Reference no: EM132826374
Questions -
Q1. A business acquired land and two buildings for a single, lump-sum purchase price of 140,000. The land was assessed for tax purposes at 50,000 and the buildings at 30,000 and 20,000, respectively, for a total assessed value of 100,000. The land would be recorded at a cost of
a. 50,000
b. 70,000
c. 60,000
d. 140,000
Q2. An asset having a four-year service life and a salvage value of 5,000 was acquired for 45,000 cash on June 28. The amortization expense at the end of the first year, December 31, will be
a. 10,000, using the straight-line method
b. 22,500, using the double declining-balance method
c. 7,000, using the straight-line method
d. 11,250, using the double declining-balance method
Q3. An asset having a four-year service life and a salvage value of 5,000 was acquired for 45,000 cash on January 2 of Year One. The amortization expense for Year 2, ending December 31, will be
a. 5,000, under the straight-line method
b. 11,250, under the double declining-balance method
c. 11,250, under the straight-line method
d. 22,500, under the double declining-balance method
Q4. Asset amortization is calculated to the nearest
a. hour
b. day
c. week
d. month
Q5. A(n) ______________________ is an expenditure that produces economic benefits that do not fully expire before the end of the current period.
a. revenue expenditure
b. capital expenditure
c. operating expense
d. ordinary repair expense
e. recognition of amortization
Q6. Failure to record the year-end adjustment for amortization will result in
a. an overstatement of income and an understatement of capital
b. an overstatement of income and an understatement of assets
c. an overstatement of income and an overstatement of assets
d. an understatement of income and an overstatement of capital
Q7. An asset having a four-year service life and a salvage value of 5,000 was acquired for 45,000 cash on April 5. Using straight-line amortization, the amortization expense at the end of the first year, December 31, will be
a. 10,000
b. 7,500
c. 5,000
d. 11,250
Q8. For which asset shown in the schedule below is a contra account maintained for the recognition of writing-off its cost over its useful life?
a. mineral deposit
b. patent
c. copyright
d. trademark
Q9. Which of the accounting procedures or the accounting rules applied to intangible assets is not true?
a. patents have a legal life of 17 years
b. the maximum length of amortization for intangibles is 40 years
c. generally, the straight-line method of amortization is used
d. Accumulated Amortization accounts are maintained for intangible assets
Q10. The Ophir Mining Company acquired an iron ore deposit for 2,000,000. The company's geologist estimated the deposit to contain 1,500,000 tons of iron ore. At the end of the first year, 60,000 tons had been extracted. The end-of-year journal entry to record the depletion of the iron ore would:
a. require a credit to Iron Ore Deposit of 45,000
b. require a credit to Accumulated Depletion of 80,000
c. require a debit to Depletion Expense of 50,000
d. require a debit to Accumulated Depletion of 8