1. Which of the following is (are) used to determine how a given asset will be reported...
Question:
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2. Belly-Acres Land Company made capital expenditures during the current year. At yearend, these expenditures should be reported on the
a. Income statement as expenses.
b. Balance sheet under current assets.
c. Balance sheet under long-term assets.
d. Statement of cash flows under operating activities.
3. The Song-in-My-Heart Record Store reported $20,000 of depreciation expense on assets acquired at the beginning of the current year. The assets€™ original cost was $50,000 with an estimated useful life of five years. The method used by Song-in-My-Heart for depreciating the assets was the
a. Straight-line method.
b. Cost recovery method.
c. Units-of-production method.
d. Double-declining-balance method.
4. The Shiny Metal Mining Company acquired mineral rights for $3,100,000. Geological studies indicate that two million tons of economically recoverable ore are likely to be present on the site. Subsequently, the rights to remaining minerals can be sold for approximately $300,000. The firm estimates that it will take about five years to mine the ore. In the first year, 600,000 tons of ore were recovered, processed, and sold. What is the amount of depletion for the first year?
a. $930,000
b. $840,000
c. $620,000
d. $560,000
5. Assuming an estimated useful life of three years and zero residual value, which of the following depreciation methods will always result in the least depreciation expense in the first year?
a. Straight-line
b. Double-declining-balance
c. Units-of-production
d. Cannot be determined from the information given
6. Boswell Company purchased its first investment in available-for-sale securities during the current year. At year-end, the current market value of the marketable securities is greater than the price paid to acquire them. As a result of this information, the company should report an unrealized holding
a. Loss on its income statement.
b. Gain on its income statement.
c. Loss on the balance sheet.
d. Gain on the balance sheet.
7. Hwan Manufacturing Company owns held-to-maturity bonds that were acquired at a premium. Each period that Hwan holds the investment, amortization of the premium will have which one of the following effects?
a. The amount of interest revenue reported on the income statement will increase.
b. The amount of cash received will decrease.
c. The book value of the investment will decrease.
d. The rate of return earned on the investment will decrease.
8. The excess of cost over the market value of identifiable net assets acquired in a purchase of another company should be reported in the financial statements as
a. A current asset.
b. An intangible asset.
c. An expense of the period in which the acquisition occurs.
d. A revenue of the period in which the acquisition occurs.
9. Which of the following is a false statement about intangible assets, other than goodwill?
a. They have no physical substance.
b. They have no real economic value.
c. They can often be purchased or sold.
d. They are amortized over their useful lives.
10. Khim Singer Company sold obsolete machinery that was no longer used in its factory. The transaction resulted in a loss being recorded in the company€™s accounting system. Information about this event will appear on which of the company€™s year-end financial statements?
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11. (Based on the Other Investment Issues section) Farma Pharmaceutical Company has invested in the common stock of Bailey Biotech. The primary factor that will determine whether the equity method or the consolidation method is used to account for this is size of the
a. Investment.
b. Industry.
c. Parent company.
d. Total assets.
12. On January 1 of the current year, Nancy Enterprises acquired 14,000 shares of the 40,000 outstanding shares of Tang Toys for $100,000. During the year, Tang Toys had net income of $50,000 and paid $10,000 in dividends. At December 31 of the current year, Nancy Enterprises should report what amount as its investment in Tang Toys?
a. $96,500
b. $103,500
c. $114,000
d.$117,500
An intangible asset is a resource controlled by an entity without physical substance. Unlike other assets, an intangible asset has no physical existence and you cannot touch it.Types of Intangible Assets and ExamplesSome examples are patented... Financial Statements
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