QUESTION 1

Happy Days, Inc. purchases a patent in the amount of $750,000. The account that gets debited is

		Patent
		Cash
		Intangible Asset
		Company property

QUESTION 2

Plant assets are recorded at the cost of all expenditures necessary to acquire an asset and make it ready for its indended use. Which accounting principle requires this?

		Materiality
		Cost/Benefit Principle
		Historical Cost
		Conservatism

QUESTION 3

GTI, Inc. purchased land. The purchase price was $100,000. The closing costs were $10,000. A building was removed for $50,000. Scrap from the building resulted in GTI receiving $20,000. What is the cost of the building on the Balance Sheet?

Arconia Inc. sold a building for $1,000,000 cash. Which section of the cash flow statement is impacted, assuming there isnt a gain or loss on the sale?

		Investing activities
		Non-cash event
		Operating activities
		Financing activities

QUESTION 5

When you record depreciation expense for an asset, what account gets DEBITED?

QUESTION 6

Explain why it is necessary to depreciate property, plant and equipment.

QUESTION 7

RH Company has just completed a minor repair on a service truck. The repair cost $1,500. The book value of the service truck prior to the repair was $30,000. What is the book value of the service truck after the repair?

QUESTION 8

Pets USA had to install a new roof on their manufacturing plant. The new roof cost $50,000 and is expected to increase the life of the building by 10 years. Prior to the roof replacement, the cost of the building was $100,000 and the accumulated depreciation was $30,000. What is the book value of the building after the roof is installed?

QUESTION 9

Rosie Company acquires a gold mine at a cost of $2,000,000. The mine is expected to hold 1,000,000 tons of gold. The estimated value of the mine after the gold is removed is $500,000. In the first year, 50,000 tons of gold were mined. What is the journal entry to record the Depletion Expense?

		Depletion Expense 50,000 Gold Mine 50,000
		Amortization Expense 75,000 Accumulated Amortization 75,000
		Depletion Expense 75,000 Gold Mine 75,000
		Depreciation Expense 75,000 Accumulated Depreciation 75,000

QUESTION 10

SHOW ALL CALCUATIONS TO EARN POINTS. NO POINTS WILL BE AWARDED FOR A SINGLE NUMBER ANSWER.

Jon Snow, Inc. purchased a new machine. Calculate the cost of the machine that should be capitalized on the Balance Sheet:

Invoice Price	3,000,000
Freight Costs	30,000
Sales Tax	150,000
Fine incurred during transit	750
Cost of electrician during installation	1,500
Spare parts needed for the machine	2,000
Cost of special base needed for the machine	3,500
One year insurance policy for the machine	2,400
Insurance during the shipping of the machine	1,000
You received a 1% discount on the invoice price	30,000

QUESTION 11

What is the formula to calculate depreciation expense using the straight-line depreciation method?

QUESTION 12

Jessie Co. sold a machine with a cost of $75,000 and accumulated depreciation of $30,000 for $35,000. What is the book value at the time of the sale?

QUESTION 13

What is the formula to calculate depletion expense?

QUESTION 14

Bossy Pants, Inc. purchased a machine on January 1, 2021. The cost of the machine was $850,000 and it is estimated to have a $50,000 salvage value at the end of its 5-year useful life.

What is the amount of depreciation expense in 2021?

QUESTION 15

Jasmine Company sold a machine with a cost of $40,000 and accumulated depreciation of $24,000 for $20,000 cash.

What is the book value of the asset at the time of sale?

QUESTION 16

Jasmine Company sold a machine with a cost of $40,000 and accumulated depreciation of $24,000 for $20,000 cash.

What is the amount of gain or loss on disposal? If there is a loss, enter a negative number.

QUESTION 17

On January 1, Fear the Deer purchased a patent for $50,000. The expected life of the patent is 10 years. How much is the amortization expense in year 1?

QUESTION 18

Onyx Co. sold a machine with a cost of $85,000 and accumulated depreciation of $30,000 for $60,000. What is the amount of the gain or loss on the disposal? Enter a minus sign in front of the number if it is a loss.