Question 1 1 out of 1 points Lyle, Inc.

, purchased certain plant assets under a deferred payment contract on December 31, 2011. The agreement was to pay $20,000 at the time of purchase and $20,000 at the end of each of the next five years. The plant assets should be valued at Answer Selected Answer: $120,000 less imputed interest Correct Answer: $120,000 less imputed interest Question 2 1 out of 1 points The theoretical justification for reporting depreciation expense is Answer Selected Answer:

Depreciation expense represents the allocation of the historical cost of the asset that has been applied to the accounting period.

Correct Answer:

Depreciation expense represents the allocation of the historical cost of the asset that has been applied to the accounting period.

Question 3 1 out of 1 points When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building should be

Answer Selected Answer: Added to the cost of the land Correct Answer: Added to the cost of the land Question 4 1 out of 1 points Recognizing depletion expense is an example of the accounting process of

Allocation A B C D Answer Selected Answer: C Correct Answer: C Question 5 1 out of 1 points No No Yes Yes

Amortization No Yes Yes No

When equipment is retired, accumulated depreciation is debited for the original cost less any residual recovery under which of the following depreciation methods?

Composite Depreciation A B C D Answer Selected Answer: D Correct Answer: D Question 6 1 out of 1 points No No Yes Yes

Group Depreciation No Yes No Yes

When a closely held corporation issues preferred stock for land, the land should be recorded at the Answer Selected Answer: Appraised value of the land Correct Answer: Appraised value of the land Question 7 1 out of 1 points A method that excludes salvage value from the base for the depreciation calculation is

Answer Selected Answer: Double-declining balance Correct Answer: Double-declining balance Question 8 1 out of 1 points A company using the group depreciation method for its delivery trucks retired one of its delivery trucks due to damage before the average service life of the group was reached. An insurance recovery was received. The net book value of these group asset accounts would be decreased by the Answer Selected Answer: Original cost of the truck less the insurance recovery received Correct Answer: Original cost of the truck less the insurance recovery received Question 9 1 out of 1 points A machine with a four-year estimated useful life and an estimated 15 percent salvage value was acquired on January 1, 2010. On December 31, 2012, the accumulated depreciation using the sum-of-years digits method would be Answer Selected Answer: (Original cost less salvage value) multiplied by 9/10

Correct Answer: (Original cost less salvage value) multiplied by 9/10 Question 10 1 out of 1 points The objectives of plant and equipment accounting include all of the following EXCEPT: Answer Selected Answer: Supplying information for regulatory authorities. Correct Answer: Supplying information for regulatory authorities. Question 11 1 out of 1 points For income statement purposes, depreciation is a variable expense if the depreciation method used for book purposes is Answer Selected Answer: Units of production Correct Answer: Units of production Question 12 1 out of 1 points Property, plant, and equipment are conventionally presented n the balance sheet at

Answer Selected Answer: Acquisition cost less depreciated portion thereof Correct Answer: Acquisition cost less depreciated portion thereof Question 13 1 out of 1 points A principal objection to the straight-line method of depreciation is that it Answer Selected Answer: Ignores variations in the rate of asset use Correct Answer: Ignores variations in the rate of asset use Question 14 1 out of 1 points As generally used in accounting, depreciation Answer Selected Answer:

Is an accounting process that allocates long-lived asset cost to accounting periods

Correct Answer:

Is an accounting process that allocates long-lived asset cost to accounting periods

Question 15 1 out of 1 points A donated plant asset for which the fair value has been determined, and for which incidental costs were incurred in acceptance of the asset, should be recorded at an amount equal to its Answer Selected Answer: Fair value and incidental costs incurred Correct Answer: Fair value and incidental costs incurred Question 16 1 out of 1 points Current accounting for an available-for-sale (AFS) security is consistent with Answer Selected Answer:

The physical capital maintenance concept of income because AFS security unrealized gains and losses are reported in other comprehensive income.

Correct Answer:

The physical capital maintenance concept of income because AFS security unrealized gains and losses are reported in other comprehensive income.

Question 17 1 out of 1 points When a company reports goodwill in its balance sheet, we know that

Answer Selected Answer: The company purchased it. Correct Answer: The company purchased it. Question 18 1 out of 1 points The theoretical justification for expensing research and development (R&D) cost as it is incurred is based on which of the following arguments? Answer Selected Answer:

Whether R&D costs that have been incurred will provide future benefit is uncertain, thus it does not meet the definition of an asset.

Correct Answer:

Whether R&D costs that have been incurred will provide future benefit is uncertain, thus it does not meet the definition of an asset.

Question 19 1 out of 1 points A purchased patent has a remaining life of 15 years. It should be Answer Selected Answer: Amortized over its useful life if less than 15 years Correct Answer:

Amortized over its useful life if less than 15 years Question 20 1 out of 1 points Changes in the fair value of a long-term available for sale equity securities portfolio should be reported as a component of Answer Selected Answer: Other comprehensive income Correct Answer: Other comprehensive income Question 21 1 out of 1 points The physical capital maintenance concept of income would require that an investment in the common stock of another entity be Answer Selected Answer:

Reported in the balance sheet at fair value and that unrealized gains and losses be reported in other comprehensive income.

Correct Answer:

Reported in the balance sheet at fair value and that unrealized gains and losses be reported in other comprehensive income.

Question 22 1 out of 1 points Under the fair value option, an investment in the common stock of another entity will be

Answer Selected Answer: Reported as a current asset Correct Answer: Reported as a current asset Question 23 1 out of 1 points A large, publicly held company developed and registered a trademark during 2010. The cost of developing and registering the trademark should be accounted for by Answer Selected Answer: Expensing it as incurred Correct Answer: Expensing it as incurred Question 24 1 out of 1 points A net unrealized loss on a companys long-term portfolio of available for sale securities should be reflected in the current financial statements as Answer Selected Answer: A component of other comprehensive income Correct Answer: A component of other comprehensive income

Question 25 1 out of 1 points Refer to the facts in problem (4). If Pacer Company uses the lower of cost or market method of accounting for its investment in Queen Company, and the value of its investment hasnt changed, its Investment in Queen Company account on December 31, 2009, should be Answer Selected Answer: $80,000 Correct Answer: $80,000 Question 26 1 out of 1 points Under the equity method of accounting for investments, an investor recognizes its share of the earnings in the period in which the Answer Selected Answer: Earnings are reported by the investee in its financial statements Correct Answer: Earnings are reported by the investee in its financial statements Question 27 1 out of 1 points Goodwill should be written off Answer

Selected Answer: When there is evidence that its carrying value has been impaired Correct Answer: When there is evidence that its carrying value has been impaired Question 28 1 out of 1 points Pacer Company purchased 300 of the 1, 000 outstanding shares of Queen Companys common stock for $80,000 on January 2, 2008. During 2009, Queen Company declared dividends of $8,000 and reported earnings for the year of $20,000. If Pacer Company uses the equity method of accounting for its investment in Queen Company, its Investment in Queen Company account at December 31, 2009 should be Answer Selected Answer: $83,600 Correct Answer: $83,600 Question 29 1 out of 1 points When a patent is successfully defended in court, the cost of the lawsuit Answer Selected Answer:

Should be added to the cost of the patent and depreciated over the remaining useful life of the patent.

Correct

Answer:

Should be added to the cost of the patent and depreciated over the remaining useful life of the patent.

Question 30 1 out of 1 points The economic concept of income would require that an investment in the common stock of another entity be Answer Selected Answer:

Reported in the balance sheet at fair value and that unrealized gains and losses be reported in earnings.

Correct Answer:

Reported in the balance sheet at fair value and that unrealized gains and losses be reported in earnings.