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Chapters 1-4The Accounting Cycle
Chapters 5-8Current Assets
Chapters 9-11Long-Term Assets
Chapters 12-14Liabilities/Equities
Chapters 15-16Using Information
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20Managerial/Cost
Chapters 21-24Budgeting/Decisions

Chapters 1-4The Accounting Cycle
Chapters 5-8Current Assets
Chapters 9-11Long-Term Assets
Chapters 12-14Liabilities/Equities
Chapters 15-16Using Information
- Chapter 15: Financial Reporting and Concepts
- Chapter 16: Financial Analysis and the Statement of Cash Flows
Chapters 17-20Managerial/Cost
Chapters 21-24Budgeting/Decisions

Chapter 10 – Multiple Choice

By admin / January 12, 2016

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Question 1 of 8

1. Question
Omni Corporation purchased a new vehicle on January 1, 20X1. The vehicle cost $100,000, has a five-year life, and a $20,000 residual value. Omni has a December 31 year-end. If Omni depreciates the truck by the double-declining balance method, how much should be recorded as depreciation expense during 20X4?
- $0
- $1,600
- $8,640
- $40,000
Correct

Incorrect
Question 2 of 8

2. Question
Realistic Company purchased a new truck on January 1, 20X1. The truck cost $20,000, has a four-year life, and a $4,000 residual value. The company has a December 31 year-end. If Realistic Company depreciates the truck by the straight-line method, how much should Realistic report as the book value of the truck at the end of 20X3?
- $1,600
- $4,000
- $8,000
- $16,000
Correct

Incorrect
Question 3 of 8

3. Question
Which of the following items should be expensed as incurred?
- Broker's fees on the purchase of a long-lived asset.
- Repair of damage occurring during installation of new equipment.
- Freight charges on the purchase of equipment.
- Normal installation fees on the purchase of equipment.
Correct

Incorrect
Question 4 of 8

4. Question
Lancer Corporation purchased a parcel of land as a factory site for $150,000. Construction began immediately on a new building. Costs incurred are as follows:

Architect’s fees

$  25,000

Legal fees for land purchase contract

      2,000

Construction costs

  250,000

Lancer should record the cost of the new land and building, respectively, at:
- $150,000 and $275,000
- $152,000 and $275,000
- $150,000 and $250,000
- $152,000 and $250,000
Correct

Incorrect
Question 5 of 8

5. Question
Reno Acquisitions Company recently bought a furnished hotel for a lump-sum purchase price of $15,000,000. Separately, the land was valued at $6,000,000, the building at $12,000,000, and the furniture and equipment at $2,000,000. How much cost should Reno assign to the land?
- $1,000,000
- $4,500,000
- $6,000,000
- $8,000,000
Correct

Incorrect
Question 6 of 8

6. Question
On July 1, 20X1, Clem Company purchased factory equipment for $50,000. Residual value was estimated to be $2,000. The equipment will be depreciated over ten years using the double-declining-balance depreciation method. Clem has a December 31 year-end, and during 20X1, one-half of a year’s depreciation expense was recorded. How much depreciation expense should be recorded for 20X2 (round computations to the nearest dollar)?
- $4,320
- $5,000
- $8,640
- $9,000
Correct

Incorrect
Question 7 of 8

7. Question
A graph is set up with “depreciation expense” on the vertical axis and “time” on the horizontal axis. Assuming linear relationships, how would the lines for straight-line and double-declining-balance depreciation expense, respectively, be drawn on this graph?
- Vertically and sloping down to the right.
- Vertically and sloping up to the right.
- Horizontally and sloping down to the right.
- Horizontally and sloping up to the right.
Correct

Incorrect
Question 8 of 8

8. Question
On July 1, 20X1, Robinson Company purchased a new machine for $200,000. The machine is estimated to have a service-life of 10 years with an estimated residual value of $5,000. Robinson uses straight-line depreciation. During 20X5, it became apparent that the machine would not be efficient to operate after December 31, 20X7. Furthermore, the machine would have no scrap value. How much should be charged to depreciation expense in 20X5 under generally accepted accounting principles (round computations to the nearest dollar)?
- $19,500
- $42,250
- $43,917
- $65,000
Correct

Incorrect

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