Question 1

At December 31,2018 and 2017,respectively,Tyler Industries reported land,buildings,and equipment totaling $5,655,000 and $2,152,000 along with Accumulated Depreciation of $1,000,000 and $600,000 on its balance sheets.Revenues amounted to $38,227,000 and $12,113,000 for 2018 and 2017,respectively.
Required:
Part a.Compute Tyler's fixed asset turnover ratio for the year ended December 31,2018.
Part b.Assume that Tyler's fixed asset turnover ratio increased from 2017 to 2018.How might an analyst interpret an increasing ratio?
Part c.Alternatively,assume that Tyler's fixed asset turnover rate decreased.Does a declining ratio always indicate a negative trend?

Accepted Answer

Part a
Average net fixed assets = (Begin...

Question 2

An asset's residual value is:

Accepted Answer

A)  the estimated amount it can be sold for at the end of its useful life.
B)  its cost minus its accumulated depreciation.
C)  its cost plus any costs to install it and place it in service.
D)  equal to its accumulated depreciation.E) A) and B)
F) A) and C)

Question 3

Match each term with the appropriate definition.Not all definitions will be used.
-Fixed assets

Accepted Answer

A)  When a company expenses the entire cost of a long-lived asset in the first year of use.
B)  When a company receives free publicity in return for charitable contributions.
C)  A tax law dealing with how companies can depreciate their assets.
D)  The acquisition cost of an asset minus its accumulated depreciation.
E)  When a company expenses the cost of a long-lived asset by a constant annual amount.F) The exclusive right to sell or use a product or process that is granted to encourage innovation.G) Net income plus interest,taxes,depreciation and amortization expenses.H) Tangible long-lived assets.I) An intangible asset that represents the value of unidentifiable assets acquired.J) Names or images that appear with a ® or TM.K) What a company expects to receive when an asset is disposed of at the end of its useful life.L) Assets whose values do not change over time.M) When a company allocates the cost of a long-lived asset at a higher rate in the first years of use.N) The estimated total use a company expects to receive from an asset.O) B) and C)
P) E) and L)

Question 4

The following information is available from the accounting records of the Bright Company:  What is the fixed asset turnover ratio?

Accepted Answer

A)  0.10 times
B)  3 times
C)  3.27 times
D)  10 timesE) C) and D)
F) All of the above

Question 5

Wilshire Company purchased land for $120,000.The cost to demolish the existing building and prepare the land for a new building was $16,000.The real estate commission paid to buy the land was $7,200.What amount should be recorded in Wilshire's accounting records for the cost of the land?

Accepted Answer

A)  $143,200
B)  $120,000
C)  $127,200
D)  $136,000E) A) and B)
F) C) and D)

Question 6

When a company sells equipment for cash on a date other than the last day of the accounting period,it must:

Accepted Answer

A)  record Depreciation Expense for the entire accounting period during which the equipment is sold.
B)  record the disposal by reducing the Equipment account and increasing a revenue account;a gain or loss is reported if the decrease and increase are not equal.
C)  first record Depreciation Expense for the period up to the date of sale,and then record the disposal by increasing Cash and decreasing both Equipment and Accumulated Depreciation;a gain or loss is reported if the proceeds from the sale do not equal the asset's book value.
D)  record Accumulated Depreciation for the entire current accounting period.E) A) and D)
F) B) and C)

Question 7

Companies with the same asset may report different amounts of depreciation in a given year for all of the following reasons,except:

Accepted Answer

A)  They use different residual values.
B)  They use different estimated useful lives.
C)  They use different depreciation methods.
D)  They are in different industries.E) A) and B)
F) A) and C)

Question 8

Amortization is an adjusting entry that records the amount of:

Accepted Answer

A)  intangible assets' usefulness used during the accounting period.
B)  tangible assets' remaining usefulness as of the end of the accounting period.
C)  the increase in value of intangible assets during the accounting period.
D)  the increase in value of tangible assets during the accounting period.E) A) and D)
F) B) and C)

Question 9

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Which of the following statements is correct?

Accepted Answer

A)  Company A will have higher depreciation expense in the early years,but Company B will have the higher depreciation expense towards the end of the asset's useful life.
B)  Company A will consistently have higher depreciation expense until residual value is reached.
C)  Company B will have higher depreciation expense in the early years,but Company A will have the higher depreciation expense towards the end of the asset's useful life.
D)  Company B will consistently have higher depreciation expense until residual value is reached.E) C) and D)
F) B) and D)

Question 10

Which of the following statements about capitalizing costs is correct?

Accepted Answer

A)  Capitalizing costs refers to the process of converting assets to expenses.
B)  All costs incurred to acquire an asset may be capitalized.
C)  Capitalizing a cost means to record it as an asset.
D)  Capitalizing costs results in an immediate decrease in net income.E) None of the above
F) B) and C)

Question 11

Match each asset with the appropriate category.
-Licensing rights

Accepted Answer

A)  I - Intangible long-lived asset
B)  N - Not a long-lived asset
C)  T - Tangible long-lived assetD) A) and C)
E) All of the above

Question 12

Which of the following costs associated with long-lived assets are expensed (rather than capitalized) ?

Accepted Answer

A)  Extraordinary repairs and maintenance
B)  Delivery costs
C)  Interest on loans to purchase the assets
D)  Installation costsE) A) and B)
F) B) and D)

Question 13

Which of the following statements about straight-line depreciation is correct?

Accepted Answer

A)  Straight-line depreciation is the most common method of depreciation used in the U.S.for financial reporting,but is not commonly used for taxes.
B)  When the straight-line method is used to compute depreciation,an asset's carrying value remains constant over the life of the asset.
C)  Straight-line depreciation is an approved method to allocate the cost of an asset to expense and it serves as a measure of the physical decline in the asset.
D)  The straight line method of depreciation results in a straight-line increase of depreciation expense over the life of an asset.E) A) and C)
F) All of the above

Question 14

If a truck's engine is overhauled for $8,000,the journal entry would normally include a debit to:

Accepted Answer

A)  Vehicles.
B)  Accounts Payable.
C)  Depreciation Expense.
D)  Cash.E) None of the above
F) A) and B)

Question 15

A piece of equipment was acquired on January 1,2018,at a cost of $22,000,with an estimated residual value of $2,000 and an estimated useful life of four years.The company uses the double-declining-balance method.What is its book value at December 31,2019?

Accepted Answer

A)  $5,500
B)  $10,000
C)  $11,000
D)  $12,000E) All of the above
F) C) and D)

Question 16

Complete the table below by placing "X's" in the correct columns to identify the: (1)type of asset and (2)appropriate method of allocating the existing costs that were already recorded.

Accepted Answer

The answer of Complete the table below by placing "X's"...

Question 17

The machine was originally purchased on January 1,2017 for $40,000.The machine was estimated to have a useful life of 5 years and no residual value.The company uses straight-line depreciation.On December 31,2018,the machine was sold for $25,000.
Required:
Part a.Determine the gain (loss)on disposal,if any.
Part b.Prepare the journal entry to record the sale.
Part c.Assuming that the company had used the double-declining balance method instead of the straight-line method,explain how this would this have affected the gain (or loss)on the sale.(Do not include any calculations. )

Accepted Answer

Part a
Annual depreciation expense = (Co...

Question 18

Extraordinary repairs:

Accepted Answer

A)  are revenue expenditures.
B)  extend an asset's life beyond the original estimate.
C)  are expensed as incurred.
D)  are credited to Accumulated Depreciation.E) B) and D)
F) None of the above

Question 19

Intangible assets with limited lives are usually amortized using the straight-line method with no residual value.

Accepted Answer

A) True 
 B)False

Question 20

Superior,Inc.just bought a new machine to be used on its production line.Which of these costs should not be capitalized?

Accepted Answer

A)  The $600,000 invoice price of the machine.
B)  The $18,000 freight bill to deliver the machine to Superior's factory.
C)  The $9,600 cost of tearing down Superior's factory wall to get the machine inside.
D)  The $520 increase in annual insurance costs for the machine.E) B) and D)
F) C) and D)

Exam 9: Long-Lived Tangible and Intangible Assets

Companies with the same asset may report different amounts of depreciation in a given year for all of the following reasons,except:

Correct Answer
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Amortization is an adjusting entry that records the amount of:

Correct Answer
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Extraordinary repairs:

Correct Answer
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Match each term with the appropriate definition.Not all definitions will be used. -Fixed assets

Correct Answer
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The following information is available from the accounting records of the Bright Company: What is the fixed asset turnover ratio?

Correct Answer
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Correct Answer
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Part a
Average net fixed assets = (Begin...
View Answer

A piece of equipment was acquired on January 1,2018,at a cost of $22,000,with an estimated residual value of $2,000 and an estimated useful life of four years.The company uses the double-declining-balance method.What is its book value at December 31,2019?

Correct Answer
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Intangible assets with limited lives are usually amortized using the straight-line method with no residual value.

Correct Answer
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An asset's residual value is:

Correct Answer
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Wilshire Company purchased land for $120,000.The cost to demolish the existing building and prepare the land for a new building was $16,000.The real estate commission paid to buy the land was $7,200.What amount should be recorded in Wilshire's accounting records for the cost of the land?

Correct Answer
verified

When a company sells equipment for cash on a date other than the last day of the accounting period,it must:

Correct Answer
verified

Which of the following statements about capitalizing costs is correct?

Correct Answer
verified

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Which of the following statements is correct?

Correct Answer
verified

Match each asset with the appropriate category. -Licensing rights

Correct Answer
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Which of the following statements about straight-line depreciation is correct?

Correct Answer
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Complete the table below by placing "X's" in the correct columns to identify the: (1)type of asset and (2)appropriate method of allocating the existing costs that were already recorded.

Correct Answer
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Correct Answer
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Part a
Annual depreciation expense = (Co...
View Answer

Which of the following costs associated with long-lived assets are expensed (rather than capitalized) ?

Correct Answer
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Superior,Inc.just bought a new machine to be used on its production line.Which of these costs should not be capitalized?

Correct Answer
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If a truck's engine is overhauled for $8,000,the journal entry would normally include a debit to:

Correct Answer
verified

Exam 9: Long-Lived Tangible and Intangible Assets

Companies with the same asset may report different amounts of depreciation in a given year for all of the following reasons,except:

Correct AnswerverifiedShow Answer

Amortization is an adjusting entry that records the amount of:

Correct AnswerverifiedShow Answer

Extraordinary repairs:

Correct AnswerverifiedShow Answer

Match each term with the appropriate definition.Not all definitions will be used. -Fixed assets

Correct AnswerverifiedShow Answer

The following information is available from the accounting records of the Bright Company: What is the fixed asset turnover ratio?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedPart aAverage net fixed assets = (Begin...View AnswerShow Answer

A piece of equipment was acquired on January 1,2018,at a cost of $22,000,with an estimated residual value of $2,000 and an estimated useful life of four years.The company uses the double-declining-balance method.What is its book value at December 31,2019?

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Intangible assets with limited lives are usually amortized using the straight-line method with no residual value.

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An asset's residual value is:

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Wilshire Company purchased land for $120,000.The cost to demolish the existing building and prepare the land for a new building was $16,000.The real estate commission paid to buy the land was $7,200.What amount should be recorded in Wilshire's accounting records for the cost of the land?

Correct AnswerverifiedShow Answer

When a company sells equipment for cash on a date other than the last day of the accounting period,it must:

Correct AnswerverifiedShow Answer

Which of the following statements about capitalizing costs is correct?

Correct AnswerverifiedShow Answer

Company A uses an accelerated depreciation method while Company B uses the straight-line method for an asset of the same cost and useful life.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Match each asset with the appropriate category. -Licensing rights

Correct AnswerverifiedShow Answer

Which of the following statements about straight-line depreciation is correct?

Correct AnswerverifiedShow Answer

Complete the table below by placing "X's" in the correct columns to identify the: (1)type of asset and (2)appropriate method of allocating the existing costs that were already recorded.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedPart aAnnual depreciation expense = (Co...View AnswerShow Answer

Which of the following costs associated with long-lived assets are expensed (rather than capitalized) ?

Correct AnswerverifiedShow Answer

Superior,Inc.just bought a new machine to be used on its production line.Which of these costs should not be capitalized?

Correct AnswerverifiedShow Answer

If a truck's engine is overhauled for $8,000,the journal entry would normally include a debit to:

Correct AnswerverifiedShow Answer

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Part a
Average net fixed assets = (Begin...
View Answer

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Part a
Annual depreciation expense = (Co...
View Answer

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Correct Answer
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