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Financial Accounting Exam 3 With Questions And 100% Correct Answers
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Financial Accounting Exam 3 With Questions And100% Correct Answers
A long-term asset is recorded at the: - ANS Cost of the asset plus all costs necessary to
the asset ready for use.
The Open Grill incurred the following costs in acquiring a new piece of land: What is the
total recorded cost of the land? - ANS $100,800.
The Cheese Factory had the following costs that are related to obtaining a new piece of
equipment: What is the total amount recorded for the equipment? - ANSWER $59,000.
Which of the following costs should be debited to an asset account? - ANSWER Interest
costs during the construction period of a new building.
A company purchased land and building from a seller for $900,000. A separate
appraisal reveals the fair value of the land to be $200,000 and the fair value of the
building to be $800,000. For what amount would the company record land at the time of
purchase? - ANSWER $180,000
Tasty Inn and Out incurred the following costs related to its purchase of equipment.
What is the recorded cost of the equipment? - ANSWER $11,900
An exclusive 20-year right to manufacture a product or to use a process is a: - ANSWER
Patent.
Which of the following is properly recorded as an intangible asset? - ANSWER A
purchased patent
, Which of the following is not recorded as an intangible asset in the balance sheet? - ANS
Research and development.
Which of the following expenditures should be recorded as an expense? - ANS Ordinary
repairs and maintenance.
Which of the following expenditures should be recorded as an asset? - ANS An addition
which increases future benefit
Which of the following expenditures should be capitalized? - ANS An improvement to a
tangible asset.
Which of the following methods of depreciation will result in the highest amount of
depreciation in an asset's first year? - ANS Double declining balance method.
Which of the following best describes depreciation? - ANS Depreciation is the allocation
of property, plant and equipment cost over service life.
Accumulated depreciation is: - ANS A contra-asset.
A company buys equipment for $100,000. The equipment is to be depreciated by the
straight-line method and has a carrying amount of $20,000 at the end of each year. At
the end of the second year, the equipment has a fair value of $82,000. What is the book
value of this equipment at the end of the second year? - ANSWER $60,000
Which of the following depreciation methods results in the largest total amount of
depreciation being recorded during an asset's entire service life? - ANSWER All of the
methods result in the same total amount of depreciation
Depreciation in accounting is the: - ANSWER Allocation of an asset's cost to an expense
over time
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