Question 1

Gains on the sale of fixed assets for cash:

Accepted Answer

A)  Are the excess of the book value over the cash received.
B)  Are recorded as a debit.
C)  Are reported on a net-of-tax basis if material.
D)  Are the excess of the cash received over the book value.E) A) and B)
F) A) and C)

Question 2

When a firm develops a trademark internally through advertising,it does not record the advertising costs as an intangible asset,but rather expenses them in the income statement.

Accepted Answer

A) True 
 B)False

Question 3

Morgan Pharmaceutical spends $50,000 this year in research and development for a new drug to cure liver damage.By the end of the year,management feels confident that the new drug will gain FDA approval and lead to higher future sales.What impact will the $50,000 spending have on this year's financial statements?

Accepted Answer

A)  Increase Assets.
B)  Decrease Revenues.
C)  Increase Expenses.
D)  Increase Revenues.E) A) and D)
F) B) and C)

Question 4

Asset turnover is net sales divided by ending total assets.
Asset turnover is net sales divided by average total assets.

Accepted Answer

A) True 
 B)False

Question 5

The amount of impairment loss is the excess of book value over:

Accepted Answer

A)  Carrying value.
B)  Future cash flows.
C)  Fair value.
D)  Future revenues.E) B) and D)
F) B) and C)

Question 6

Research and development costs should be:

Accepted Answer

A)  Expensed in the period incurred.
B)  Expensed in the period they are determined to be unsuccessful.
C)  Deferred pending determination of success.
D)  Expensed if unsuccessful,capitalized if successful.E) None of the above
F) A) and D)

Question 7

Alliance Products purchased equipment that cost $120,000.It had an estimated useful life of four years and no residual value.The equipment was depreciated by the straight-line method and was sold at the end of the third year of use for $25,000 cash.Alliance should record:

Accepted Answer

A)  a gain of $5,000.
B)  a loss of $5,000.
C)  neither a gain or a loss since the computer was sold at its book value.
D)  neither a gain nor a loss since the gain would not be recognizeD.$120,000/4 = depreciation of $30,000 per year.After three years,the book value would be [$120,000 - ($30,000 x 3 years) ] = $30,000.The asset was sold for $25,000 or a $5,000 loss below book value.E) B) and C)
F) B) and D)

Question 8

Advertising costs that increase the value of trademarks are recorded to the asset account entitled Trademarks.
Advertising costs are recorded as expenses in the income statement.

Accepted Answer

A) True 
 B)False

Question 9

An impairment loss is equal to the amount by which book value exceeds the fair value of a long-term asset.

Accepted Answer

A) True 
 B)False

Exam 7: Long-Term Assets

Alliance Products purchased equipment that cost $120,000.It had an estimated useful life of four years and no residual value.The equipment was depreciated by the straight-line method and was sold at the end of the third year of use for $25,000 cash.Alliance should record:

Correct Answer
verified

Correct Answer
verified

Gains on the sale of fixed assets for cash:

Correct Answer
verified

Research and development costs should be:

Correct Answer
verified

Asset turnover is net sales divided by ending total assets. Asset turnover is net sales divided by average total assets.

Correct Answer
verified

An impairment loss is equal to the amount by which book value exceeds the fair value of a long-term asset.

Correct Answer
verified

Advertising costs that increase the value of trademarks are recorded to the asset account entitled Trademarks. Advertising costs are recorded as expenses in the income statement.

Correct Answer
verified

When a firm develops a trademark internally through advertising,it does not record the advertising costs as an intangible asset,but rather expenses them in the income statement.

Correct Answer
verified

The amount of impairment loss is the excess of book value over:

Correct Answer
verified

Exam 7: Long-Term Assets

Alliance Products purchased equipment that cost $120,000.It had an estimated useful life of four years and no residual value.The equipment was depreciated by the straight-line method and was sold at the end of the third year of use for $25,000 cash.Alliance should record:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Gains on the sale of fixed assets for cash:

Correct AnswerverifiedShow Answer

Research and development costs should be:

Correct AnswerverifiedShow Answer

Asset turnover is net sales divided by ending total assets. Asset turnover is net sales divided by average total assets.

Correct AnswerverifiedShow Answer

An impairment loss is equal to the amount by which book value exceeds the fair value of a long-term asset.

Correct AnswerverifiedShow Answer

Advertising costs that increase the value of trademarks are recorded to the asset account entitled Trademarks. Advertising costs are recorded as expenses in the income statement.

Correct AnswerverifiedShow Answer

When a firm develops a trademark internally through advertising,it does not record the advertising costs as an intangible asset,but rather expenses them in the income statement.

Correct AnswerverifiedShow Answer

The amount of impairment loss is the excess of book value over:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified