Multiple Choice Quiz. Encircle the letter of the correct answerTop of Form

1. A business acquired land and two buildings for a single, lump-sum purchase

price of 140,000. The land was assessed for tax purposes at 50,000 and the

buildings at 30,000 and 20,000, respectively, for a total assessed value of

100,000. The land would be recorded at a cost of

a. 50,000

b. 70,000

c. 60,000

d. 140,000

2. An asset having a four-year service life and a salvage value of 5,000 was

acquired for 45,000 cash on June 28. The amortization expense at the end of

the first year, December 31, will be

a. 10,000, using the straight-line method

b. 22,500, using the double declining-balance method

c. 7,000, using the straight-line method

d. 11,250, using the double declining-balance method

3. An asset having a four-year service life and a salvage value of 5,000 was

acquired for 45,000 cash on January 2 of Year One. The amortization expense

for Year 2, ending December 31, will be

a. 5,000, under the straight-line method

b. 11,250, under the double declining-balance method

c. 11,250, under the straight-line method

d. 22,500, under the double declining-balance method

4. Asset amortization is calculated to the nearest

a. hour

b. day

c. week

d. month

5. A(n) ______________________ is an expenditure that produces economic

benefits that do not fully expire before the end of the current period.

a. revenue expenditure

b. capital expenditure

c. operating expense

d. ordinary repair expense

e. recognition of amortization

6. Failure to record the year-end adjustment for amortization will result in

a. an overstatement of income and an understatement of

capital

b. an overstatement of income and an understatement of

assets

c. an overstatement of income and an overstatement of assets

d. an understatement of income and an overstatement of

capital

7. An asset having a four-year service life and a salvage value of 5,000 was

acquired for 45,000 cash on April 5. Using straight-line amortization, the

amortization expense at the end of the first year, December 31, will be

a. 10,000

b. 7,500

c. 5,000

d. 11,250

8. For which asset shown in the schedule below is a contra account maintained

for the recognition of writing-off its cost over its useful life?

a. mineral deposit

b. patent

c. copyright

d. trademark

9. Which of the accounting procedures or the accounting rules applied to

intangible assets is not true?

a. patents have a legal life of 17 years

b. the maximum length of amortization for intangibles is 40

years

c. generally, the straight-line method of amortization is used

d. Accumulated Amortization accounts are maintained for

intangible assets

10. The Ophir Mining Company acquired an iron ore deposit for 2,000,000. The

company's geologist estimated the deposit to contain 1,500,000 tons of iron

ore. At the end of the first year, 60,000 tons had been extracted. The end-of-

year journal entry to record the depletion of the iron ore would:

a. require a credit to Iron Ore Deposit of 45,000

b. require a credit to Accumulated Depletion of 80,000

c. require a debit to Depletion Expense of 50,000

d. require a debit to Accumulated Depletion of 8