Chapter 10 Review

REVIEW QUESTION 1

• Which of the depreciation methods writes off more depreciation near the start of an asset’s than in later years?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 1

• Which of the depreciation methods writes off more depreciation near the start of an asset’s than in later years?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 2

• Which of the depreciation methods allocates an equal amount of depreciation to each year?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 2

• Which of the depreciation methods allocates an equal amount of depreciation to each year?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 3

• Which of the depreciation methods does NOT use a residual method in the first year?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 3

• Which of the depreciation methods does NOT use a residual method in the first year?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 4

• Which of the accounting methods is used to compute amortization?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 4

• Which of the accounting methods is used to compute amortization?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 5

• Which of the accounting methods is used to compute depletion?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 5

• Which of the accounting methods is used to compute depletion?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 5

• Which of the depreciation methods allocates a fixed dollar amount per unit of output by an asset?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 5

• Which of the depreciation methods allocates a fixed dollar amount per unit of output by an asset?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 6

• Which of the depreciation methods is used MOST by companies for their financial statements?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 6

• Which of the depreciation methods is used MOST by companies for their financial statements?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 7

• Which of the depreciation methods is calculated by multiplying the asset’s decreasing book value by a percent that is two times the straight-line rate?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 7

• Which of the depreciation methods is calculated by multiplying the asset’s decreasing book value by a percent that is two times the straight-line rate?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 8

• Which of the depreciation methods is preferable for tax purposes?

– Units of Production– Declining balance– Straight line– All of the above

REVIEW QUESTION 8

• Which of the depreciation methods is preferable for tax purposes?

– Units of Production– Declining balance– Straight line– All of the above

True or False

• The cost of fencing around a building is included in the cost of the building

True or False

• The cost of fencing around a building is included in the cost of the building

FALSE

True or False

• The cost of land includes the cost of removing unwanted buildings

True or False

• The cost of land includes the cost of removing unwanted buildings

TRUE

True or False

• Treating a capital expenditure as an expense causes an understatement of net income

True or False

• Treating a capital expenditure as an expense causes an understatement of net income

TRUE

True or False

• Estimated residual value is the expected cash value of an asset at the end of its useful life

True or False

• Estimated residual value is the expected cash value of an asset at the end of its useful life

TRUE

True or False

• A loss on the sale of a plant asset is recorded when the sales price exceeds the book value

True or False

• A loss on the sale of a plant asset is recorded when the sales price exceeds the book value

FALSE

True or False

• Tangible assets are assets with no physical form that have value because of the special rights they carry

True or False

• Tangible assets are assets with no physical form that have value because of the special rights they carry

FALSE

True or False

• Depletion expense is the portion of a natural resource’s cost used up in a particular period

True or False

• Depletion expense is the portion of a natural resource’s cost used up in a particular period

TRUE

True or False

• A patent is an exclusive right to reproduce and sell a book, musical composition, film, other work of art, or computer program, and must be amortized over the useful life of the patent.

True or False

• A patent is an exclusive right to reproduce and sell a book, musical composition, film, other work of art, or computer program, and must be amortized over the useful life of the patent.

FALSE

True or False

• If assets are junked before being fully depreciated, there is a loss equal to the book value of the assets.

True or False

• If assets are junked before being fully depreciated, there is a loss equal to the book value of the assets.

TRUE

True or False

• You capitalize all costs that provide future benefit

True or False

• You capitalize all costs that provide future benefit

TRUE

Other terms to look over

• Plant assets• Residual value• Amortization• Depletion• Tangible vs. intangible assets• Land vs. land improvements• Ordinary vs. extra ordinary repairs• Copyright, brand names, licenses, patents