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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