Reference no: EM132315714

Question

1) The asset turnover ratio measures the amount of net sales generated for each average dollar of total assets invested.

True

False

2) Which of the following is true when the estimate of an? asset's useful life is? changed?

A.The depreciation expense in the prior years are restated.

B.The new estimate is ignored until the last year of the? asset's life.

C.Prior? years' financial statements must be restated.

D.The? asset's remaining depreciable book value will be spread over the? asset's remaining life.

3) Brentwood Auto Repair purchased a new machine and placed it in service on June 14. Which of the following is not included in the cost of? equipment?

A.purchase commission

B.sales tax

C.a six month insurance policy which was paid on June 5 and became effective on June 15

D.cost of testing the machine on June 12

4) Equipment was acquired for? $210,000 and has accumulated depreciation of? $87,000. The business exchanges this equipment for new equipment. The new equipment has a market value of? $303,000 and the business pays? $58,000 cash. Assume the exchange has commercial substance. The exchange results in? ________.

A.gain? $122,000

B.loss? $122,000

C.loss? $180,000

d.gain? $180,000

5) All intangible assets must be amortized each year.

True

False

6) If a plant asset is sold for more than its book? value, a loss is recorded.

True

False

7) Repair work that generates a capital expenditure because it extends a plant? asset's useful life past the normal expected life is known as an extraordinary repair.

True

False

8) Estimated residual value can be zero if the company does not expect to receive anything when disposing of the asset.

True

False

9) Which of the following is an intangible? asset?

A.goodwill

B.land

C.plant and machinery

D.building

10) On January? 1, 2018, McHenry Manufacturing Company purchased a machine for $40,900,000. ?McHenry's management expects to use the machine for 28,000 hours over the next six years. The estimated residual value of the machine at the end of the sixth year is $44,000. The machine was used for 3,900 hours in 2018 and 5,900 hours in 2019. Calculate the book value of the machine at the end of 2019 if the company uses the units-of-production method of depreciation.? (Round any intermediate calculations to two decimal? places, and your final answer to the nearest? dollar.)

A.$40,900,000

B.$35,209,354

C.$26,585,042

D.$ 26,600,428

11) A truck costs $95,000 when new and has accumulated depreciation of $75,000. Suppose Frank Towing exchanges the truck for a new truck. The new truck has a market value of $78,000?, and Frank pays cash of $52,000. Assume the exchange has commercial substance. What is the result of this? exchange?

A.No gain or loss

B.Gain of $6,000

C.Gain of $58,000

D.Loss of $ 6,000

12) Capitalizing a cost involves crediting the asset account.

True

False

13) Depletion expense should not be recorded for natural resources because they do not decrease in value over time.

True

False

14) Gain or loss is determined by comparing the cash received and the market value of any other asset received with the historical cost of the asset disposed of.

True

False