ACCOUNTING

| January 27, 2016

QUESTION 1

1. Match the items below by entering the appropriate code letter in the space provided.

Process of allocating the cost of an intangible asset to expense over its useful life.

Examples are franchises and licenses.

The allocation of the cost of a natural resource to expense over its useful life.

A symbol that identifies a particular enterprise or product (Coca Cola’s swirl / Disney’s Mouse ears).

Indicates how efficiently a company is able to generate sales with its assets (Net sales / Avg. assets)

An estimate of the expected productive life of an asset.

A. Useful life

B. Loss on disposal

C. Trademark

D. Research and development costs

E. Intangible

F. Depletion

G. Amortization

H. Asset turnover ratio

I. Gain on disposal

J. Goodwill

15 points

QUESTION 2

1. The cost of a purchased building includes all of the following except

1. closing costs

2. real estate broker’s commission

3. remodeling costs

4. All of these are included

6 points

QUESTION 3

1. In computing depreciation, salvage value is

1. the fair value of a plant asset on the date of acquisition.

2. subtracted from accumulated depreciation to determine the plant asset’s depreciable cost.

3. an estimate of a plant asset’s value at the end of its useful life.

4. ignored in all the depreciation methods.

6 points

QUESTION 4

1. Which depreciation method is most frequently used in businesses today?

1. Straight-line

2. Declining-balance

3. Units-of-activity

4. Double-declining-balance

6 points

QUESTION 5

1. On a balance sheet, natural resources may be described more specifically as all of the following except

1. land improvements.

2. mineral deposits.

3. oil reserves.

4. timberlands.

6 points

QUESTION 6

1. Identify the item below where the terms are not related.

1. Equipment—depreciation

2. Franchise—depreciation

3. Copyright—amortization

4. Oil well—depletion

6 points

QUESTION 7

1. On August 30, Williams Manufacturing Company decided to sell one of its fabricating machines that was 15 years old for $6,000. The machine, which originally cost $105,000, had accumulated depreciation of $102,500.

Prepare the journal entry to record the disposal of the machine (SHOW ALL WORK)

15 points

QUESTION 8

1. Irons Inc. purchased a new delivery truck for $45,000 on 1/1/2011. The truck is expected to have a $3,000 residual value at the end of its 5 year useful life. Compute the depreciation expense under the following methods.

(a) Straight Line for 12/31/2011 and 12/31/2012 (SHOW ALL WORK)

10 points

QUESTION 9

1. Irons Inc. purchased a new delivery truck for $45,000 on 1/1/2011. The truck is expected to have a $3,000 residual value at the end of its 5 year useful life. Compute the depreciation expense under the following methods.

(b) Double Declining Balance for 12/31/2011 and 12/31/2012 (SHOW ALL WORK)

10 points

QUESTION 10

1. Irons Inc. purchased a new delivery truck for $45,000 on 1/1/2011. The truck is expected to have a $3,000 residual value at the end of its 5 year useful life. Compute the depreciation expense under the following methods.

(c) Units of Production for 12/31/2011 and 12/31/2012 – assuming that Irons expects the truck to run for 160,000 miles. The actual miles driven in 2011 and 2012 were 40,000 and 36,000 , respectively (SHOW ALL WORK)

10 points

QUESTION 11

1. At 12/31/11, Clark Corporation reported beginning net fixed assets of $94,150, ending net fixed assets of $103,626, accumulated depreciation of $49,133, net sales of $212,722, and depreciation expense of $12,315. Compute Clark Corporations fixed asset turnover ratio and the average age of its fixed assets. (SHOW ALL WORK)

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Category: Essay

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