1- In January 2019, Winn Corp. purchased equipment at a cost of $500,000. The equipment had an estimated salvage value of $100,000, an estimated 8-year useful life, and was being depreciated by the straight-line method. Two years later, it became apparent to Winn that this equipment suffered a permanent impairment of value. In January 2019, management of Winn Corp. determines the expected future net cash flows (discounted) from the use of the equipment and its eventual disposal to be $250,000 and fair value less costs to sell of $225,000. Amount of an impairment loss for the equipment:

A. $100,000

B. $150,000

C. $175,000

D. $350,000

2- Which of the following is NOT a method for determining depreciation expense for a specific asset?

A. Weighted-average method

B. Units-of-output method

C. Double-declining-balance method

D. Straight-line method

3- Bennette Company acquired a patent on May 1, 2018. Bennette paid cash of $20,000 to the seller. Legal fees of $800 were paid related to the acquisition. What amount should be debited to the patent account?

A. $800

B. $19,200

C. $20,000

D. $20,800

4- Cummings Company purchased equipment for $87,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $6,600. Using the straight-line method, depreciation for 2019 and the equipment's book value at December 31, 2019, would be:

A. $17,400 and $69,600 respectively.

B. $16,080 and $48,240 respectively.

C. $16,080 and $54,840 respectively.

D. $34,800 and $52,200 respectively.

5- Machinery has a depreciable base of $16.5 million and a service life of 10 years. What would the accumulated depreciation be at the end of year five under the sum-of-the-years' digits method?

A. $4.5 million

B. $8.25 million

C. $12 million

D. $13.5 million

6- Which of the following would NOT be considered an R & D activity?

A. Adaptation of an existing capability to a requirement or customer's need.

B. Searching for applications of new research findings.

C. Laboratory research aimed at discovery of new knowledge.

D. Conceptual formulation and design of possible product or process alternatives.

7- Hanna Company owns equipment for which it paid $90 million. At the end of 2019, it had accumulated depreciation on the equipment of $27 million. Due to adverse economic conditions, Hanna's management determined that it should assess whether an impairment should be recognized for the equipment. The estimated discounted future cash flows to be provided by the equipment total $60 million and the equipment's fair value less selling costs at that point is $40 million. Under these circumstances, Hanna:

A. Would record no impairment loss on the equipment.

B. Would record a $3 million impairment loss on the equipment.

C. Would record a $23 million impairment loss on the equipment.

D. None of the above is correct.

8- Nanki Corporation purchased equipment on January 1, 2016, for $631,000. In 2016 and 2017, Nanki depreciated the asset on a straight-line basis with an estimated useful life of eight years and a $7,000 residual value. In 2018, due to changes in technology, Nanki revised the useful life to a total of 4 years with no residual value. What depreciation would Nanki record for the year 2018 on this equipment?

A. $237,500.

B. $167,333.

C. $109,283.

D. $104,283.

9- Central Coporation purchased equipment for $99,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $4,500. Using the sum-of-the-years'-digits method, depreciation for 2018 and book value at December 31, 2018, would be:

A. $31,500 and $67,500 respectively.

B. $33,000 and $66,000 respectively.

C. $33,000 and $61,500 respectively.

D. $31,500 and $63,000 respectively.

10- A production machine that cost $2,200,000 is acquired by Kelly Company on October 1, 2018. Its estimated residual value is $200,000 and its expected life is 10 years or about 80,000 operating hours. During 2018, the machine was used to produce products for 3,000 operating hours during 2018 and 8,100 operating hours during 2019. Kelly does not use the half-year convention for depreciating any assets. Calculate depreciation expense for 2018 and 2019 using double-declining balance method.

A. 2018 = $200,000; 2019 = $50,000

B. 2018 = $110,000; 2019 = $418,000

C. 2018 = $75,000; 2019 = $202,500

D. 2018 = $200,000; 2019 = $110,000

11- Under current accounting practice, what are the two general classes of intangible assets?

A- monetary and non-monetary

B- indefinite-life and finite-life

C- legally restricted and unrestricted

D- specifically, identifiable and non-identifiable

12- Kaven Corporation purchased a truck at the beginning of 2018 for $85,000 which will be depreciated using the units-of-output method. The truck is estimated to have a residual value of $4,000 and a useful life of 4 years and 120,000 miles. It was driven 18,000 miles in 2018 and 32,000 miles in 2019. What is the depreciation expense for 2019?

A- $21,600

B- $21,760

C- $22,720

D- $32,000

13- Apple Inc. purchased equipment for $93,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $3,900. Using the sum-of-the-years'-digits method, depreciation for 2019 and book value at December 31, 2019, would be:

A- $24,800 and $37,200 respectively.

B- $24,800 and $33,300 respectively.

C- $23,760 and $39,540 respectively.

D- $23,760 and $35,640 respectively.

14- Which of the following is NOT an intangible asset?

A. Trade name

B. Research and development costs

C. Franchise

D. Copyrights

15- Tories Company purchased equipment for $75,000 on January 1, 2018. The equipment is expected to have a five-year life and a residual value of $8,400. Using the double-declining balance method, depreciation for 2018 and the book value at December 31, 2018, would be:

A. $26,640 and $48,360 respectively.

B. $30,000 and $45,000 respectively.

C. $30,000 and $36,600 respectively.

D. $26,640 and $39,960 respectively.

16- Depreciation, depletion, and amortization:

A. All refer to the process of allocating the cost of long-term assets used in the business over future periods.

B. All generally use the same methods of cost allocation.

C. Are all handled the same in arriving at taxable income.

D. All of these answer choices are correct.

17- Which, if any, intangible assets are subject to amortization?

A. Only indefinite-life intangible assets are subject to amortization.

B. No intangible assets are subject to amortization.

C. Only finite-life intangible assets are subject to amortization.

D. Both finite and indefinite-life intangible assets are subject to amortization.