ACC 563 Week 7 Quiz – Strayer NEW
Click On The Link Below to Purchase A+ Graded Material
Instant Download
http://budapp.net/ACC-563-Week-7-Quiz-Strayer-NEW-ACC563W7Q.htm
Week 7 Quiz 5: Chapters 9 and 10
Chapter 9
Multiple Choice
1. When a closely held corporation issues preferred stock for land, the land should be recorded at the
a. Total par value of the stock issued
b. Total book value of the stock issued
c. Appraised value of the land
d. Total liquidating value of the stock issued
Answer
2. A principal objection to the straight-line method of depreciation is that it
a. Provides for the declining productivity of an aging asset
b. Ignores variations in the rate of asset use
c. Tends to result in a constant rate of return on a diminishing investment base
d. Gives smaller periodic write-offs than decreasing charge methods
Answer
3. Property, plant, and equipment are conventionally presented n the balance sheet at
a. Replacement cost less accumulated depreciation
b. Historical cost less salvage value
c. Original cost adjusted for general price level changes
d. Acquisition cost less depreciated portion thereof
Answer
4. As generally used in accounting, depreciation
a. Is a process of asset valuation for balance sheet purposes
b. Applies only to long-lived intangible assets
c. Is used to indicate a decline in market value of a long-lived asset
d. Is an accounting process that allocates long-lived asset cost to accounting periods
Answer
5. Lyle, Inc., purchased certain plant assets under a deferred payment contract on December 31, 2011. The agreement was to pay $20,000 at the time of purchase and $20,000 at the end of each of the next five years. The plant assets should be valued at
a. The present value of a $20,000 ordinary annuity for five years
b. $120,000
c. $120,000 less imputed interest
d. $120,000 plus imputed interest
Answer
6. For income statement purposes, depreciation is a variable expense if the depreciation method used for book purposes is
a. Units of production
b. Straight line
c. Sum-of-the-year’s-digits
d. Declining balance
Answer
7. A method that excludes salvage value from the base for the depreciation calculation is
a. Straight line
b. Sum-of-the-year’s digits
c. Double-declining balance
d. Productive output
Answer
8. When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building should be
a. Expensed as incurred
b. Added to the cost of the plant
c. Added to the cost of the land
d. Amortized over the estimated time period between the tearing down of the building and the completion of the plant
Answer
9. A machine with a four-year estimated useful life and an estimated 15 percent salvage value was acquired on January 1, 2010. On December 31, 2012, the accumulated depreciation using the sum-of-year’s digits method would be
a. (Original cost less salvage value) multiplied by 9/10
b. Original cost multiplied by 9/10
c. Original cost multiplied by 9/10 less total salvage value
d. (Original cost less salvage value) multiplied by 1/10
Answer
10. The theoretical justification for reporting depreciation expense is
a. Depreciation expense represents a decrease in the value of the asset that has occurred during the accounting period.
b. Depreciation expense represents the impairment of the asset that has occurred during the accounting period.
c. Depreciation expense represents the unrealized loss that has been incurred by using the asset during the accounting period.
d. Depreciation expense represents the allocation of the historical cost of the asset that has been applied to the accounting period.
Answer
11. A company using the group depreciation method for its delivery trucks retired one of its delivery trucks due to damage before the average service life of the group was reached. An insurance recovery was received. The net book value of these group asset accounts would be decreased by the
a. Original cost of the truck
b. Original cost of the truck less the insurance recovery received
c. Original cost of the truck less depreciation on the truck to the date of retirement
d. Insurance recovery received
Answer
12. When equipment is retired, accumulated depreciation is debited for the original cost less any residual recovery under which of the following depreciation methods?
Composite Group
Depreciation Depreciation
a. No No
b. No Yes
c. Yes No
d. Yes Yes
Answer
13. Recognizing depletion expense is an example of the accounting process of
AllocationAmortization
a. No No
b. No Yes
c. Yes Yes
d. Yes No
Answer
14. A donated plant asset for which the fair value has been determined, and for which incidental costs were incurred in acceptance of the asset, should be recorded at an amount equal to its
a. Incidental costs incurred
b. Fair value and incidental costs incurred
c. Book value on books of donor and incidental costs incurred
d. Book value on books of donor
Answer
Essay
1. List the objectives of accounting for property, plant and equipment.
2. Describe how cost is assigned to individual assets when they are acquired in a lump-sum group purchase.
3. Discuss the three approaches to allocating fixed overhead to a self-construction project.
4. Discuss the issue of allocating interest to self construction projects. That is, when should interest be allocated and how much interest should be allocated?
5. Explain the concept of commercial substance originally outlined in SFAS No. 158.
6. How did SFAS No. 116, now FASB ASC 605-10-15-3, change the accounting for donated assets?
7. Discuss the factors comprising the depreciation process.
8. Discuss the distinction between capital and revenue expenditures for long-term assets.
9. Define and discuss accounting for asset retirement obligations under SFAS No. 14FASB ASC 410-20.
10. Discuss the guidelines for accounting for property, plant and equipment outlined in IAS No. 16.
11. How does IAS no. 23 define borrowing costs?
12. Discuss accounting for the impairment of assets as outlined in IAS No. 36.
EXAMPLE TEST QUESTIONS
Chapter 10
Multiple Choice
1. Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the
a. Investor sells the investment
b. Investee declares a dividend
c. Investee pays a dividend
d. Earnings are reported by the investee in its financial statements
Answer
2. Pence Corporation, which accounts for its investments in the common stock of Walsh Company by the equity method, should ordinarily record a dividend received from Walsh as
a. An addition to the carrying value of the investment
b. Dividend revenue
c. A reduction of the carrying value of the investment
d. Revenue from affiliate
Answer
3. On January 15, 2002, a corporation was granted a patent on a product. On January 2, 2010, to protect its patent, the corporation purchased a patent on a competing product the originally was issued on January 10, 2008. Because of its unique plant, the corporation does not feel the competing patent can be used in producing a product. The cost of the competing patent should be
a. Amortized over a maximum period of 17 years
b. Amortized over a maximum period of 13 years
c. Amortized over a maximum period of 9 years
d. Expensed in 2010
Answer
4. Pacer Company purchased 300 of the 1, 000 outstanding shares of Queen Company’s common stock for $80,000 on January 2, 2008. During 2009, Queen Company declared dividends of $8,000 and reported earnings for the year of $20,000.
If Pacer Company uses the equity method of accounting for its investment in Queen Company, its Investment in Queen Company account at December 31, 2009 should be
a. $100, 000
b. $88,000
c. $83,600
d. $80,000
Answer
5. Refer to the facts in problem (4). If Pacer Company uses the lower of cost or market method of accounting for its investment in Queen Company, and the value of its investment hasn’t changed, its Investment in Queen Company account on December 31, 2009, should be
a. $100, 000
b. $88,000
c. $80,000
d. $73,600
Answer
6. A large, publicly held company developed and registered a trademark during 2010. The cost of developing and registering the trademark should be accounted for by
a. Charging it to an asset account that should not be amortized
b. Expensing it as incurred
c. Amortizing it over 25 years if in accordance with management’s evaluation
d. Amortizing it over its useful life or 17 years, whichever is shorter
Answer
7. Goodwill should be written off
a. As soon as possible against retrained earnings
b. When there is evidence that its carrying value has been impaired
c. By systematic charges against retained earnings over the period benefited, but not more than 40 years
d. By systematic charges to expense over the period benefited, but not more than 40 years
Answer
8. A net unrealized loss on a company’s long-term portfolio of available for sale securities should be reflected in the current financial statements as
a. An extraordinary item shown as a direct reduction from retained earnings
b. A current loss resulting from holding marketable equity securities
c. A footnote or parenthetical disclosure only
d. A component of other comprehensive income
Answer
9. Changes in the fair value of a long-term available for sale equity securities portfolio should be reported as a component of
a. Other comprehensive income
b. Noncurrent assets
c.
No comments:
Post a Comment