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WorksheetsChapter 9 FA
Total questions: 16
Worksheet time: 8mins
Erin Danielle Electronics purchased equipment and incurred the following costs.
Cash price €24,000
Sales taxes 1,200
Insurance during transit 200
Installation and testing 400
Total costs €25,800
What amount should be recorded as the cost of the equipment?
a. €24,000.
b. €25,200.
c. €25,400.
d. €25,800.
Additions to plant assets are:
a. revenue expenditures.
b. debited to the Maintenance and Repairs Expense account.
c. debited to the Purchases account.
d. capital expenditures.
Depreciation is a process of:
a. valuation.
b. cost allocation.
c. cash accumulation.
d. appraisal.
Micah Bartlett Ltd. purchased equipment on January 1, 2019, at a total invoice cost of £400,000. The equipment has an estimated residual value of £10,000 and an estimated useful life of 5 years. The amount of accumulated depreciation at December 31, 2020, if the straight-line method of depreciation is used, is:
a. £80,000.
b. £160,000.
c. £78,000.
d. £156,000.
Ann Torbert purchased a truck for €11,000 on January 1, 2019. The truck will have an estimated residual value of €1,000 at the end of 5 years. Using the units-of-activity method, the balance in accumulated depreciation at December 31, 2020, can be computed by the following formula:
a. (€11,000 ÷ Total estimated activity) × Units of activity for 2020.
b. (€10,000 ÷ Total estimated activity) × Units of activity for 2020.
c. (€11,000 ÷ Total estimated activity) × Units of activity for 2019 and 2020.
d. (€10,000 ÷ Total estimated activity) × Units of activity for 2019 and 2020.
Chang Industries purchased a piece of equipment on January 1, 2020. The equipment cost HK$600,000 and has an estimated life of 8 years and a residual value of HK$80,000. What was the depreciation expense for the asset for 2021 under the doubledeclining-balance method?
a. HK$65,000.
b. HK$112,500.
c. HK$150,000.
d. HK$65,620.
When there is a change in estimated depreciation:
a. previous depreciation should be corrected.
b. current and future years’ depreciation should be revised.
c. only future years’ depreciation should be revised.
d. None of the above.
Able Towing purchased a tow truck for £60,000 on January 1, 2018. It was originally depreciated on a straight-line basis over 10 years with an assumed residual value of £12,000. On December 31, 2020, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 years (including 2020) and the residual value to £2,000. What was the depreciation expense for 2020?
a. £6,000.
b. £4,800.
c. £15,000.
d. £12,100.
Wales Remodeling applies revaluation accounting to equipment that is recorded on its books at €800,000, with €100,000 of accumulated depreciation after depreciation for the year recorded. It has determined that the asset is now worth €775,000. The entry to record the revaluation would include a:
a. credit to Equipment of €25,000.
b. debit to Equipment of €75,000.
c. credit to Accumulated Depreciation of €100,000.
d. debit to Revaluation Surplus of €75,000.
Bennie Razors has decided to sell one of its old manufacturing machines on June 30, 2020. The machine was purchased for €80,000 on January 1, 2016, and was depreciated on a straight-line basis for 10 years assuming no residual value. If the machine was sold for €26,000, what was the amount of the gain or loss recorded at the time of the sale?
a. €18,000.
b. €54,000.
c. €22,000.
d. €46,000.
Maggie Sharrer Energy expects to extract 20 million tons of coal from a mine that cost NT$12 million. If no residual value is expected and 2 million tons are mined in the first year, the entry to record depletion will include a:
a. debit to Accumulated Depletion of NT$2,000,000.
b. credit to Depletion Expense of NT$1,200,000.
c. debit to Inventory of NT$1,200,000.
d. credit to Accumulated Depletion of NT$2,000,000.
Which of the following statements is false?
a. If an intangible asset has a finite life, it should be amortized.
b. The amortization period of an intangible asset can exceed 20 years.
c. Goodwill is recorded only when a business is purchased.
d. Development costs are always expensed when incurred.
Indicate which of the following statements is true.
a. Since intangible assets lack physical substance, they need be disclosed only in the notes to the financial statements.
b. Goodwill should be reported as a contra account in the equity section.
c. Totals of major classes of assets can be shown in the statement of financial position, with asset details disclosed in the notes to the financial statements.
d. Intangible assets are typically combined with plant assets and extractable natural resources and shown in the property, plant, and equipment section.
Tianzi Coffee reported net sales of HK$1,800,000, net income of HK$540,000, beginning total assets of HK$2,000,000, and ending total assets of HK$3,000,000. What was the company’s asset turnover?
a. 0.90.
b. 0.20.
c. 0.72.
d. 1.39.
Schopenhauer NV exchanged an old machine, with a book value of €39,000 and a fair value of €35,000, and paid €10,000 cash for a similar new machine. The transaction has commercial substance. At what amount should the machine acquired in the exchange be recorded on Schopenhauer’s books?
a. €45,000.
b. €46,000.
c. €49,000.
d. €50,000.
In exchanges of assets in which the exchange has commercial substance:
a. neither gains nor losses are recognized immediately.
b. gains, but not losses, are recognized immediately.
c. losses, but not gains, are recognized immediately.
d. both gains and losses are recognized immediately.
