Question :
81. The entry to record patent amortization of $4,500 embedded in : 1230670
81. The entry to record patent amortization of $4,500 embedded in a product is as follows:
A. Work-in-Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
B. Finished Goods Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Patent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
C. Work-in-Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Allowance for Amortization of Patent . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
D. Finished Goods Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Allowance for Amortization of Patent . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
E. none of the above
82. The entry to record amortization of a customer list in the amount of $4,500 is as follows:
A. Amortization (or Selling) Expense . . . . . . . . . . . . . . . . . . . . . . . 4,500
Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
B. Finished Goods Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
C. Work-in-Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
D. Amortization (or Selling) Expense . . . . . . . . . . . . . . . . . . . . . . . 4,500
Allowance for Amortization of Customer List . . . . . . . . . . . . . . .. . . . . 4,500
E. Work-in-Process Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,500
Allowance for Amortization of Customer List . . . . . . . . . . . . . . .. . . . . 4,500
83. The Work-in-Process Inventory account is _____. Product costs accumulate in the Work-in-Process Inventory account until the firm completes the goods and transfers them to _____.
A. an asset; Finished Goods Inventory
B. a liability; Finished Goods Inventory
C. an asset; Cost of Goods Sold
D. a liability; Cost of Goods Sold
E. produced capital; Cost of Goods Sold
84. The original depreciation or amortization schedule for long-lived assets sometimes requires changing. Which of the following is not true?
A. Each period a firm must evaluate its estimates of service life and assess if these estimates require changing in light of new information.
B. Each period a firm must evaluate its estimates of salvage value and assess if these estimates require changing in light of new information.
C. The firm makes no adjustment for the past misestimate but spreads the remaining carrying value less the new estimate of salvage value over the new estimate of the remaining service life of the asset.
D. If changing from the old estimates to the new estimates would have a material impact, the firm must change the depreciation or amortization schedule retroactively.
E. none of the above
85. A firm purchased an office machine for $18,400, estimated that it will use the machine for 15 years, and estimated a salvage value of $400. On December 31 of the sixth year, before closing the books for the year, the firm analyzed its estimates of useful life and salvage value. In light of new information, the firm estimated that the machine will have a total useful life of only 10 years, and the salvage estimate of $400 remains reasonable.
The new estimate of the remaining life is five years (the year just ended plus the next four). The depreciation entry on December 31 of the sixth year and each year thereafter is:
A. Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,200
B. Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,400
C. Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . .1,200
Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,200
D. Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . .2,400
Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400
E. none of the above
86. A firm purchased an office machine for $4,600, estimated that it will use the machine for 15 years, and estimated a salvage value of $100. On December 31 of the sixth year, before closing the books for the year, the firm analyzed its estimates of useful life and salvage value. In light of new information, the firm estimated that the machine will have a total useful life of only 10 years, and the salvage estimate of $100 remains reasonable.
The new estimate of the remaining life is five years (the year just ended plus the next four). The depreciation entry on December 31 of the sixth year and each year thereafter is:
A. Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .300
B. Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600
Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .600
C. Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . .300
Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300
D. Accumulated Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . .600
Depreciation Expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600
E. none of the above
87. Firms often incur costs to maintain, repair, and improve their tangible assets. U.S. GAAP and IFRS require firms to treat expenditures for _____ as _____ as incurred but _____ treat as _____.
A. maintenance and repairs; expenses of the period; expenditures for improvements; assets
B. maintenance and repairs; assets; expenditures for improvements; expenses of the period
C. maintenance and repairs; expenses of the period; expenditures for improvements; liabilities
D. maintenance and repairs; liabilities; expenditures for improvements; expenses of the period
E. maintenance and repairs; assets; expenditures for improvements; liabilities
88. Which of the following is/are not true regarding maintenance?
A. Maintenance includes routine costs such as for cleaning and adjusting.
B. Maintenance includes the costs of restoring an asset’s service potential after breakdowns or other damage.
C. Maintenance does not extend the estimated service life or increase its productive capacity of an asset beyond original expectations.
D. U.S. GAAP and IFRS treat maintenance expenditures as expenses of the period when the firm makes the expenditure.
E. Distinguishing repairs from maintenance is difficult but typically not necessary because expenditures for both are period expenses.
89. Which of the following is/are not true regarding repairs?
A. Repairs include routine costs such as for cleaning and adjusting.
B. Repairs include the costs of restoring an asset’s service potential after breakdowns or other damage.
C. Repairs do not extend the estimated service life or increase its productive capacity of an asset beyond original expectations.
D. U.S. GAAP and IFRS treat repair expenditures as expenses of the period when the firm makes the expenditure.
E. Distinguishing repairs from maintenance is difficult but typically not necessary because expenditures for both are period expenses.
90. Which of the following is not true regarding expenditures for improvements?
A. Improvements are sometimes called betterments
B. Improvements may increase an asset’s performance by increasing the service life.
C. Improvements may increase an asset’s performance by reducing the operating costs.
D. Improvements may increase an asset’s performance by increasing the rate of output.
E. When the firm makes the expenditure for improvements, it recognizes the cost of the improvement by debiting the Improvement Expense account.
