Question :
81.The allocation of the costs of natural resources, such as : 1169027
81.The allocation of the costs of natural resources, such as minerals, to the units produced is referred to as
A. depreciation.
B. depletion.
C. amortization.
D. salvage value.
82.When computing depreciation, the salvage value should be ignored if a company uses
A. the units-of-output method.
B. the sum-of-the-years’-digits method.
C. the declining-balance method.
D. the straight-line method.
83.The amount of a long-term asset’s impairment is
A. the difference between the asset’s current market value and historical cost.
B. the estimated net cash flows from the asset’s future use less its accumulated depreciation.
C. the current market value of the asset.
D. the amount by which the asset’s book value exceeds its market value.
84.Dom’s Delivery purchased a van for $32,000. The transportation charges were $400, sales tax was $2,240, and the license cost $250. Special shelving was installed in the van for $4,300. In addition, Dom had the company name painted on the doors. This cost the company $1,250. The total cost of the van to record in the proper asset account is
A. $40,190.
B. $40,440.
C. $38,940.
D. $39,190.
85.Which of the following is NOT a class under MACRS for personal property?
A. 5 year class
B. 7 year class
C. 10 year class
D. 27.5 year class
86.Under MACRS, the highest percent—resulting in the highest depreciation expense—occurs during which year?
A. first
B. second
C. third
D. fourth
87.Financial accounting rules (GAAP) and federal income tax rules differ for handling depreciation on the trade-in of an asset. Which of the following is correct?
A. Option A.
B. Option B.
C. Option C.
D. Option D.
88.Which of the following abides by the principle of conservatism regarding trade-ins?
A. recording only the loss
B. recording only the gain
C. recording both the loss and the gain
D. recording neither the loss nor the gain
89.For federal income tax purposes, the depletion expense deducted from income is the larger of cost depletion or ___________.
A. amount per table provided with forms
B. percentage depletion
C. units-of-output times the calculated rate per unit
D. number of units extracted times the calculated rate per unit
90.The process by which the cost of natural resources extracted are allocated is
A. depreciation.
B. amortization.
C. depletion.
D. evaluation.
91.All of the following refer to the handling of a decline in value of property, plant, and equipment except
A. depreciation.
B. impairment.
C. realization principle.
D. conservatism constraint.
92.The steps in the process of determining an impairment loss in their proper order are
A. apply the recoverability test, review circumstances that suggest impairment, compute the amount of the impairment.
B. apply the recoverability test, review circumstances that suggest impairment, record the amount of the impairment.
C. review circumstances that suggest impairment, apply the recoverability test, and compute the amount of the impairment.
D. review circumstances that suggest impairment, apply the recoverability test, record the amount of the impairment.
93.Blue Box Company was purchased for $115 million 10 years ago by the Big Box Company. The assessed (market) value of assets at the time of purchase was estimated at $90 million and the additional cash paid over the purchase price was recorded as goodwill. As a result of various product defects over the years, the market value of the Blue Box acquisition dropped to $80 million. Big Box recorded the corresponding impairment loss but instead of spinning off the division, management at Big Box invested heavily this past year in quality improvement programs that resulted in an increase in the market value of the Blue Box acquisition up to $120 million. In the current year, Big Box should
A. reinstate the original $25 million recognized as goodwill at acquisition.
B. write up Blue Box goodwill to the new $120 million market value.
C. record additional goodwill of $5 million.
D. do nothing with respect to the higher market value of Blue Box.
94.Intangible assets may be purchased or developed. If developed, they are categorized as Research and Development and
A. depreciated over their useful life.
B. amortized over their useful life.
C. depleted over their useful life.
D. expensed.
95.Amortization is the periodic transfer of an intangible’s cost to expense done on a
A. straight-line or unit-of-production basis.
B. straight-line or sum-of-the years basis.
C. declining basis or percentage depletion basis.
D. percentage depletion or straight-line basis.
