ACCN 2010 Chapter 9 Quiz

ACCN 2010 Chapter 9 Quiz | 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

Your answer is incorrect.

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.

A company has the following assets:

Buildings and Equipment,                            

less accumulated depreciation of $5500000                      $24000000

Copyrights                          2200000

Patents                                15500000

Land                      17500000

Question 16

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.