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Questions
Q:
Known liabilities are obligations set by agreements, contracts, or laws and are measurable and definitely determinable.
Q:
When companies pay the government collected sales tax, sales taxes payable is credited and cash is debited.
Q:
Unearned revenues are listed on the balance sheet under liabilities.
Q:
Unearned revenue is another name for sales.
Q:
Trade accounts payable are amounts owed to suppliers for products or services purchased on credit.
Q:
A liability does not exist if there is any uncertainty about whom to pay, when to pay, or how much to pay.
Q:
A company can have a liability even if the amount of the obligation is unknown.
Q:
A single liability can be divided between current and noncurrent liabilities.
Q:
Current liabilities are obligations not due within one year or the company's operating cycle, whichever is longer.
Q:
A liability is a probable future payment of assets or services that a company is currently obligated to make as a result of past transactions or events.
Q:
To compute the amount of tax withheld from an employee's pay, employers can use a _______________________________________________________ table.
Q:
Vacation benefits are a type of _______________ liability.
Q:
A _____________________ shows the pay period dates, hours worked, gross pay, deductions, and net pay of each employee for every pay period.
Q:
____________________________ are banks authorized to accept deposits of amounts payable to the federal government, including amounts due for payroll taxes.
Q:
Companies with many employees often use a special ____________________ account to pay employees.
Q:
A _____________________ is a seller's obligation to replace or correct a product or service that fails to perform as expected within a specified period.
Q:
Employer payroll taxes are an added employee _______________ beyond the wages and salaries earned by the employees.
Q:
__________ allowances are items that reduce the amount of federal income taxes owed by the individual.
Q:
Gross pay less all deductions is called ____________________.
Q:
______________________ is the total compensation an employee earns including wages, salaries, commissions, bonuses, and any compensation earned before deductions such as taxes.
Q:
A _______________________ is a written promise to pay a specified amount on a definite future date within one year or the company's operating cycle, whichever is longer.
Q:
The difference between the amount borrowed and the amount repaid is referred to as _______________.
Q:
Times interest earned ratio is computed by dividing _______________ by interest expense.
Q:
Contingent liabilities are recorded if the future event is _______________ and the amount owed can be _______________.
Q:
A ________________________ is a potential obligation arising from a past transaction or event that depends on a future event.
Q:
On April 1, 2013, a company discarded a machine that had cost $10,000 and had accumulated depreciation of $8,000 as of December 31, 2012. The asset had a five-year life and no salvage value. Prepare the journal entries to record the updating of the depreciation expense and discarding of this asset.
Q:
A company purchased and installed a machine on January 1, 2010, at a total cost of $72,000. Straight-line depreciation was calculated based on the assumption of a five-year life and no salvage value. The machine was disposed of on July 1, 2013. a. Prepare the general journal entry to update depreciation to July 1, 2013.
b. Prepare the general journal entry to record the disposal of the machine under each of these three independent situations:
(1) The machine was sold for $22,000 cash.
(2) The machine was sold for $15,000 cash.
(3) The machine was totally destroyed in a fire and the insurance company settled the claim for $18,000 cash.
Q:
A company purchased a heating system on January 2, 2000, for $225,000. The system had an estimated useful life of 15 years. On January 3, 2013, the company completed a renovation of the system that cost of $33,000 and now expects the system to be more efficient to last eight years beyond the original estimate. The company uses the straight-line method of depreciation.
a. Prepare the journal entry at January 3, 2013, to record the renovation of the heating system.
b. Prepare the journal entry at December 31, 2013, to record the depreciation for 2013.
Q:
Mahoney Company had the following transactions involving plant assets during 2012 and 2013. Unless otherwise indicated, all transactions were for cash. 2012 Jan. 2
Purchased a truck for $50,000. Sales tax on the truck was $3,000, and the license was $250. The truck is expected to have a $4,000 salvage value and a four-year life. Jan. 3
Paid $1,500 to have the companys logo painted on the truck. This did not change the trucks salvage value. Dec.31
Recorded straight-line depreciation on the truck. 2013 Jan. 5
Paid $5,000 to put a bigger engine in the truck. This new engine is expected to make the truck run more efficiently and will increase the trucks useful life by one year. The salvage value remained at $4,000. Mar. 1
Paid $2,000 to replace a broken tailgate. The tailgate was damaged when a heavy carton was inadvertently dropped on it. Dec.31
Recorded straight-line depreciation on the truck. Prepare the general journal entries to record these transactions.
Q:
The Weiss Company purchased a truck for $95,000 on January 2, 2011. The truck was estimated to have a $3,000 salvage value and a four-year life. The truck was depreciated using the straight-line method. During 2013, it was obvious that the truck's total useful life would be six years rather than four and the salvage at the end of the sixth year would be $1,500. Determine the depreciation expense for the truck for the six years of its life. Year
Depreciation Expense 2011 2012 2013 2014 2015 2016
Q:
A company entered into the following transactions concerning its computer system:
On January 1, 2012 purchased a computer system that cost $1,480,000. The estimated useful life of the computer is 3 years and salvage value is $40,000. Straight-line depreciation is to be used. On January 1, 2013 the company determined that the estimated useful life of the computer would be 4 years instead of 3 years. The estimated salvage value will only be $10,000.
a. Prepare the journal entry to record depreciation expense for 2012.
b. Prepare the journal entry to record depreciation expense for 2013.
Q:
On April 1, 2012, SAS Corp. purchased and placed in service a plant asset. The following information is available regarding the plant asset: Acquisition cost
$130,000 Estimated salvage value
$15,000 Estimated useful life
5 years Make the necessary adjusting journal entries at December 31, 2012, and December 31, 2013, to record depreciation for each year under the following depreciation methods:
a. Straight-line
b. Double-declining-balance.
Q:
On September 30 of the current year, a company acquired and placed in service a machine at a cost of $700,000. It has been estimated that the machine has a service life of five years and a salvage value of $40,000. Using the double-declining-balance method of depreciation, prepare a schedule showing depreciation amounts for the current year and the next four years (round answers to the nearest dollar). The company closes its books on December 31 of each year.
Q:
On July 1 of the current year, a company purchased and placed in service a machine with a cost of $240,000. The company estimated the machine's useful life to be four years or 60,000 units of output with an estimated salvage value of $60,000. During the current year, 15,000 units were produced.
Prepare the necessary December 31 adjusting journal entry to record depreciation for the current year assuming the company uses:
a. The straight-line method of depreciation.
b. The units-of-production method of depreciation.
c. The double-declining balance method of depreciation.
Q:
Beauty Company purchased a machine valued at $565,000 on September 1. The equipment has an estimated useful life of eight years or 5.5 million units. The equipment is estimated to have a salvage value of $48,300. Assuming the double declining balance method of depreciation is used, what is depreciation expense that needs to be recorded at the end of the second year?
Q:
A company purchased equipment valued at $825,000 on January 1. The equipment has an estimated useful life of seven years or 6 million units. The equipment is estimated to have a salvage value of $35,000. Assuming the straight-line method of depreciation, what is the book value at the end of the second year?
Q:
A company purchased equipment valued at $825,000 on January 1. The equipment has an estimated useful life of seven years or 6 million units. The equipment is estimated to have a salvage value of $35,000. Assuming the units of production method of depreciation, what is the annual depreciation for the second year if .5 million units were produced?
Q:
A company purchased equipment valued at $825,000 on January 1. The equipment has an estimated useful life of seven years or 6 million units. The equipment is estimated to have a salvage value of $35,000. Assuming the double-declining-balance method of depreciation, what is depreciation for the second year?
Q:
A company purchased equipment valued at $825,000 on January 1. The equipment has an estimated useful life of seven years or 6 million units. The equipment is estimated to have a salvage value of $35,000. Assuming the straight-line method of depreciation, what is depreciation for the second year?
Q:
A company purchased a machine for $75,000 that was expected to last six years and have a salvage value of $6,000. At the beginning of the machine's fourth year, the company decided that the machine's estimated useful life should be revised to a total of 10 years instead of 6 years. Also, the salvage value was re-estimated to be $5,500. Straight-line depreciation was used throughout the machine's life. Calculate the depreciation expense for the fourth year of the machine's useful life.
Q:
A machine was purchased for $37,000 and depreciated for five years on a straight-line basis under the assumption it would have a ten-year life and a $1,000 salvage value. At the beginning of the machine's sixth year it was recognized the machine had three years of remaining life instead of five and that at the end of the remaining three years its salvage value would be $1,600. What amount of depreciation should be recorded in each of the machine's remaining three years?
Q:
A company's property records revealed the following information about its plant assets: Machine No.
Cost
Salvage Value
Purchase Date
Depreciation Method and Estimate Life 1
$42,000
$3,000
10/1/12
Straight-line (3 years) 2
86,000
8,600
7/1/12
Double-declining-balance (5 years) Calculate the depreciation expense for each machine for the year ended December 31, 2013, and for the year ended December 31, 2012.
Machine 1:
2012 _______________________
2013 _______________________ Machine 2:
2012 _______________________
2013 _______________________
Q:
Describe the accounting for intangible assets, including their acquisition, cost allocation, and accounts involved.
Q:
Describe the accounting for natural resources, including their acquisition, cost allocation, and account titles.
Q:
Explain the difference between revenue expenditures and capital expenditures and how they are recorded in the accounting system.
Q:
Explain (in detail) how to compute each of the following depreciation methods: straight-line, units-of-production, and double-declining-balance.
Q:
How is the cost principle applied to plant asset acquisitions, including lump-sum purchases?
Q:
Explain how to calculate total asset turnover. Describe what it reveals about a company's financial condition, whether a higher or lower ratio is desirable, and how it is best applied for comparative purposes.
Q:
Compare the different depreciation methods (straight-line, units-of-production, and double-declining-balance) with respect to the computation of depreciation per period and the total depreciation over the life of the asset.
Q:
Explain the impact, if any, on depreciation when depreciation estimates change.
Q:
Explain the purpose and method of depreciation for partial years.
Q:
Why is the useful life of a plant asset so difficult to predict?
Q:
What is depreciation of plant assets? What are the factors to consider in computing depreciation?
Q:
Define plant assets and identify the four primary issues in accounting for them.
Q:
A $78,633
B. $76,833
C. $66,589
D. $74,125
Answer: B
Q:
On December 31, 2013, Stable Company sold a piece of equipment that was purchased on January 1, 2009. The equipment originally cost $820,000 and has an estimated useful life of eight years. Stable uses the doubledeclining-balance method of depreciation. What is the gain/loss on the sale of equipment that Stable will recognize if the equipment was sold for $230,000?
A $35,409.50 gain
B. $25,000.00 loss
C. $25,000.00 gain
D. $35,408.00 loss
E. $0; no gain or loss
Q:
On December 31, 2013, Stable Company sold a piece of equipment that was purchased on January 1, 2008. The equipment originally cost $820,000 and has an estimated useful life of eight years. Stable uses the straight-line method of depreciation. What is the gain/loss on the sale of equipment that Stable will recognize if the equipment was sold for $230,000?
A $230,000 gain
B. $25,000 loss
C. $25,000 gain
D. $73,750 gain
E. $0; no gain or loss
Q:
Ace Company purchased a machine valued at $320,000 on August 1. The equipment has an estimated useful life of five years or 2.5 million units. The equipment is estimated to have a salvage value of $8,200. Assuming the straight-line method of depreciation, what is the amount of depreciation expense that needs to be recorded at the end of the first year?
A $64,000
B. $76,800
C. $62,360
D. $25,983
E. $106,667
Q:
Ace Company purchased a machine valued at $320,000 on August 1. The equipment has an estimated useful life of five years or 2.5 million units. The equipment is estimated to have a salvage value of $8,200. Assuming the double-declining-balance method of depreciation, what is the amount of depreciation expense that needs to be recorded at the end of the second year?
A $128,000
B. $62,360
C. $90,880
D. $88,750
E. $106,667
Q:
On September 1, 2010, Drill Far Company purchased a tract of land for $2,300,000. The land is estimated to have a salvage value or $50,000, a useful life of four years, and contain an estimated 4,234,000 tons of iron ore. The company also purchased equipment to use in the extraction process that cost $220,450. The company plans to abandon the equipment when the ore is completely mined. During 2010, the company extracted and sold 1.25 million tons of ore. What is the depletion expense recorded for 2010?
A. $575,000
B. $679,027
C. $664,265
D. $562,500
E. $600,000
Q:
2346 x $3,000,000=$ 703,800
Q:
January 2010, Giant Green Company pays $3,000,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $742,000, with a useful life of 25 years and a $75,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $400,500 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $2,020,600. Giant Green also incurs the following additional costs: Cost to demolish Building 1
$
400,200 Cost of additional land grading 200,000 Cost to construct new building (Building 3), having a useful life of 25 years and a $322,000 salvage value 3,851,000 Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value 122,000 What is the amount that should be recorded for Building #1?
A $600,200
B. $742,000
C. $667,000
D. $703,800
E. $487,921
Q:
January 2010, Giant Green Company pays $3,000,000 for a tract of land with two buildings on it. It plans to demolish Building 1 and build a new store in its place. Building 2 will be a company office; it is appraised at $742,000, with a useful life of 25 years and a $75,000 salvage value. A lighted parking lot near Building 1 has improvements (Land Improvements 1) valued at $400,500 that are expected to last another 18 years with no salvage value. Without the buildings and improvements, the tract of land is valued at $2,020,600. Giant Green also incurs the following additional costs: Cost to demolish Building 1
$
400,200 Cost of additional land grading 200,000 Cost to construct new building (Building 3), having a useful life of 25 years and a $322,000 salvage value 3,851,000 Cost of new land improvements (Land Improvements 2) near Building 2 having a 20-year useful life and no salvage value 122,000 What is the amount that should be recorded for land?
A $2,516,600
B. $2,020,600
C. $3,851,000
D. $1,916,400
E. $3,000,000
Q:
Cobb Corn Company purchases a large lot on which a building is located. The negotiated purchase price is $2,500,000 for the lot and the building. The company pays $71,500 in commissions and taxes. The appraisal values of each item is as follows: land $650,000, building $1,750,000, land improvements $120,000. What is the appropriate amount to be recorded in the general journal for the building?
A $1,750,000
B. $1,785,650
C. $1,735,000
D. $1,685,379
E. $1,730,000
Q:
A company purchased equipment valued at $200,000 on January 1. The equipment has an estimated useful life of six years or 5 million units. The equipment is estimated to have a salvage value of $13,400. Assuming the double declining balance method of depreciation, what is the book value at the end of the second year?
A $166,667.00
B. $88,897.78
C. $96,416.25
D. $168,900.00
E. $137,800.00
Q:
A company purchased equipment valued at $200,000 on January 1. The equipment has an estimated useful life of six years or 5 million units. The equipment is estimated to have a salvage value of $13,400. Assuming the straight-line method of depreciation, what is the book value at the end of the second year?
A $166,667.00
B. $88,977.80
C. $96,416.25
D. $168,900.00
E. $137,800.00
Q:
A company purchased equipment valued at $200,000 on January 1. The equipment has an estimated useful life of six years or 5 million units. The equipment is estimated to have a salvage value of $13,400. Assuming the units of production method of depreciation, what is the annual depreciation for the second year if 1.5 million units were produced?
A $41,445.91
B. $62,137.80
C. $31,100.00
D. $55,980.00
E. $33,333.00
Q:
A company purchased equipment valued at $200,000 on January 1. The equipment has an estimated useful life of six years or 5 million units. The equipment is estimated to have a salvage value of $13,400. Assuming the double declining balance method of depreciation, what is the depreciation for the second year?
A $41,445.91
B. $62,137.80
C. $31,100.00
D. $55,980.00
E. $44,442.22
Q:
A company purchased equipment valued at $200,000 on January 1. The equipment has an estimated useful life of six years or 5 million units. The equipment is estimated to have a salvage value of $13,400. Assuming the straight-line method of depreciation, what is the depreciation for the second year?
A $41,445.91
B. $62,137.80
C. $31,100.00
D. $55,980.00
E. $33,333.00
Q:
A company purchased a machine valued at $66,000. It traded in an old (similar) machine for a $9,000 trade-in allowance, meaning the company paid $57,000 cash with the trade-in. The old machine cost $44,000 and had accumulated depreciation of $36,000. What is the recorded value of the new machine?
A. $8,000
B. $9,000
C. $57,000
D. $65,000
E. $66,000
Q:
A company bought a new display case for $42,000 and was given a trade-in of $2,000 on an old display case, so the company paid $40,000 cash with the trade-in. The old case had an original cost of $37,000 and accumulated depreciation of $34,000. The company should record the value of new display case at:
A. $2,000
B. $3,000
C. $40,000
D. $42,000
E. $43,000
Q:
Huffington Company traded in an old delivery truck for a new one. The old truck had a cost of $75,000 and accumulated depreciation of $60,000. The new truck had an invoice price of $125,000. Huffington was given a $12,000 trade-in allowance on the old truck, which meant they paid $113,000 in addition to the old truck to acquire the new truck. What is the recorded value of the new truck?
A. $15,000
B. $75,000
C. $113,000
D. $125,000
E. $128,000
Q:
Endor Fishing Company exchanged an old boat for a new one. The old boat had a cost of $260,000 and accumulated depreciation of $200,000. The new boat had an invoice price of $400,000. Endor received a trade in allowance of $100,000 on the old boat, which meant they paid $300,000 in addition to the old boat to acquire the new boat. What amount of gain or loss should be recorded on this exchange? (The exchange lacks commercial substance.)
A. $0 gain or loss
B. $40,000 gain
C. $40,000 loss
D. $60,000 loss
E. $100,000 loss
Q:
A company's old machine, which cost $40,000 and had accumulated depreciation of $30,000, was traded in on a new machine of like purpose having an estimated 20-year life with an invoice price of $50,000. The company also paid $43,000 cash, along with its old machine to acquire the new machine. The value of new machine should be recorded at:
A. $40,000
B. $47,000
C. $50,000
D. $53,000
E. $10,000
Q:
A leasehold:
A. Is a short-term rental agreement.
B. Is the same as a patent.
C. Are the rights granted to the lessee by the lessor of a lease.
D. Is recorded as rent expense.
E. Is an investment asset.
Q:
A patent:
A. Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.
B. Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 20 years.
C. Is an exclusive right granted to its owner to manufacture and sell a device or to use a process for 50 years.
D. Is the amount by which the value of a company exceeds the fair market value of a company's net assets if purchased separately.
E. Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years.
Q:
Amortization:
A. Is the systematic allocation of the cost of an intangible asset to expense over its estimated useful life.
B. Is the process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its use.
C. Is the process of allocating the cost of natural resources to periods when they are consumed.
D. Is an accelerated form of expensing an asset's cost.
E. Is the same as depletion.
Q:
A company purchased a mineral deposit for $800,000. It expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000. In the current year, the company mined and sold 90,000 tons of ore. Its depletion expense for the current period is equal to:
A. $15,000
B. $60,000
C. $150,000
D. $56,250
E. $139,500
Q:
A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. The depletion expense per ton of ore is:
A. $0.75
B. $0.625
C. $0.875
D. $6.00
E. $8.00
Q:
Depletion:
A. Is the process of allocating the cost of natural resources to periods in which they are consumed.
B. Is also called depreciation.
C. Is also called amortization.
D. Is an unrealized expense reported in equity.
E. Is the process of allocating the cost of intangibles to periods in which they are used.