right to reproduce TRUE OR FALSE: 1. The cost of a patent should be amortized over its 20-year legal life or useful life, whichever is shorter. 2. Copyrights give the owners an exclusive right to reproduce and sell an artistic work. 3. If an acquired franchise or licence is for an indefinite time period, then the cost of the asset should not be amortized. 4. When an entire business is p ...

Other / Other 20 Apr 2016

The four subdivisions for property, plant, and equipment assets are 1. The four subdivisions for property, plant, and equipment assets are a. land, land improvements, buildings, and equipment. b. intangibles, land, buildings, and equipment. c. furnishings and fixtures, land, buildings, and equipment. d. property, plant, equipment, and land. 2. The cost of land does not include a. costs to clear the land. b. annual pro ...

Other / Other 20 Apr 2016

Amortization expense each year using the straight-line method 1. Equipment was purchased for $15,000. Freight charges amounted to $700, and there was a cost of $2,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $3,000 residual value at the end of its 5-year useful life. Amortization expense each year using the straight-line method will be a. $3,540. b. $2,940. c. $2,460. ...

Other / Other 20 Apr 2016

Which of the following is not an intangible asset that is reported on the balance sheet 1. Research costs a. are classified as intangible assets. b. must be expensed when incurred under generally accepted accounting principles. c. should be included in the cost of the patent they relate to. d. are capitalized and then amortized over a period not to exceed 40 years. 2. A computer company has $3,000,000 in development costs r ...

Other / Other 20 Apr 2016

Which of the following is an intangible asset that results from the purchase of an asset 1. Goodwill can be recorded a. when customers keep returning because they are satisfied with the company's products. b. when the company acquires a good location for its business. c. when the company has exceptional management. d. only when there is an exchange transaction involving the purchase of an entire business. 2. On July 1, 2001 ...

Other / Other 20 Apr 2016

Future removal and site restoration costs should be estimated in advance TRUE OR FALSE: 1. Natural resources are often called wasting assets because it is difficult to use the assets in an efficient manner. 2. Future removal and site restoration costs should be estimated in advance and allocated over the useful life of a natural resource. 3. Straight-line amortization will result in a higher net income than the doubledeclining- bal ...

Other / Other 20 Apr 2016