30 MCQ Henson Company incurred $300,000 of research and deve

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Question: Henson Company incurred $300,000 of research and development costs in its laboratory to develop a new product. It spent $40,000 in legal fees for a patent granted on January 2, 2010. On July 31, 2010, Henson paid $30,000 for legal fees in a successful defense of the patent. What is the total amount that should be debited to Patents through July 31, 2010?
A $300,000
B $70,000
C $370,000
D Some other amount
2
Question: Drago Company purchased equipment on January 1, 2010, at a total invoice cost of $600,000. The equipment has an estimated salvage value of $15,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2011, if the straight-line method of depreciation is used?
A $120,000
B $240,000
C $117,000
D $234,000
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Question: Farr Company purchased a new van for floral deliveries on January 1, 2010. The van cost $36,000 with an estimated life of five years and $9,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the depreciation expense for 2010?
A $7,200
B $5,400
C $10,800
D $14,400
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Question: Presto Company purchased equipment and these costs were incurred:
Presto will record the acquisition cost of the equipment as
A $22,500
B $24,300
C $24,620
D $25,050
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Question: An asset that cannot be sold individually in the market place is
A A patent
B Goodwill
C A copyright
D A trade name
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Question: Cost allocation of an intangible asset is referred to as
A Amortization
B Depletion
C Accretion
D Capitalization
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Question: On July 1, 2010, Jenks Company purchased the copyright to Jackson Computer tutorials for $162,000. It is estimated that the copyright will have a useful life of five years with an estimated salvage value of $12,000. The amount of Amortization Expense recognized for the year 2010 would be
A $32,400
B $15,000
C $30,000
D $16,200
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Question: Santayana Company purchased a machine on January 1, 2008, for $12,000 with an estimated salvage value of $3,000 and an estimated useful life of eight years. On January 1, 2010, Santayana decides the machine will last 12 years from the date of purchase. The salvage value is still estimated at $3,000. Using the straight-line method, the new annual depreciation will be
A $675
B $750
C $900
D $1,000
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Question: Improvements are
A Revenue expenditures
B Debited to an appropriate asset account when they increase useful life
C Debited to accumulated depreciation when they do not increase useful life
D Debited to an appropriate asset account when they do not increase useful life
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Question: Ordinary repairs are expenditures to maintain the operating efficiency of a plant asset and are referred to as
A Capital expenditures
B Expense expenditures
C Improvements
D Revenue expenditures
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Question: On October 1, 2010, Holt Company places a new asset into service. The cost of the asset is $60,000 with an estimated five-year life and $15,000 salvage value at the end of its useful life. What is the depreciation expense for 2010 if Holt Company uses the straight-line method of depreciation?
A $2,250
B $12,000
C $3,000
D $6,000
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Question: A company purchased office equipment for $40,000 and estimated a salvage value of $8,000 at the end of its five-year useful life. The constant percentage to be applied against book value each year if the double-declining-balance method is used is
A 20%
B 25%
C 40%
D 4%
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Question: The cost of land does not include
A Real estate brokers’ commission
B Annual property taxes
C Accrued property taxes assumed by the purchaser
D Title fees
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Question: Natural resources are generally shown on the balance sheet under
A Intangibles
B Investments
C Property, Plant, and Equipment
D Owner’s Equity
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Question: A gain or loss on disposal of a plant asset is determined by comparing the
A Replacement cost of the asset with the asset’s original cost
B Book value of the asset with the asset’s original cost
C Original cost of the asset with the proceeds received from its sale
D Book value of the asset with the proceeds received from its sale
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Question: If a plant asset is retired before it is fully depreciated, and no salvage or scrap value is received
A A gain on disposal will be recorded
B Phantom depreciation must be taken as though the asset were still on the books
C A loss on disposal will be recorded
D No gain or loss on disposal will be recorded
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Question: Additions and improvements
A Occur frequently during the ownership of a plant asset
B Normally involve immaterial expenditures
C Increase the book value of plant assets when incurred.
D Typically only benefit the current accounting period
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Question: A factory machine was purchased for $75,000 on January 1, 2010. It was estimated that it would have a $15,000 salvage value at the end of its five-year useful life. It was also estimated that the machine would be run 40,000 hours in the five years. The company ran the machine for 4,000 actual hours in 2010. If the company uses the units-of-activity method of depreciation, the amount of depreciation expense for 2010 would be
A $7,500
B $12,000
C $15,000
D $6,000
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Question: A gain on sale of a plant asset occurs when the proceeds of the sale are greater than the
A Salvage value of the asset sold
B Market value of the asset sold
C Book value of the asset sold
D Accumulated depreciation on the asset sold
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Question: The entry to record depletion expense
A Decreases owner’s equity and assets
B Decreases net income and increases liabilities
C Decreases assets and liabilities
D Decreases assets and increases liabilities
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Question: During 2010, Rathke Corporation reported net sales of $2,000,000, net income of $1,200,000, and depreciation expense of $100,000. Rathke also reported beginning total assets of $1,000,000, ending total assets of $1,500,000, plant assets of $800,000, and accumulated depreciation of $500,000. Rathke’s asset turnover ratio is
A 2 times
B 1.6 times
C 1.3 times
D .96 times
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Question: If a fully depreciated plant asset is still used by a company, the
A Estimated remaining useful life must be revised to calculate the correct revised depreciation
B Asset is removed from the books
C Accumulated depreciation account is removed from the books but the asset account remains
D Asset and the accumulated depreciation continue to be reported on the balance sheet without adjustment until the asset is retired
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Question: The entry to record patent amortization usually includes a credit to
A Amortization Expense
B Accumulated Amortization
C Accumulated Depreciation
D Patents
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Question: Accountants do not attempt to measure the change in a plant asset’s market value during ownership because
A The assets are not held for resale
B Plant assets cannot be sold
C Losses would have to be recognized
D It is management’s responsibility to determine fair values
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Question: A plant asset was purchased on January 1 for $40,000 with an estimated salvage value of $8,000 at the end of its useful life. The current year’s Depreciation Expense is $4,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $20,000. The remaining useful life of the plant asset is
A 10 years
B 8 years
C 5 years
D 3 years
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Question: Yanik Company’s delivery truck, which originally cost $70,000, was destroyed by fire. At the time of the fire, the balance of the Accumulated Depreciation account amounted to $47,500. The company received $40,000 reimbursement from its insurance company. The gain or loss as a result of the fire was
A $30,000 loss
B $17,500 loss
C $30,000 gain
D $17,500 gain
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Question: Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
A Capital expenditures
B Expense expenditures
C Ordinary repairs
D Revenue expenditures
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Question: Farr Company purchased a new van for floral deliveries on January 1, 2010. The van cost $36,000 with an estimated life of five years and $9,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2011?
A 5,760
B $17,280
C $23,040
D $8,640
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: Equipment was purchased for $75,000. Freight charges amounted to $3,500 and there was a cost of $10,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $15,000 salvage value at the end of its five-year useful life. Depreciation expense each year using the straight-line method will be
A $17,700
B $14,700
C $12,300
D $12,000
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Question: Carey Company buys land for $50,000 on 12/31/09. As of 3/31/10, the land has appreciated in value to $50,700. On 12/31/10, the land has an appraised value of $51,800. By what amount should the Land account be increased in 2010?
A $0
B $700
C $1,100
D $1,800

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