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Frankel Feed purchased a new machine on January 1, 2016. Relevant information is as follows: Frankel Feed purchased a new machine on January 1, 2016. Relevant information is as follows: It is now the beginning of year 6 and the management reevaluated the estimates related to the machine. Required: Compute the depreciation expense for year 6 under each of the following independent cases: It is now the beginning of year 6 and the management reevaluated the estimates related to the machine. Required: Compute the depreciation expense for year 6 under each of the following independent cases: Frankel Feed purchased a new machine on January 1, 2016. Relevant information is as follows: It is now the beginning of year 6 and the management reevaluated the estimates related to the machine. Required: Compute the depreciation expense for year 6 under each of the following independent cases:

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Annual straight-line depreciation expens...

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Which of the following statements regarding the fixed asset turnover ratio is incorrect?


A) The numerator is net operating income.
B) The denominator is average net fixed assets.
C) The ratio is used to assess a company's effectiveness in generating sales from its fixed assets.
D) The ratio increases when a company sells a factory building for a gain.

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Waterloo Corporation purchased factory equipment for a cost of $1,800,000. There was also the cost of $100,000 for delivery, $220,000 for installation and modifications to the factory building, and $60,000 in interest costs on borrowed funds used to acquire the equipment. Required: Calculate the acquisition cost of the new equipment.

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Equipment cost = $2,120,000 = ...

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Which of the following journal entries is correct when a company owns its office building for many years and now sells the building?


A) Which of the following journal entries is correct when a company owns its office building for many years and now sells the building? A) B) C) D)
B) Which of the following journal entries is correct when a company owns its office building for many years and now sells the building? A) B) C) D)
C) Which of the following journal entries is correct when a company owns its office building for many years and now sells the building? A) B) C) D)
D) Which of the following journal entries is correct when a company owns its office building for many years and now sells the building? A) B) C) D)

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On January 1, 2016, Wasson Company purchased a delivery vehicle costing $40,000. The vehicle has an estimated 6-year life and a $4,000 residual value. Wasson uses the units-of-production depreciation method and Wasson estimates that the vehicle will be driven 100,000 miles. What is the vehicle's book value as of December 31, 2017 assuming the vehicle was driven 10,000 miles during 2016 and driven 18,000 miles during 2017?


A) $29,920.
B) $28,800.
C) $24,800.
D) $25,920.

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Which of the following statements is incorrect?


A) Ordinary repairs and maintenance decrease net income.
B) Capital expenditures decrease assets.
C) Ordinary repairs and maintenance are recurring in nature.
D) Additions and improvements to a depreciable asset occur infrequently.

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During 2016, the Bowtie Company reported net income of $1,872 million, depreciation expense of $1,412 million and $978 million paid for purchases of property, plant and equipment. What would be the effect on cash flows from operating activities during 2016?


A) Cash flows from operating activities would be increased by depreciation expense and decreased by the property, plant and equipment purchases.
B) Cash flow from operating activities would be increased by depreciation expense and by the property, plant and equipment purchases.
C) Cash flow from operating activities would be increased by depreciation expense but the property, plant and equipment purchases would have no effect on cash flow from operating activities.
D) Depreciation is a noncash expense and would not be used to calculate cash flow from operating activities.

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Augie Corporation purchased a truck at a cost of $60,000. It has an estimated useful life of five years and estimated residual value of $5,000. At the beginning of year three, Augie's managers concluded that the total useful life would be four years, rather than five years. There was no change in the estimated residual value. What is the amount of depreciation that Augie should record for year 3 under the straight-line depreciation method?


A) $15,500.
B) $8,250.
C) $11,000.
D) $16,500.

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Which of the following statements is incorrect?


A) Replacement of a truck's tires would be a capital expenditure.
B) Replacement of carpet in an office, damaged by a coffee spill, would be a repairs expense.
C) Replacement of a roof on a newly purchased building before using it as a store would be a capital expenditure.
D) The cost of repainting a hallway would be maintenance expense.

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Which of the following statements is correct with respect to the sale of a depreciable asset?


A) A gain occurs when the selling price exceeds book value.
B) A sale for a gain results in a decrease in total assets.
C) A sale for a loss results in an increase in total assets.
D) A loss occurs when the selling price is more than book value.

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Benson Mining Company purchased a site containing a mineral deposit during 2016. The purchase price was $820,000, and the site is estimated to contain 400,000 tons of extractable ore. Benson constructed a building at the site, at a cost of $500,000, to be used while the ore is being extracted. When the ore reserves are gone, the building will have no further value. Required: A.Explain the objective of recording depletion of natural resources. B.Determine Benson's depletion rate per ton of ore. C.Prepare the journal entry to record depletion for the year 2016, when Benson mined and sold 150,000 tons of ore. D.Prepare the journal entry to record depreciation on the building for 2016.Benson calculates depreciation on the building using the units-of-production method based on the amount of ore extracted (150,000 tons in 2016).

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A. The purpose of recording depletion is...

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Which of the following accounts would not be considered a tangible asset?


A) Buildings
B) Land
C) Equipment
D) Copyright

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If depreciation expense is calculated without taking into account the asset's residual value, depreciation expense will be overstated.

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Which of the following statements is incorrect?


A) A copyright has a legal life not exceeding 70 years after the author's death.
B) A trademark is recorded on the balance sheet at an amount equal to the related research and development costs incurred.
C) A patent's legal life is 20 years.
D) A franchise's amortization period is determined by the franchise agreement.

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Gilbert Company made an ordinary repair to a delivery truck during 2016 at a cost of $500 and capitalized the repair cost. What is the effect on the 2016 financial statements as a result of the incorrect capitalization?


A) The financial statements are not affected.
B) Assets are understated and net income is overstated.
C) Assets are overstated and net income is overstated.
D) Assets and stockholders' equity are both understateD.The repair should be expensed during 2016 rather than be capitalized.As a result, net income is overstated because expenses are understated.Assets are overstated because of the capitalization.

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Under what conditions would a company most likely adopt the double-declining-balance method for financial reporting?


A) The company has high technology, robotic equipment in its plant that becomes obsolete quickly and declines in utility to the company more rapidly in the early years of the assets' lives.
B) The company wants to maximize its net income during the earlier years of the asset's life.
C) The company wants to maximize the asset's book value in the earlier years of the asset's life.
D) The company wants to maximize the total depreciation expense over the life of the asset.

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In accounting for depreciation, acquisition cost and useful life usually are known quantities, whereas residual value is an estimate because it relates to an amount in the future.

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Which of the following statements is false?


A) The book value at the end of an asset's useful life will be the same under all the depreciation methods allowed under GAAP.
B) The balance in the accumulated depreciation account will be the same at the end of an asset's useful life under all the methods allowed under GAAP.
C) Once you select a depreciation method, then you must use this method for all depreciable assets.
D) The annual depreciation expense and year-end book values will differ under the various depreciation methods over the life of the asset.

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A company acquires land by issuing 10,000 shares of its $10 par value common stock which is currently trading at $20 per share, and the appraised value of the land is $250,000. Which of the following statements correctly describes the recording of the land?


A) Record the land at its appraised value of $250,000 and recognize a gain of $50,000 since the issued stock is currently worth $200,000.
B) Record the land at the $200,000 value of the consideration given up.
C) Record the land at the average of its appraised value of $250,000 and the $200,000 value of the stock issued, thereby recognizing a $25,000 gain.
D) Record the land at the par value of the stock given up, $100,000.

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Amanda Company purchased a computer that cost $10,000. It had an estimated useful life of five years and a residual value of $1,000. The computer was depreciated by the straight-line method and was sold at the end of the third year of use for $5,000 cash. Which of the following statements correctly describes the computer sale?


A) Assets and stockholders' equity both increase by $5,000.
B) Assets decrease $5,000 and stockholders' equity is not affected.
C) Assets and stockholders' equity both decrease by $400.
D) Assets and stockholders' equity both increase by $400.

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