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    Homework   1.1  1.2   2.1  2.2  3.1  3.2   4.1  4.2  5.1  5.2   6.1   6.2  7.1  7.2  8.1  8.2  9.1  9.2  10.1   10.2  11.1   11.2  12.1  12.2   13.1  13.2

The cost at which a company records purchases of machinery and equipment should include which of the following?
 
Shipping fees
Installation
Taxes
Purchase price
   
Which of the following are plant assets?
 
Building being held for operations
Equipment being held for operations
   
Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for
its intended use. This would include which of the following costs?
 
Testing
Assembling
Ship
   
Alin Co. purchases a building for $300,000 and pays an additional $30,000 for closing costs (brokerage, title, attorney fees). Alin also pays
$20,000 in renovations, including painting, carpet, lighting, etc. Alin should record the cost of the building at:
 
$350,000
   
Wen Co. purchased a building for $200,000. Wen paid $20,000 in lawyer and title fees. Wen also paid an additional $15,000 to modify the
building in order to accommodate his business needs. Wen should record the cost of the building at:
 
$235,000
   
Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 closing fees (including title and lawyer fees). Geo also paid $60,000
to modify the building, changing the layout specifically for Geo's needs. Geo should record the building at $_____.
 
495,000
   
Assets that increase the benefits of land, have a limited useful life, and are depreciated—such as parking lots and street lights—are called:
 
land improvements
   
_____ assets are assets used in a company's operations that have a useful life of more than one accounting period.
 
Plant
   
Ion Co. purchased land for $190,000. Ion also paid $5,000 in brokerage fees, $1,000 in legal fees, and $500 in title costs. Ion should record
the cost of this land to be:
 
$196,500
   
Niren Co. made modifications to a manufacturing machine that increased its productivity by 40%. Niren would classify this expense as a(n):
 
Betterment
   
The cost of a plant asset includes the following:
Purchase price
Cost to prepare it for use
   
Cen Co. purchases land and a building for $130,000. The land is appraised at $100,000 and the building at $150,000. Allocating the cost
based on market values, the land should be recorded at what amount?
 
$52,000


[100,000/(100,000+150,000)] x 130,000
   
The factors necessary to compute depreciation include (cost/selling price/market value), salvage value and useful life.
 
cost
   
_____ are assets that are physically consumed when used, such as mineral deposits and oil and gas fields.
 
Natural resources
   
Quick Catering Co. paid for a refrigeration system to be added to their delivery van to keep the food cooled during deliveries.
To record this expense, Quick would debit the _____ account.
 
equipment
   
An oil company recognizes the cost of discovering and operating oil wells by recording _____ expense for each unit of oil used.
 
Depletion
   
Assets used in a company's operations that have a useful life of more than one accounting period are called _ assets.
 
plant
   
A company owns an asset that is fully depreciated. The asset is no longer being used in operations and has no market value.
The company has decided to _____ the asset by recording an entry to remove it from the balance sheet.
 
discard
   
Seven Co. owns a coal mine with an estimated 1,000,000 tons of available coal. It was purchased for $300,000 and has $50,000 salvage value.
During the current period, Seven mined and sold 200,000 tons of coal. Depletion expense for the period will be how much?
 
$50,000
   
Forward Co. discarded a machine that cost $5,000 and was fully depreciated. The entry to record this transaction would include a credit to the _____ account.
 
Machinery
   
The cost of plant assets should include all of the normal and reasonable expenditures necessary to get the asset in place and ready for its intended
use, including repairs to damages incurred after installation
 
False
   
To calculate depletion expense, first determine the depletion per unit. Depletion per unit can be calculated by taking (cost _____)/total units of capacity.
 
minus salvage value
   
Martinez Co. sells a machine that cost $10,000 with accumulated depreciation of $8,000 for $2,000 cash. The entry to record this transaction
will recognize a gain or loss of how much?
 
There is no gain or loss.
   
Brice Co. purchases land in order to drill oil. This oil field would be classified as a(n) _____ on the balance sheet.
 
natural resource
   
_____ are nonphysical assets (used in operations) that confer on their owners longer-term rights, or competitive advantages.
 
Intangible assets
   
PT Co. purchased land and an existing building for $200,000. In addition, PT paid closing costs of $15,000. PT removed the building and regarded
the land for a total cost of $35,000. PT should record the cost of the land for:
 
$250,000
   
Teshin Co. purchases a piece of land with several land improvements for $180,000. The land appraises at $120,000 and the land improvements
appraise at $80,000. The land should be recorded at what cost?
 
$108,000


[120,000/(120,000+80,000)] x 180,000 = 108,000
   
_______________ is the process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use.
 
Depreciation
   
The factors necessary to compute depreciation include all of the following, except:
 
Book value.
   
Consistent with the ________ principle, plant assets should be recorded at cost, which includes all the normal and reasonable expenditures
necessary to get the asset in place and ready for its intended use.
cost
   
Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for its
intended use. This would include which of the following costs? (Check all that apply.)
The cost of a plant asset
Shipping charges
Assembling


Testing
   
_______________ (Plant/Current) assets purchased as a group in a single transaction for a lump-sum price (also called a lump-sum, group, bulk, or basket purchase)
 
Plant
   
_____ is the process of allocating the cost of a natural resource to the period when it is consumed.
 
Depletion
   
______ value, also called residual value or scrap value, is an estimate of the asset's value at the end of its benefit period.
 
Salvage
   
The cost of a plant asset consists of all necessary and reasonable expenditures to acquire it and prepare it for its intended use.
 
True
   
The life (also called service life) is the length of time the asset is productively used in a company's operations.
 
useful
   
The cost at which a company records purchases of machinery and equipment should include which of the following? (Check all that apply.)
 
Shipping fees
Purchase price
Taxes
Installation
   
Accumulated depreciation is recorded on which of the following financial statements?
 
balance sheet
   
Book value can be calculated by taking an asset's acquisition cost less its _____ _____.
 
accumulated depreciation
   
Straight-line depreciation is calculated by taking cost minus _______________ (salvage/market) value divided by useful life.
 
Salvage
   
The term ______ refers to a plant asset that is in process of becoming outdated and no longer used.
 
obsolescence
   
Straight-line depreciation is calculated by taking cost minus (salvage/market) value divided by useful life.
 
salvage
   
Ring Co. owns a delivery van that was purchased two years ago for $25,000. Ring has depreciated the van for two years at a straight-line
amount of $4,000 per year. The book value of this van at the end of the second year would be $_____.
17,000
   
On January 2, Dice Co. purchases a mixing machine for $25,500. The machine is expected to last four years and have a salvage value of
$5,500. Assuming the company uses straight-line method, depreciation should be $_____ per year.
5,000
   
Geo Co. purchased a building for $400,000. In addition, Geo paid $35,000 closing fees (including title and lawyer fees). Geo also paid
$60,000 to modify the building, changing the layout specifically for Geo's needs. Geo should record the building at $.
 
495,000
   
When a company revises an estimate used to record depreciation expense, the company should revise depreciation by using the formula
(_______ - revised salvage value)/revised remaining useful life.
 
book value
   
A(n) _________ is a permanent decline in the market value of an asset relative to its book value.
 
Impairment
   
Nimo Co. purchased a machine for $12,000 and estimates it will use the machine for five years with a $2,000 salvage value. Using the
double declining-balance depreciation method, compute the machine's first year depreciation expense.
 
$4,800
12,000 x (1 / 5) x 2 =4,800
   
Assets that increase the benefits of land, have a limited useful life, and are depreciated—such as parking lots and street lights—are called:
 
land improvements.
   
Which of the following items are plant assets? (Check all that apply.)
 
Equipment being used in operations
   
On January 2, Dice Co. purchases a mixing machine for $25,500. The machine is expected to last four years and have a salvage value
of $5,500. Assuming the company uses the straight-line method, depreciation expense should be $ per year.
 
5,000
   
Depreciation Expense is reported on which of the following financial statements?
 
Income statement
   
Determine which of the following expenses are considered revenue expenditures related to a company vehicle. (Check all that apply.)
 
Car wash
Dent repair
Oil change
   
A permanent decline in the fair value of an asset relative to its book value is called asset ________ .
 
impairment
   
Grand Co. owns one copier that was purchased for $10,000 three years ago. The depreciation expense taken on the copier each
year has been $2,700; $1,800; and $2,200, based on the number of copies that have been made on the copier. Based on this
information, the company uses the  _____ depreciation method.
 
units-of-production
   
Depreciation Expense is reported on which of the following financial statements?
 
income statement
   
On January 1, Bora Co. purchased a delivery van for $22,000. Bora expects to drive the van for approximately 5 years or 100,000 miles,
before disposing of it for an estimated salvage value of $2,000. During the first year, Bora drives the van for 18,000 miles. How much would
 depreciation expense be if Bora uses the units-of-production depreciation method?
 
$3,600
   
Accumulated depreciation is a _____ asset account (one that is linked with the plant asset account, but has an opposite normal balance)
and is reported on the balance sheet.
 
contra
   
Privo Co. purchases a machine that cost $15,000. Privo estimates a 5-year life with no salvage value. The first three years of
depreciation expense are $6,000; $3,600; and $2,160, respectively. Based on this information, Privo is using the _____ depreciation method.
 
Declining balance
   
The cost of plant assets should include all of the normal and reasonable expenditures necessary to get the asset in place and
ready for its intended use, including repairs to damages incurred after installation.
 
False
   
The factors necessary to compute depreciation include all of the following, except:
 
book value
   
Land _____ are assets that increase the benefits of land, have a limited useful life, and are depreciated—such as walkways and fences.
 
improvements
   
_____ value, also called residual value or scrap value, is an estimate of the asset's value at the end of its benefit period.
 
Salvage
   
PT Co. purchased land and an existing building for $200,000. In addition, PT paid closing costs of $15,000. PT removed the
building and regraded the land for a total cost of $35,000. PT should record the cost of the land for:
 
$250,000
   
Straight-line depreciation can be calculated by taking:
 
(cost minus salvage value)/useful life
   
Which of the following items relate to depreciating equipment would be found on a company's income statement?
 
Depreciation Expense - Equipment
   
Which of the following factors determine depreciation?
 
Useful life
Cost of asset
Salvage value
   
Copyrights, trademarks, and other intangible assets are expensed over their useful lives through the process of:
 
amortization
   
Daley Co. owns a mineral deposit with an estimated 600,000 tons of available ore. It was purchased for $300,000 and
has no salvage value. During the current period, Daley mined and sold 40,000 tons of ore. Depletion expense for the
period will be how much?
 
$20,000
   
Which of the following intangible assets is not amortized using straight-line amortization?
 
Goodwill
   
(Capital/Revenue) expenditures are additional costs of plant assets that provide benefits extending beyond the current
period, such as a plant expansion, or machine overhaul.
 
Capital
   
Accumulated depletion is considered to be a ________ and is recorded on the _________.
 
contra-asset; balance sheet
   
_______ are expenditures that keep an asset in normal, good operating condition. They are necessary if an asset is to
perform to expectations over its useful life.
 
Ordinary repairs
   
Trio Co. reported that maintenance and repair costs are expensed as incurred. If Trio's current year machinery and equipment
repair costs are $8,200, which accounts would be impacted to complete the journal entry? (Check all that apply.)
 
Debit Repairs expense.
Credit Cash.
   
_______________ Revenue/Capital) expenditures are additional costs of plant assets that do not materially increase the asset's
life or productive capabilities.
 
Revenue
   
To calculate depletion expense in a period, a company should multiply the depletion per unit by:
 
units extracted and sold in the period
   
Determine which of the following expenses related to a building would be classified as a capital expenditure. (Check all that apply.)
 
New air conditioning system
Room addition
   
A company acquired a patent for $20,000 to manufacture and sell an item. The company intends to hold the patent for 5 years.
Amortization for the first year will be recorded with a debit to Amortization Expense for $_____.
 
4,000
   
The exclusive right to publish or sell a musical, literary piece, or artistic work during the life of the creator plus 70 years is called a
 
copyright
   
Which of the following asset(s) are not considered intangible assets?
 
Copy machine
Mineral deposit
   
Wyatt Co. purchased a popular symbol that doubled its sales in the first year. The cost of this symbol is an asset called a:
 
Trademark
   
Niren Co. made modifications to a manufacturing machine that increased its productivity by 40%. Niren would classify this expense as a(n):
 
betterment.
   
Modified Accelerated Cost Recovery System (MACRS) is a depreciation method that allows companies to delay depreciation expense for tax purposes.
 
False
   
Which depreciation method will compute the most depreciation expense over the life of the asset?
 
All methods will produce equal depreciation expense over the life of the asset.
   
Which of the following assets are amortized?
 
copyright
patent
   
The amount by which a company's value exceeds the value of its individual assets and liabilities is called _____.
 
goodwill
   
_____ is the amount by which a company's value exceeds the value of its individual assets and liabilities. It is recorded as
an intangible asset, but is not amortized.
 
Goodwill
   
Tops Co. purchases equipment for $12,000 and has been using straight-line depreciation, estimating a 5-year life and $500 salvage value.
At the beginning of the third year, Tops decides to use the equipment for a total of 6-years with no salvage value. Compute the revised depreciation for the third year.
 
$1,850


(12,000-500) / 5 = 2,300
2,300 x 2 years = 4,600
12,000-4,600 = 7,400 / 4 = 1,850
   
A _____ is an exclusive right granted to its owner to manufacture and sell an item or use a process for 20 years.
 
patent
   
The exclusive right to publish or sell a musical, literary, or artistic work during the life of a creator plus 70 years is called a _____.
 
Copyright
   
On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for four-years with a $2,000 salvage value.
Using the straight-line depreciation method, compute the machine's first year partial depreciation expense for October 30 through December 31.
 
$1,000


26,000 - 2,000 = 24,000 / 4 = 6000 per year. 6000 x 2/12 = 1,000.
   
On June 1, Harding Co. purchased a machine for $14,000 and estimates it will use the machine for five-years with a $2,000 salvage value.
Using the straight-line depreciation method, compute the machine's first year (partial) depreciation expense for June 1st through December 31st.
 
$1,400


(14,000-2000) / (5 x 7) / 12 = 1,400
   
A symbol, name, phrase or jingle identified with a company, product or service is called a _____.
 
trademark
   
_____ is measured as the excess of the cost of an acquired entity over the value of the acquired net assets.
 
Goodwill
   
The asset's acquisition costs less its accumulated depreciation is called:
 
book value
   
On October 30, Cleo Co. purchased a machine for $26,000 and estimates it will use the machine for four years with a $2,000 salvage value.
Using the straight-line depreciation method, compute the machine's first year partial depreciation expense for October 30 through December 31.
 
$1,000
   
At the beginning of the year, Jobs Co. owned one piece of office equipment, a copier. The copier was purchased two years ago for $12,000.
At the beginning of the year, the balance in accumulated depreciation was $4,000. Jobs uses straight-line depreciation of $2,000 per year
with a zero salvage value. How much is accumulated depreciation at the end of the year?
 
$6,000
   
Bina Co. purchased a vehicle on January 1st for $15,000 and estimates it will use the vehicle for eight years with a $3,000 salvage value.
Using the double declining-balance depreciation method, compute the vehicle's second year depreciation expense.
 
$2,812.50
   
Tops Co. purchases equipment for $12,000 and has been using straight-line depreciation, estimating a 5-year life and $500 salvage
value. At the beginning of the third year, Tops decides to use the equipment for a total of 6-years with no salvage value.
Compute the revised depreciation for the third year.
 
$1,850
   
The method of depreciation that charges a varying amount to depreciation expense for each period of an asset's useful life
depending on its usage is called the _____ method.
 
units-of-production
   
Depreciation expense is reported as a decrease in which of the following financial statements?
 
income statement
   
When a company revises an estimate used to record depreciation expense, the company should revise depreciation by using the
formula (_____ - revised salvage value)/revised remaining useful life.
 
book value
   
To calculate depletion expense, first determine the depletion per unit. Depletion per unit can be calculated by taking
(cost ______)/total units of capacity.
 
salvage value
   
On January 24, Bora Co. purchased a delivery van for $22,000. Bora expects to drive the van for approximately 5 years or 100,000
miles, before disposing of it for an estimated salvage value of $2,000. During the first year, Bora drives the van for 18,000 miles.
How much would depreciation expense be if Bora uses the units-of-production depreciation method?
 
$3,600
   
_____ are expenditures that make plant assets more efficient or productive, but do not always increase an asset's useful life.
 
Betterments
   
Accumulated depreciation is reported on which of the following financial statements?
 
balance sheet
   
Zion Co. paid cash for an upgrade to an existing machine that would reduce the amount of waste produced by the
machine (and therefore, increasing efficiency). The journal entry to record this upgrade would include which of the following entries?
 
debit to Machinery
credit to Cash
   
Daley Co. owns a mineral deposit with an estimated 600,000 tons of available ore. It was purchased for $300,000 and has no salvage
value. During the current period, Daley mined and sold 40,000 tons of ore. Depletion expense for the period will be how much?
 
$20,000
   
Determine which of the following expenses are considered revenue expenditures related to a company's vehicle.
 
Oil change
Car wash
Dent repair
 
Ella Co. owns a mineral deposit and recognizes $15,000 of depletion expense during the period. This entry will be recorded with a credit to:
   
Accumulated Depletion - Mineral Deposit
 
A plant asset is (depreciated/discarded/obsolete) when it is no longer useful to the company, and it has no market value.
 
discarded
   
Which of the following expenses would not be considered an ordinary repair?
 
Replacing an engine
   
Sangmoon Co. sells equipment for $1,000 cash. The equipment cost Sangmoon $6,500 and is fully depreciated at the time of
sale and has no salvage value. Sangmoon will record the sale with a credit to which account and for how much?
 
Gain on Sale of Equipment for $1,000.
   
On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated depreciation of $4,500. The
entry to record this disposal would include a debit to which account and for how much?
 
Loss on Disposal of Equipment for $1,500
   
A company sells a machine that cost $7,000 for $500 cash. The machine had $6,500 accumulated depreciation. The entry to
record this transaction will include which of the following entries?
 
debit to Cash for $500
debit to Accumulated Depreciation - Machinery for $6,500
credit to Machinery for $7,000
   
The purchase of multiple plant assets for one purchase price is called a _____ purchase.
 
lump-sum
   
An oil company recognizes the cost of discovering and operating oil wells by recording ______ expense for each unit of oil used.
 
depletion
   
When an asset is sold for an amount that is above the asset's current book value, the company should record?
 
a gain on sale of equipment.
   
On January 3, ATA Company purchases a copy machine for $11,500. The machine is expected to last five years and have a
salvage value of $1,500. Compute depreciation expense for the first year, assuming the company uses the straight-line method.
 
$2,000
   
Which of the following situations will result in recognizing a gain on sale of a plant asset?
 
A fully depreciated asset is sold for $1,000.
   
Rino Co. pays $35,000 for equipment. The machine's useful life is estimated at 10 years, or 50,000 units of product with a $5,000 salvage
value. During the first year, the machine produced 12,000 units of product. How much depreciation expense will Rino record this first
year based on the units-of-production depreciation method?
 
$7,200
   
Brice Co. purchases land in order to drill oil. This oil field would be classified as a(n) _______ on the balance sheet.
 
natural resource
   
At the beginning of the year, Jobs Co. owned one piece of office equipment, a copier. The copier was purchased two years ago for $12,000.
At the beginning of the year, the balance in accumulated depreciation was $4,000. Jobs uses straight-line depreciation of $2,000 per year
with a zero salvage value. How much is accumulated depreciation at the end of the year?
 
$6,000
   
____________ (Revenue/Capital) expenditures are additional costs of plant assets that do not materially increase the asset's life or
productive capabilities.
 
Revenue
   
A delivery van that cost $45,000 with accumulated depreciation of $15,000 is sold for $20,000. How much gain or loss will be recognized on this sale?
 
$10,000 loss
   
On December 31, Briar Co. disposed of a piece of equipment that cost $6,000 with accumulated depreciation as of December 31
of $4,500. The entry to record this disposal would include a debit to which account and for how much?
 
Loss on Disposal of Equipment for $1,500
   
Seven Co. owns a coal mine with an estimated 1,000,000 tons of available coal. It was purchased for $300,000 and has $50,000 salvage
value. During the current period, Seven mined and sold 200,000 tons of coal. Depletion expense for the period will be how much?
 
$50,000


(300,000 - 50,000)/1,000,000 x 200,000 = 50,000.
   
Martinez Co. sells a machine that cost $10,000 with accumulated depreciation of $8,000 for $2,000 cash. The entry to record this
transaction will recognize a gain or loss of how much?
There is no gain or loss.
   
_____ are expenditures that keep an asset in normal, good operating condition. They are necessary if an asset is to perform to expectations
over its useful life.
 
Ordinary repairs
   
_____ is the process of allocating the cost of a plant asset to expense in the accounting periods from its use.
 
Depreciation
   
_______ is the process of allocating the cost of a natural resource to the period when it is consumed.
 
Depletion
   
______ are assets that are physically consumed when used, such as mineral deposits and oil and gas fields.
 
Natural resources
   
On January 1, Enco Co. purchases a milling machine for $15,000. The machine is expected to last seven years and have a salvage
value of $1,000. Assuming the company uses the straight-line method, depreciation expense should be $ per year.
 
$2,000
   
T. Chung Co. sold a computer for $500 cash. The computer cost $3,000 and had accumulated depreciation of $2,200 at the time
of the sale. Chung will record the sale with an entry to the (Gain/Loss) on Disposal of Equipment account in the amount of $______-.
 
Loss; $300
   
__________________ (Plant/Current) assets purchased as a group in a single transaction for a lump-sum price (also called a lump-sum,
group, bulk, or basket purchase) are allocated the purchase price based on their relative market values.
 
Plant
   
To calculate depletion expense in a period, a company should multiply the depletion per unit by:
 
units extracted and sold in the period
   
The ______ life of a plant asset is the length of time it is productively used in a company's operations
 
Useful
   
The depreciation method that determines the depreciation charge for the period by multiplying a depreciation rate
(often twice the straight-line rate) by the asset's beginning-period book value is known as the __________ method.
 
Declining balance
   
Ironworks Co. sells a machine that cost $5,000 with a current book value of $1,500 for $2,000 cash. Ironworks will record a debit
to which account and for how much?
 
Accumulated Depreciation - Equipment for $3,500
   
Modified Accelerated Cost Recovery System is acceptable for financial reporting purposes.
 
Not
   
A company sells a machine that cost $7,000 for $500 cash. The machine had $6,500 accumulated depreciation. The entry to record this
transaction will include which of the following entries? (Check all that apply.)
 
Debit to Cash for $500.
Credit to Machinery for $7,000.
Debit to Accumulated Depreciation - Machinery for $6,500.
   
Accumulated depreciation is a ___________ asset account (one that is linked with the plant asset account, but has an opposite normal balance)
and is reported on the balance sheet.
 
contra
   
Plant assets should be recorded at cost, including all normal and reasonable expenditures necessary to get the asset in place and ready for its
intended use. This would include which of the following costs? (Check all that apply.)
 
Testing
Shipping charges
Assembling
   
The asset's acquisition costs less its accumulated depreciation is called:
 
book value
   
The book value of an asset when using straight-line depreciation is always greater than the book value from using double-declining-
balance, except at the beginning and end of the asset's useful life, when it is the same.
 
True
   
A plant asset is (depreciated/discarded/obsolete) when it is no longer useful to the company, and it has no market value.
 
discarded
   
Which of the following items related to depreciating equipment would be found on a company's income statement?
 
Depreciation Expense – Equipment
   
Accumulated depreciation is recorded on which of the following financial statements?
 
Balance sheet
   
Alin Co. purchases a building for $300,000 and pays an additional $30,000 for closing costs (brokerage, title, attorney fees).
Alin also pays $20,000 in renovations, including painting, carpet, lighting, etc. Alin should record the cost of the building at:
 
$350,000.
   
Wen Co. purchased a building for $200,000. Wen paid $20,000 in lawyer and title fees. Wen also paid an additional $15,000 to
modify the building in order to accommodate his business needs. Wen should record the cost of the building at:
 
$235,000
   
Arc Co. purchased a piece of equipment for $25,000. At the end of the year, the book value of the equipment is $12,000.
The salvage value is 0. How much is accumulated depreciation at the end of the period?
 
$13,000
   
Digg Co. installs a manufacturing machine in its factory at the beginning of the year at a cost of $36,000. The machine's useful life is
estimated at 10 years, or 300,000 units of product, with a $6,000 salvage value. During its first year, the machine produces 14,000
units of product. Determine the machine's first year depreciation expense under the units-of-production method.
 
$1,400


(36,000-6,000) / 300,000 x 14,000 = 1,400
   
The method of depreciation that charges a varying amount to depreciation expense for each period of an asset's useful life depending
on its usage is called the _________ method.
 
units-of-production
   
Grand Co. owns one copier that was purchased for $10,000 three years ago. The depreciation expense taken on the copier each year has
been $2,700; $1,800; and $2,200, based on the number of copies that have been made on the copier. Based on this information, the
company uses the ________ depreciation method.
 
units-of-production
   
Rojo's Roses Co. received an invoice for replacement of the engine on its main delivery van. The replacement will extend the life of the
van an additional three years. The entry to record receipt of the invoice would include which of the following entries? (Check all that apply.)
 
Debit to Equipment.
Credit to Accounts Payable.
   
Juno Co. purchased a machine for $10,000 and estimates it will use the machine for four years with a $2,000 salvage value.
Using the double declining-balance depreciation method, compute the machine's first year depreciation expense.
 
$5,000


$10,000 x (.25 x 2) = $5,000.
   
Book value can be calculated by taking an asset's acquisition costs less its ___________ ______________.
 
Accumulated, depreciation
   
Rino Co. pays $35,000 for equipment. The machine's useful life is estimated at 10 years, or 50,000 units of product with a $5,000
salvage value. During the first year, the machine produced 12,000 units of product. How much depreciation expense will Rino
record this first year based on the units-of-production depreciation method?
 
$7,200


(35,000-5,000)/50,000 x 12,000
   
Ion Co. purchased land for $190,000. Ion also paid $5,000 in brokerage fees, $1,000 in legal fees, and $500 in title costs. Ion should
record the cost of this land to be:
 
$196,500
   
Quick Catering Co. paid for a refrigeration system to be added to their delivery van to keep the food cooled during deliveries.
To record this expense, Quick would debit the ________ account.
 
Equipment
   
The inability of a company's plant assets to meet its demands is called:
 
inadequacy
   
Land _______ are assets that increase the benefits of land, have a limited useful life, and are depreciated—such as
walkways and fences.
 
improvements
   
The purchase of multiple plant assets for one purchase price is called a ______ purchase.
 
lump-sum
   
Forward Co. discarded a machine that cost $5,000 and was fully depreciated. The entry to record this transaction
would include a credit to the _________ account.
 
Machinery
   
Privo Co. purchases a machine that cost $15,000. Privo estimates a 5-year life with no salvage value. The first three years of depreciation
expense are $6,000; $3,600; and $2,160, respectively. Based on this information, Privo is using the ________ depreciation method.
 
 
declining-balance
   
Straight-line depreciation can be calculated by taking:
 
(cost - salvage value) / useful life
   
_________ are expenditures that make a plant asset more efficient or productive, but do not always increase an asset's useful life.
 
Betterments
   
Sioux Co. replaced the roof on its existing building, therefore increasing the building's life by 10 years. The cost of the roof is considered a(n):
 
extraordinary repair
   
A company owns an asset that is fully depreciated. The asset is no longer being used in operations and has no market value.
The company has decided to ________ the asset by recording an entry to remove it from the balance sheet.
 
discard
   
Which of the following expenses would not be considered an ordinary repair?
 
Replacing an engine
   
Zion Co. paid cash for an upgrade to an existing machine that would reduce the amount of waste produced by the machine
(and therefore, increasing efficiency). The journal entry to record this upgrade would include which of the following entries?
(Check all that apply.)
 
Debit to Machinery
Credit to Cash
Ordinary repairs, such as repairs and maintenance to a vehicle, would be recorded with a debit to which of the following accounts?
Repairs expense
   
Determine which of the following expenses are considered revenue expenditures related to a company vehicle. (Check all that apply.)
 
Oil change
Dent repair
Car wash
   
___________ are expenditures that extend the asset's useful life beyond its original estimate.
Extraordinary repairs
   
Diamond Co. paid cash to overhaul a forklift, which extended the life of the forklift for an additional four years.
The entry to record this purchase would include a debit to the _______ account.
 
Equipment

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