1) All of the following are property, plant and equipment
except
Question 1 options:
land.
prepaid taxes.
a building.
:
equipment.
2) Which of the following assets is never amortized?
Question 2 options:
land
land improvements
patents
goodwill
3) The cost of land would include all of the followingexcept:
Question 3 options:
delinquent property taxes paid by the purchaser.
net purchase price.
grading of the land.
paving.
4) The cost of fencing should be charged to:
Question 4 options:
repairs expense.
land improvements.
land.
improvements expense.
5) The cost of a building would include all of the followingexcept:
Question 5 options:
architectural fees.
clearing and grading the land prior to construction of the building.
cost of repairs made to an old building to get it ready for occupancy.
costs of construction.
6) All of the following are characteristics of property, plant and equipmentexcept:
Question 6 options:
tangible.
long-lived.
held for investment.
used in the business.
7) A lump-sum purchase of assets requires an allocation of the purchase price among the assets acquired. This allocation method is called the:
Question 7 options:
book-value method.
relative-fair-value method.
accumulated method.
betterment approach.
8) For an asset that generates revenue fairly evenly over time, which is the most appropriate method of amortization?
Question 8 options:
units-of-production method
double declining balance method
straight-line method
declining-balance method
9) Which of the following is not a recognized amortization method?
Question 9 options:
straight-line method
lower-of-cost-or-market method
units-of-production method
double-declining-balance method
10) The process of allocating a property, plant, and equipment asset's cost to expense over the period the asset is used is called:
Question 10 options:
cash-basis accounting.
amortization.
accruing.
direct write-off.
11) Which amortization method generally results in the greatest amortization expense in the first full year of an asset's life?
Question 11 options:
straight-line
units-of-production
double-declining-balance
either straight-line or double-declining-balance
12) Amortizable cost equals cost minus:
Question 12 options:
residual value.
book value.
accumulated amortization.
current year's amortization expense.
13) Book value is defined as:
Question 13 options:
cost minus residual value.
cost minus accumulated amortization.
current market value minus residual value.
current market value minus accumulated amortization.
14) Multiplying the asset's book value by a constant percentage is the computation of amortization under:
Question 14 options:
the double-declining-balance method.
the units-of-production method.
the straight-line method.
either double-declining-balance method or straight-line method.
15)The amortization method that initially ignores residual value in the initial calculation is:
Question 15 options:
double-declining-balance.
straight-line.
both double-declining-balance and straight-line.
units-of-production.
16) A revision of an estimate that extends the asset's useful life:
Question 16 options:
requires restatement of prior years' financial statements.
is ignored until the last year of the asset's life.
decreases amortization expense per year for the remaining years of the asset's life.
increases amortization expense per year for the remaining years of the asset's life.
17) Which of the following statements regarding the relationship between amortization and income taxes is true?
Question 17 options:
All capital assets have the same amortization rate.
The same amortization method must be used for income tax purposes and for the books.
Canada Revenue Agency specifies the maximum amortization rate (CCA rate) a taxpayer may use.
Most companies use straight-line amortization for income tax purposes.
18) A loss is recorded on the disposal of property, plant and equipment when:
Question 18 options:
an asset is sold for a price greater than the asset's book value.
the asset's residual value is less than the cash received.
the asset's book value is greater than the amount of cash received from the sale.
the asset's amortizable cost is greater than the cash received.
19) Safeguarding property, plant and equipment includes all of the followingexcept:
Question 19 options:
training the operating personnel in the proper use of the assets.
setting up security measures to prevent theft.
separating custody of the assets from the accounting for the assets.
assigning responsibility for the custody of the assets to the accountant.
20) An asset was purchased for $12,000. The asset's estimated useful life was 5 years, and its residual value was $2,000. Straight-line amortization was used. How much gain or loss is reported if the asset is sold for $4,500 at the end of the third year?
Question 20 options:
$1,500 gain
$2,000 loss
No gain or loss
$1,500 loss
21) Which of the following is true about future removal and site restoration costs for natural resource companies?
Question 21 options:
These estimated costs are both an asset and a liability on the balance sheet.
These estimated costs impact only the asset section of the balance sheet.
These estimated costs impact only the liability section of the balance sheet.
These estimated costs do not impact the balance sheet but are disclosed in the notes.
22) Goodwill is equal to the excess of the cost of an acquired business over the sum of the:
Question 22 options:
book value of its net assets.
book value of its assets.
market value of its net assets.
market value of its assets.
23) Which of the following is the proper accounting treatment for purchased goodwill?
Question 23 options:
Goodwill must be capitalized when acquired, and amortized over 70 years or less.
Goodwill must be capitalized when acquired, and amortized over 20 years or less.
Goodwill must be expensed when acquired.
Goodwill must be capitalized when acquired, and expensed each year to the extent that the value has declined.