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ACC 291 Principles Of Accounting II Week 2 Practice Questions Chapter 9 Answers

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Phoenix ACC 291 Week 2 Practice Questions Chapter 9  Answers (2017)

  1. Land improvements are depreciable assets.
  2. Which of the following is not a depreciable asset?

  3. Book value and market value are synonymous terms as they relate to plant assets.

  4. Which depreciation method calculates annual depreciation expense based on book value at the beginning of each year?

  5. At the beginning of the year, Powers Company purchased a piece of machinery for $50,000. It has a salvage value of $5,000, an estimated useful life of 9 years, and estimated units of output of 90,000 units. Actual units produced during the first year were 11,000. How much is depreciation expense for the first year under the straight-line method? 

  6. Able Towing Company purchased a tow truck for $60,000 on January 1, 2012. It was originally depreciated on a straight-line basis over 10 years with an estimated salvage value of $12,000. On December 31, 2014, before adjusting entries had been made, the company decided to change the remaining estimated life to 4 more years as of January 1, 2014, and the salvage value was adjusted to $2,000. How much is depreciation expense for 2014?

  7. On June 1, 2014, Brislin Company sold some equipment for $22,000. The original cost was $80,000, the estimated salvage value was $8,000, and the expected useful life was 8 years. The equipment was fully depreciated. How much is the gain or loss on the sale?

  8. If a company reports goodwill as an intangible asset on its books, what is the one thing you know with certainty?

  9. Which one of these statements is true?

  10. Schneider Trucking Inc. purchased a new semi-truck on January 1, 2013 for $200,000. Its useful life is expected to be 4 years and its salvage value is estimated at $25,000. What is the depreciation for 2014 using the declining-balance method at double the straight-line rate?

  11. These expenditures were incurred by Wildhorse Co. in purchasing land: cash price $58,230, accrued taxes $4,980, attorney’s fees $2,770, real estate broker’s commission $3,020, and clearing and grading $4,140.

  12. Ivanhoe Company incurs these expenditures in purchasing a truck: cash price $22,420, accident insurance (during use) $1,720, sales taxes $1,400, motor vehicle license $690, and painting and lettering $2,120.

    What is the cost of the truck?

Practice Do It! Review 1

Martinez Company has an old factory machine that cost $66,000. The machine has accumulated depreciation of $36,960. Martinez has decided to sell the machine. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

(a)

 

What entry would Martinez make to record the sale of the machine for $33,000 cash?

(b)

 

What entry would Martinez make to record the sale of the machine for $19,800 cash?

Practice Exercise 1

Victor Mineli, the new controller of Cullumber Company, has reviewed the expected useful lives and salvage values of selected depreciable assets at the beginning of 2017. Here are his findings:

Practice Exercise 2

On January 1, 2017, Carla Vista Co. had a balance of $347,500 of goodwill on its balance sheet that resulted from the purchase of a small business in a prior year. The goodwill had an indefinite life. During 2017, the company had the following additional transactions.

Jan. 

2

 

Purchased a patent (6-year life) $332,850.

July 

1

 

Acquired a 10-year franchise; expiration date July 1, 2,027, $604,800.

Sept. 

1

 

Research and development costs $187,500.

Prepare the necessary entries to record the transactions related to intangibles. All costs incurred were for cash. (Record entries in the order displayed in the problem statement. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

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