Business

A plant asset was purchased on January 1 for $100,000 with an estimated salvage value of $20,000 at the end of its useful life. The current year’s Depreciation Expense is $10,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $50,000. The remaining useful life of the plant asset is

Answer

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10 years.

8 years.

5 years.

3 years.

6. Goodwill can be recorded

Answer

when customers keep returning because they are satisfied with the company’s products.

when the company acquires a good location for its business.

when the company has exceptional management.

only when there is an exchange transaction involving the purchase of an entire business.

7. Which of the following statements concerning IFRS and U.S. GAAP is true?

Answer

IFRS permits revaluation of all intangible assets, whereas U.S. GAAP prohibits revaluation of intangible assets.

Gains on exchange of assets when the exchange has commercial substance are recognized under both IFRS and U.S. GAAP.

Changes in depreciation method under IFRS are reported in current and future periods, under U.S. GAAP such changes are treated as prior period adjustments.

All of the choices are true regarding IFRS and U.S. GAAP.

8. A company has the following assets: Buildings and Equipment, less accumulated depreciation of $2,000,000 $9,600,000 Copyrights 960,000 Patents 4,000,000 Timberlands, less accumulated depletion of $2,800,000 4,800,000 The total amount reported under Property, Plant, and Equipment would be

Answer

$19,360,000.

$14,400,000.

$18,400,000.

$15,360,000.

9. Powell’s Courier Service recorded a loss of $9,000 when it sold a van that originally cost $84,000 for $15,000. Accumulated depreciation on the van must have been

Answer

$78,000.

$24,000.

$75,000.

$60,000.

10.On October 1, 2015, Holt Company places a new asset into service. The cost of the asset is $120,000 with an estimated 5-year life and $30,000 salvage value at the end of its useful life. What is the book value of the plant asset on the December 31, 2015, balance sheet assuming that Holt Company uses the double-declining-balance method of depreciation?

Answer

$78,000

$90,000

$108,000

$114,000

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