ACC 563 Week 7 Quiz – Strayer NEW
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Week
7 Quiz 5: Chapters 9 and 10
Chapter
9
Multiple
Choice
1. When
a closely held corporation issues preferred stock for land, the land should be
recorded at the
a. Total par value of the stock issued
b. Total book value of the stock issued
c. Appraised
value of the land
d. Total
liquidating value of the stock issued
Answer
2.
A principal objection to the
straight-line method of depreciation is that it
a. Provides
for the declining productivity of an aging asset
b. Ignores
variations in the rate of asset use
c. Tends
to result in a constant rate of return on a diminishing investment base
d. Gives
smaller periodic write-offs than decreasing charge methods
Answer
3.
Property, plant, and equipment are
conventionally presented n the balance sheet at
a. Replacement
cost less accumulated depreciation
b. Historical
cost less salvage value
c. Original
cost adjusted for general price level changes
d. Acquisition
cost less depreciated portion thereof
Answer
4.
As generally used in accounting,
depreciation
a. Is
a process of asset valuation for balance sheet purposes
b. Applies
only to long-lived intangible assets
c. Is
used to indicate a decline in market value of a long-lived asset
d. Is
an accounting process that allocates long-lived asset cost to accounting
periods
Answer
5.
Lyle, Inc., purchased certain plant
assets under a deferred payment contract on December 31, 2011. The agreement
was to pay $20,000 at the time of purchase and $20,000 at the end of each of
the next five years. The plant assets should be valued at
a. The
present value of a $20,000 ordinary annuity for five years
b. $120,000
c. $120,000
less imputed interest
d. $120,000
plus imputed interest
Answer
6.
For income statement purposes,
depreciation is a variable expense if the depreciation method used for book
purposes is
a. Units
of production
b. Straight
line
c. Sum-of-the-year’s-digits
d. Declining
balance
Answer
7.
A method that excludes salvage value
from the base for the depreciation calculation is
a. Straight
line
b. Sum-of-the-year’s
digits
c. Double-declining
balance
d. Productive
output
Answer
8.
When a company purchases land with a
building on it and immediately tears down the building so that the land can be
used for the construction of a plant, the cost incurred to tear down the
building should be
a. Expensed
as incurred
b. Added
to the cost of the plant
c. Added
to the cost of the land
d. Amortized
over the estimated time period between the tearing down of the building and the completion of the plant
Answer
9.
A machine with a four-year estimated
useful life and an estimated 15 percent salvage value was acquired on January
1, 2010. On December 31, 2012, the accumulated depreciation using the
sum-of-year’s digits method would be
a. (Original
cost less salvage value) multiplied by 9/10
b. Original
cost multiplied by 9/10
c. Original
cost multiplied by 9/10 less total salvage value
d. (Original
cost less salvage value) multiplied by 1/10
Answer
10. The
theoretical justification for reporting depreciation expense is
a. Depreciation
expense represents a decrease in the value of the asset that has occurred
during the accounting period.
b. Depreciation
expense represents the impairment of the asset that has occurred during the
accounting period.
c. Depreciation
expense represents the unrealized loss that has been incurred by using the
asset during the accounting period.
d. Depreciation
expense represents the allocation of the historical cost of the asset that has
been applied to the accounting period.
Answer
11. A
company using the group depreciation method for its delivery trucks retired one
of its delivery trucks due to damage before the average service life of the group
was reached. An insurance recovery was received. The net book value of
these group asset accounts would be
decreased by the
a. Original
cost of the truck
b. Original
cost of the truck less the insurance recovery received
c. Original
cost of the truck less depreciation on the truck to the date of retirement
d. Insurance
recovery received
Answer
12. When
equipment is retired, accumulated depreciation is debited for the original cost
less any residual recovery under which of the following depreciation methods?
Composite Group
Depreciation Depreciation
a. No
No
b. No
Yes
c. Yes No
d. Yes
Yes
Answer
13. Recognizing
depletion expense is an example of the accounting process of
AllocationAmortization
a. No No
b. No Yes
c. Yes Yes
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