WSU Accounting 230 Exam 3 Questions With Correct Answers
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Course
WSU Accounting 230
Institution
WSU Accounting 230
WSU Accounting 230 Exam 3 Questions
With Correct Answers
Recording an expenditure as an asset if it increases future benefits; if it only increase benefits
during the current period then we label it as an expense. - answerWhat does the term
"capitalize" mean?
Land, land improvements, buildings...
WSU Accounting 230 Exam 3 Questions
With Correct Answers
Recording an expenditure as an asset if it increases future benefits; if it only increase benefits
during the current period then we label it as an expense. - answer✔What does the term
"capitalize" mean?
Land, land improvements, buildings, equipment, and natural resources. - answer✔What is
included in Plant, Property, and Equipment?
The long term asset at its cost, plus all expenditures necessary to prepare the asset for use. -
answer✔What is included in the value of a long-term asset to record on the balance sheet?
Purchase price of land, commissions, back property taxes, title insurance, cost of removing an
existing building, cost of leveling the land, less: salvaged materials. - answer✔When purchasing
land, how do you calculate the amount to be recorded?
$6,000. - answer✔If $8,000 ($6,000 in back taxes and $2,000 due for the current fiscal year) in
Property Taxes are paid on a price of land after purchase, what amount is included in the total
cost of the land?
No; since land improvements (sprinklers, sidewalks, driveway, etc.) do not last forever, they are
not included. - answer✔Are land improvements recorded with land?
The purchase of more than one asset at the same time for a single purchase price. -
answer✔What is a basket purchase?
Estimated Fair Value x Allocation Percentage x Basket Purchase Cost = Recorded Amount -
answer✔How do you determine the value of individual accounts from a basket purchase?
Copyrights, patents, franchises, trademarks, and goodwill. - answer✔What are types of
Intangible Assets?
1. Purchase Intangible Assets from other companies.
2. Develop Intangible Assets internally. - answer✔How can companies acquire Intangible Assets
(2 different ways)?
The original cost plus all other costs (such as legal fees) necessary to prepare the asset for use;
recorded under assets. - answer✔How do you record/value Intangible Assets that are
purchased from other companies to record?
Expense the costs for developing the intangible asset as you incur the costs. - answer✔How do
you record Intangible Assets that are developed internally?
Additions, improvements (replacements), major repairs that increase future benefits, and legal
defense of intangible assets. - answer✔What expenditures are *capitalized* after the
acquisition of an asset?
Routine repairs and maintenance. - answer✔What expenditures are *expensed* after the
acquisition of an asset?
Expensed as they are incurred. - answer✔How are research and development costs recorded?
A contra-asset account. - answer✔What type of account is Accumulated Depreciation?
Debit: Depreciation Expense
(Asset's Cost - Residual Value) / Service Life - answer✔How do you calculate annual
depreciation expense?
Patents, copyrights, trademarks, and franchises. - answer✔Which intangible assets are subject
to amortization?
Goodwill and trademarks. - answer✔Which intangible assets are not subject to amortization?
Sale Amount - Book Value (Book Value = Original Cost - Accumulate Depreciation) = Gain or Loss
- answer✔How do you calculate the gain or loss on the disposal (sale, retirement, exchange) of
an asset?
Debit: Cash
Debit: Accumulated Depreciation
Credit: Equipment
Credit: Gain - answer✔Journalize a gain on the sale of equipment.
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