Question 1

The intangible asset most frequently reported by Canadian businesses is:

Accepted Answer

A)  goodwill.
B)  trademarks.
C)  patents.
D)  licensing rights.E) B) and D)
F) B) and C)

Question 2

Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

Accepted Answer

A)  has a greater amount invested in fixed assets than a company with a lower fixed asset turnover ratio.
B)  has less invested in fixed assets than a company with a lower fixed asset turnover ratio.
C)  generates less sales revenue than a company with a lower fixed asset turnover ratio.
D)  makes better use of its fixed assets to generate revenues than a company with a lower fixed asset turnover ratio.E) None of the above
F) A) and B)

Question 3

Depreciation and maintenance are expenses associated with the use of long-lived assets.

Accepted Answer

A) True 
 B)False

Question 4

Expenditures on self-created intangible assets are accounted for in the same way as expenditures on self-constructed tangible assets.

Accepted Answer

A) True 
 B)False

Question 5

A loss on disposal of an asset is reported:

Accepted Answer

A)  in the Other Revenues section of the income statement.
B)  in the Other Expenses section of the income statement.
C)  as a direct increase to the asset account on the balance sheet.
D)  as a direct decrease to the asset account on the balance sheet.E) B) and C)
F) A) and D)

Question 6

All things being equal,if average net fixed assets decrease,then the fixed asset turnover ratio will increase.

Accepted Answer

A) True 
 B)False

Question 7

When a company determines that estimated future cash flows from an asset are different from the book value of the asset,it records:

Accepted Answer

A)  an asset impairment gain,if the value of the cash flows exceeds the asset's book value.
B)  an asset impairment loss,if the value of the cash flows exceeds the asset's book value.
C)  an asset impairment gain,if the asset's book value exceeds the value of the cash flows.
D)  an asset impairment loss,if the asset's book value exceeds the value of the cash flows.E) All of the above
F) B) and D)

Question 8

The declining-balance method applies a depreciation rate to the book value of the asset at the beginning of each accounting period.

Accepted Answer

A) True 
 B)False

Question 9

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the income statement.

Accepted Answer

A) True 
 B)False

Question 10

If a fully depreciated asset with no residual value is retired without receiving any cash on retirement:

Accepted Answer

A)  a gain on disposal will be recorded.
B)  depreciation must be recorded as though the asset were still on the books.
C)  a loss on disposal will be recorded.
D)  no gain or loss on disposal will be recorded.E) None of the above
F) All of the above

Question 11

The amount of depreciation expense over the life of an asset will be the same in all of the different methods of depreciation.

Accepted Answer

A) True 
 B)False

Question 12

The useful life of an asset is always measured in years.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following methods would be a typical choice for assets that are most productive when they are new but lose their utility quickly as they get older?

Accepted Answer

A)  Straight line method
B)  Double declining method
C)  Units of production method
D)  DepletionE) A) and B)
F) A) and C)

Question 14

The book or carrying value of an asset is:

Accepted Answer

A)  its acquisition cost less the accumulated depreciation from the acquisition date to the balance sheet date.
B)  its acquisition cost plus accumulated depreciation from the acquisition date to the balance sheet date.
C)  the amount that could be obtained for the asset on the balance sheet date if it were sold.
D)  the annual cost of carrying the asset in inventory.E) C) and D)
F) A) and B)

Question 15

If the double-declining balance method were used to depreciate a building that has a 10-year useful life and a residual value equal to 10% of the building's original cost,what depreciation rate would be used?

Accepted Answer

A)  9%
B)  10%
C)  18%
D)  20%E) All of the above
F) B) and C)

Question 16

All of the following costs should be capitalized when land is acquired,except,

Accepted Answer

A)  Purchase cost.
B)  Sales taxes.
C)  Survey fees.
D)  Legal fees.E) All of the above
F) B) and C)

Question 17

Shaggy Limited purchased a new van on January 1,2018.The van cost $20,000.It has an estimated life of five years and the estimated residual value is $5,000.Shaggy uses the double-declining-balance method to compute depreciation. What is the depreciation expense for 2018?

Accepted Answer

A)  $4,000.
B)  $3,000.
C)  $6,000.
D)  $8,000. E) All of the above
F) B) and C)

Question 18

Which of the following statements is true when the straight-line method is used to compute depreciation?

Accepted Answer

A)  The carrying value of an asset is a constant amount during the asset's useful life.
B)  Accumulated depreciation is a constant amount during the asset's estimated useful life.
C)  Depreciation expense per period is the depreciable cost divided by the number of periods in the asset's useful life.
D)  None of the answers are acceptable.E) B) and D)
F) A) and B)

Question 19

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

Accepted Answer

A) True 
 B)False

Question 20

A real estate management company buys an apartment complex for $4.8 million.An appraiser values the land at $1.1 million,the building at $3.4 million,and the equipment at $0.3 million.In addition,the company pays a 5% commission to a broker for arranging the sale.Which of the following statements is true?

Accepted Answer

A)  The company would record $3.57 million as the acquisition cost of the building.
B)  The company would record $1.1 million as the acquisition cost of the land.
C)  The company would record $3.7 million as the acquisition cost of the building.
D)  The company would record $0.24 million as an expense and $4.8 million as an asset.E) A) and B)
F) A) and C)

Exam 9: Long-Lived Tangible and Intangible Assets

Shaggy Limited purchased a new van on January 1,2018.The van cost $20,000.It has an estimated life of five years and the estimated residual value is $5,000.Shaggy uses the double-declining-balance method to compute depreciation. What is the depreciation expense for 2018?

Correct Answer
verified

All things being equal,if average net fixed assets decrease,then the fixed asset turnover ratio will increase.

Correct Answer
verified

Depreciation and maintenance are expenses associated with the use of long-lived assets.

Correct Answer
verified

The useful life of an asset is always measured in years.

Correct Answer
verified

The amount of depreciation expense over the life of an asset will be the same in all of the different methods of depreciation.

Correct Answer
verified

The declining-balance method applies a depreciation rate to the book value of the asset at the beginning of each accounting period.

Correct Answer
verified

Which of the following statements is true when the straight-line method is used to compute depreciation?

Correct Answer
verified

Which of the following methods would be a typical choice for assets that are most productive when they are new but lose their utility quickly as they get older?

Correct Answer
verified

Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

Correct Answer
verified

Correct Answer
verified

The book or carrying value of an asset is:

Correct Answer
verified

Expenditures on self-created intangible assets are accounted for in the same way as expenditures on self-constructed tangible assets.

Correct Answer
verified

If a fully depreciated asset with no residual value is retired without receiving any cash on retirement:

Correct Answer
verified

A loss on disposal of an asset is reported:

Correct Answer
verified

The intangible asset most frequently reported by Canadian businesses is:

Correct Answer
verified

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

Correct Answer
verified

All of the following costs should be capitalized when land is acquired,except,

Correct Answer
verified

When a company determines that estimated future cash flows from an asset are different from the book value of the asset,it records:

Correct Answer
verified

If the double-declining balance method were used to depreciate a building that has a 10-year useful life and a residual value equal to 10% of the building's original cost,what depreciation rate would be used?

Correct Answer
verified

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the income statement.

Correct Answer
verified

Exam 9: Long-Lived Tangible and Intangible Assets

Shaggy Limited purchased a new van on January 1,2018.The van cost $20,000.It has an estimated life of five years and the estimated residual value is $5,000.Shaggy uses the double-declining-balance method to compute depreciation. What is the depreciation expense for 2018?

Correct AnswerverifiedShow Answer

All things being equal,if average net fixed assets decrease,then the fixed asset turnover ratio will increase.

Correct AnswerverifiedShow Answer

Depreciation and maintenance are expenses associated with the use of long-lived assets.

Correct AnswerverifiedShow Answer

The useful life of an asset is always measured in years.

Correct AnswerverifiedShow Answer

The amount of depreciation expense over the life of an asset will be the same in all of the different methods of depreciation.

Correct AnswerverifiedShow Answer

The declining-balance method applies a depreciation rate to the book value of the asset at the beginning of each accounting period.

Correct AnswerverifiedShow Answer

Which of the following statements is true when the straight-line method is used to compute depreciation?

Correct AnswerverifiedShow Answer

Which of the following methods would be a typical choice for assets that are most productive when they are new but lose their utility quickly as they get older?

Correct AnswerverifiedShow Answer

Assuming two companies use the same accounting methods,other things being equal,the company with a higher fixed asset turnover ratio:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The book or carrying value of an asset is:

Correct AnswerverifiedShow Answer

Expenditures on self-created intangible assets are accounted for in the same way as expenditures on self-constructed tangible assets.

Correct AnswerverifiedShow Answer

If a fully depreciated asset with no residual value is retired without receiving any cash on retirement:

Correct AnswerverifiedShow Answer

A loss on disposal of an asset is reported:

Correct AnswerverifiedShow Answer

The intangible asset most frequently reported by Canadian businesses is:

Correct AnswerverifiedShow Answer

Extraordinary repairs,replacements,and additions are added to the appropriate asset accounts rather than being recorded as expenses.

Correct AnswerverifiedShow Answer

All of the following costs should be capitalized when land is acquired,except,

Correct AnswerverifiedShow Answer

When a company determines that estimated future cash flows from an asset are different from the book value of the asset,it records:

Correct AnswerverifiedShow Answer

If the double-declining balance method were used to depreciate a building that has a 10-year useful life and a residual value equal to 10% of the building's original cost,what depreciation rate would be used?

Correct AnswerverifiedShow Answer

The gain or loss resulting from the disposal of a long-lived asset appears below the "operating income" line on the income statement.

Correct AnswerverifiedShow Answer

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