Question 1

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right on its balance sheet?

Accepted Answer

A)  Tangible asset
B)  Intellectual property asset
C)  Intangible asset
D)  Nonreported assetE) C) and D)
F) B) and C)

Question 2

The Gulp convenience store chain buys new soda machines for $450,000 and pays $50,000 for installation.One-half of the total cost is paid in cash; the other half is financed.How should the company record this transaction?

Accepted Answer

A)  Debit cash for $250,000,debit notes payable for $250,000,and credit equipment for $500,000.
B)  Debit equipment for $500,000,credit cash for $250,000,and credit notes payable for $250,000.
C)  Debit cash for $250,000,debit notes payable for $250,000 credit equipment for $450,000,and credit expenses for $50,000.
D)  Debit equipment for $450,000,debit expenses for $50,000,credit cash for $250,000,and credit notes payable for $250,000.E) A) and D)
F) A) and C)

Question 3

A company sells a long-lived asset that originally cost $200,000 for $50,000 on December 31,2009.The accumulated amortization account had a balance of $110,000 after the current year's depreciation of $45,000 had been recorded.The company should recognize a:

Accepted Answer

A)  $100,000 loss on disposal.
B)  $40,000 gain on disposal.
C)  $40,000 loss on disposal.
D)  $25,000 loss on disposal.E) B) and C)
F) A) and B)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

A piece of equipment was acquired on January 1,2009,at a cost of $22,000,with an estimated residual value of $2,000 and an estimated useful life of four years.The company uses the double-declining-balance method.What is its book value at December 31,2010?

Accepted Answer

A)  $5,500
B)  $10,000
C)  $11,000
D)  $12,000E) None of the above
F) C) and D)

Question 6

Intangibles with unlimited or indefinite lives (trademarks and goodwill)are amortized using straight line amortization method.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 7

Identify the category to which each of the following assets belongs.
T - tangible long-lived asset
I - intangible long-lived asset
N - not a long-lived asset
______ Warehouse
______ Licensing rights
______ Supplies
______ Patents
______ Production equipment
______ Goodwill
______ Land
______ Office computer

Accepted Answer

The answer of Identify the category to which each of...

Question 8

Intangible assets are not adjusted for asset impairment losses.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 9

The intangible asset most frequently reported by Canadian businesses is:

Accepted Answer

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

Question 10

Paul Hauling has a fleet of 10 large trucks that cost a total of $1,410,000.The fleet is expected to provide 1,000,000 miles of transportation during an estimated 10-year life,and be sold for 10% of the original cost at the end of that time.If the fleet traveled 125,000 miles in the current twelve-month period,what would be the amortization expense under the straight-line (SL) and units-of-production (UoP) methods?

Accepted Answer

A)  SL = $158,625 & UoP = $141,000
B)  SL = $141,000 & UoP = $158,625
C)  SL = $126,900 & UoP = $176,250
D)  SL = $126,900 & UoP = $158,625E) None of the above
F) A) and B)

Question 11

Your company buys a computer system from IBM for $3 million and pays IBM $200,000 to install the computer system.Your company should record:

Accepted Answer

A)  $3 million in equipment and $200,000 in expenses.
B)  $3.2 million in expenses.
C)  $2.8 million in equipment and the rest in expenses.
D)  $3.2 million in equipment.E) A) and C)
F) All of the above

Question 12

A declining fixed asset turnover ratio can actually be caused by acquiring additional assets in the current period in preparation for greater future sales.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 13

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

Accepted Answer

A)  debit amortization expense for $62,000 and credit accumulated amortization for $62,000.
B)  debit intangible assets and credit accumulated amortization for an amount equal to 20% of book value.
C)  debit amortization expense for $31,000 and credit intangible assets for $31,000.
D)  report no amortization expense because patents are not subject to amortization.E) B) and D)
F) A) and B)

Question 14

Under what circumstance should a company record an asset impairment loss?

Accepted Answer

A)  When residual value is greater than the repairs and maintenance expenses needed to keep the asset.
B)  When net book value is less than the residual value of the asset.
C)  When accumulated amortization equals the purchase cost of the asset.
D)  When net book value is greater than expected future cash flows for the asset.E) A) and C)
F) A) and D)

Question 15

,the company sold the vehicle for $6,000 and reported a loss on disposal of $3,480.What method of amortization did the company use?

Accepted Answer

A)  Units-of-production method
B)  Double-declining-balance method
C)  Straight-line method
D)  None of the aboveE) B) and C)
F) A) and D)

Question 16

What would be the amount of amortization expense in year 2 using the double-declining-balance method of amortization?

Accepted Answer

A)  $6,500.00
B)  $5,900.00
C)  $10,400.00
D)  $6,555.55E) A) and B)
F) A) and C)

Question 17

The purpose of amortization is to correctly value assets.
BT: Comprehension

Accepted Answer

A) True 
 B)False

Question 18

A company buys a piece of equipment for $48,000.The equipment has a useful life of ten years.Using the double-declining-balance method,the company's amortization expense in the first year would be:

Accepted Answer

A)  $9,600.
B)  $12,000.
C)  $4,800.
D)  $24,000.E) All of the above
F) C) and D)

Question 19

A trucking company sold its fleet of trucks for $55,000.The trucks had originally cost $1,410,000 and had accumulated amortization of $1,269,000 through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

Accepted Answer

A)  Gain of $86,000.
B)  Gain of $55,000.
C)  Loss of $55,000.
D)  Loss of $86,000.E) A) and B)
F) B) and D)

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 9: Long-Lived Tangible and Intangible Assets

,the company sold the vehicle for $6,000 and reported a loss on disposal of $3,480.What method of amortization did the company use?

Correct Answer
verified

The purpose of amortization is to correctly value assets. BT: Comprehension

Correct Answer
verified

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

Correct Answer
verified

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right on its balance sheet?

Correct Answer
verified

A declining fixed asset turnover ratio can actually be caused by acquiring additional assets in the current period in preparation for greater future sales. BT: Comprehension

Correct Answer
verified

A trucking company sold its fleet of trucks for $55,000.The trucks had originally cost $1,410,000 and had accumulated amortization of $1,269,000 through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

Correct Answer
verified

Under what circumstance should a company record an asset impairment loss?

Correct Answer
verified

The intangible asset most frequently reported by Canadian businesses is:

Correct Answer
verified

Intangible assets are not adjusted for asset impairment losses. BT: Comprehension

Correct Answer
verified

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

Correct Answer
verified

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

Correct Answer
verified

Correct Answer
verified

Your company buys a computer system from IBM for $3 million and pays IBM $200,000 to install the computer system.Your company should record:

Correct Answer
verified

Identify the category to which each of the following assets belongs. T - tangible long-lived asset I - intangible long-lived asset N - not a long-lived asset Warehouse Licensing rights Supplies Patents Production equipment Goodwill Land Office computer

Correct Answer
verified

A piece of equipment was acquired on January 1,2009,at a cost of $22,000,with an estimated residual value of $2,000 and an estimated useful life of four years.The company uses the double-declining-balance method.What is its book value at December 31,2010?

Correct Answer
verified

What would be the amount of amortization expense in year 2 using the double-declining-balance method of amortization?

Correct Answer
verified

Intangibles with unlimited or indefinite lives (trademarks and goodwill)are amortized using straight line amortization method. BT: Comprehension

Correct Answer
verified

A company buys a piece of equipment for $48,000.The equipment has a useful life of ten years.Using the double-declining-balance method,the company's amortization expense in the first year would be:

Correct Answer
verified

The Gulp convenience store chain buys new soda machines for $450,000 and pays $50,000 for installation.One-half of the total cost is paid in cash; the other half is financed.How should the company record this transaction?

Correct Answer
verified

A company sells a long-lived asset that originally cost $200,000 for $50,000 on December 31,2009.The accumulated amortization account had a balance of $110,000 after the current year's depreciation of $45,000 had been recorded.The company should recognize a:

Correct Answer
verified

Exam 9: Long-Lived Tangible and Intangible Assets

,the company sold the vehicle for $6,000 and reported a loss on disposal of $3,480.What method of amortization did the company use?

Correct AnswerverifiedShow Answer

The purpose of amortization is to correctly value assets. BT: Comprehension

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The MegaHit Film Studio has a licensing right (or agreement) to distribute films produced by the Artsy Film Company.How would the MegaHit Company classify this licensing right on its balance sheet?

Correct AnswerverifiedShow Answer

A declining fixed asset turnover ratio can actually be caused by acquiring additional assets in the current period in preparation for greater future sales. BT: Comprehension

Correct AnswerverifiedShow Answer

A trucking company sold its fleet of trucks for $55,000.The trucks had originally cost $1,410,000 and had accumulated amortization of $1,269,000 through the date of disposal.What gain or loss did the trucking company record when it sold the fleet of trucks?

Correct AnswerverifiedShow Answer

Under what circumstance should a company record an asset impairment loss?

Correct AnswerverifiedShow Answer

The intangible asset most frequently reported by Canadian businesses is:

Correct AnswerverifiedShow Answer

Intangible assets are not adjusted for asset impairment losses. BT: Comprehension

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Your company pays $620,000 for a patent that has 10 years remaining.Each year,your company should:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Your company buys a computer system from IBM for $3 million and pays IBM $200,000 to install the computer system.Your company should record:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

A piece of equipment was acquired on January 1,2009,at a cost of $22,000,with an estimated residual value of $2,000 and an estimated useful life of four years.The company uses the double-declining-balance method.What is its book value at December 31,2010?

Correct AnswerverifiedShow Answer

What would be the amount of amortization expense in year 2 using the double-declining-balance method of amortization?

Correct AnswerverifiedShow Answer

Intangibles with unlimited or indefinite lives (trademarks and goodwill)are amortized using straight line amortization method. BT: Comprehension

Correct AnswerverifiedShow Answer

A company buys a piece of equipment for $48,000.The equipment has a useful life of ten years.Using the double-declining-balance method,the company's amortization expense in the first year would be:

Correct AnswerverifiedShow Answer

The Gulp convenience store chain buys new soda machines for $450,000 and pays $50,000 for installation.One-half of the total cost is paid in cash; the other half is financed.How should the company record this transaction?

Correct AnswerverifiedShow Answer

A company sells a long-lived asset that originally cost $200,000 for $50,000 on December 31,2009.The accumulated amortization account had a balance of $110,000 after the current year's depreciation of $45,000 had been recorded.The company should recognize a:

Correct AnswerverifiedShow Answer

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