Question :
51. A leasehold refers to the rights the lessor grants to : 1258051
51. A leasehold refers to the rights the lessor grants to the lessee under the terms of the lease.
52. Intangible assets are nonphysical assets used in operations that confer on their owners’ long-term rights, privileges, or competitive advantages.
53. Since goodwill is an intangible, it is amortized each year using the straight-line method, the same as other intangibles are amortized.
54. A patent is an exclusive right granted to its owner to manufacture and sell a patented device or to use a process for 20 years.
55. A copyright gives its owner the exclusive right to publish and sell a musical, literary, or artistic work during the life of the creator plus 17 years.
56. A trademark is an exclusive right granted to its owner to publish and sell a musical, literary, or artistic work during the life of the creator plus 70 years.
Multiple Choice Questions
57. Plant assets are defined as:
A. Tangible assets that have a useful life of more than one accounting period and are used in the operation of a business.
B. Current assets.
C. Held for sale.
D. Intangible assets used in the operations of a business that have a useful life of more than one accounting period.
E. Tangible assets used in the operation of business that have a useful life of less than one accounting period.
58. One characteristic of plant assets is that they are:
A. Current assets.
B. Used in operations.
C. Natural resources.
D. Long-term investments.
E. Intangible.
59. The relevant factors in computing depreciation do not include:
A. Cost.
B. Salvage value.
C. Useful life.
D. Depreciation method.
E. Market value.
60. Salvage value is:
A. Not a factor relevant to determining depletion.
B. A factor relevant to amortizing an intangible asset with an indefinite life.
C. An estimate of the asset’s value at the end of its benefit period.
D. A factor relevant to determining depreciation under MACRS.
E. A factor relevant to determining depreciation that cannot be revised during an asset’s useful life.
61. Depreciation:
A. Measures the decline in market value of an asset.
B. Measures physical deterioration of an asset.
C. Is the process of allocating the cost of a plant asset to expense.
D. Is an outflow of cash from the use of a plant asset.
E. Is applied to land.
62. The useful life of a plant asset is:
A. The length of time it is productively used in a company’s operations.
B. Never related to its physical life.
C. Its productive life, but not to exceed one year.
D. Determined by the FASB.
E. Determined by law.
63. The term inadequacy, as it relates to the useful life of an asset, refers to:
A. The insufficient capacity of a company’s plant assets to meet the company’s growing production demands.
B. An asset that is worn out.
C. An asset that is no longer useful in producing goods and services.
D. The condition where the salvage value is too small to replace the asset.
E. The condition where the asset’s salvage value is less than its cost.
64. The term, obsolescence, as it relates to the useful life of an asset, refers to:
A. The end of an asset’s useful life.
B. A plant asset that is no longer useful in producing goods and services with a competitive advantage.
C. The insufficient capacity of a company’s plant assets to meet the company’s productive demands.
D. An asset’s salvage value becoming less than its replacement cost.
E. Intangible assets that have been fully amortized.
65. Once the estimated depreciation expense for an asset is calculated:
A. It cannot be changed,based on the historical cost principle.
B. It may be revised based on new information.
C. Any changes are accumulated and recognized when the asset is sold.
D. The estimate itself cannot be changed; however, new information should be disclosed in financial statement footnotes.
E. It cannot be changed,based on the consistency principle.
66. A machine originally had an estimated useful life of 6 years, but after 4 complete years, it was decided that the original estimate of useful life should have been 10 years. At that point the remaining cost to be depreciated should be allocated over the remaining:
A. 2 years.
B. 4 years.
C. 6 years.
D. 16 years.
E. 10 years.
