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ACC 556 WEEK 6 HOMEWORK CHAPTER 9 • Question 1 All plant assets (fixed assets) must be depreciated for accounting purposes. • Question 2 Recording depreciation on plant assets affects the balance sheet and the income statement. • Question 3 Additions and improvements to a plant asset that increase the asset’s operating efficiency, productive capacity, or expected useful life are generally expensed in the period incurred. • Question 4 If a plant asset is sold at a gain, the gain on disposal should reduce the cost of goods sold section of the income statement. • Question 5 Research and development costs that result in a successful product that is patentable are charged to the Patent account. • Question 6 A company purchased land for $350,000 cash. Real estate brokers’ commission was $25,000 and $35,000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land would be recorded at • Question 7 The four subdivisions for plant assets are • Question 8 Which of the following is included in the cost of constructing a building? • Question 9 Accountants do not attempt to measure the change in a plant asset’s market value during ownership because • Question 10 Equipment was purchased for $68,000 on January 1, 2013. Freight charges amounted to $2,800 and there was a cost of $8,000 for building a foundation and installing the equipment. It is estimated that the equipment will have a $12,000 salvage value at the end of its 5-year useful life. What is the amount of accumulated depreciation at December 31, 2014, if the straight-line method of depreciation is used? • Question 11 The Modified Accelerated Cost Recovery System (MACRS) is a depreciation method that • Question 12 A plant asset was purchased on January 1 for $45,000 with an estimated salvage value of $5,000 at the end of its useful life. The current year’s Depreciation Expense is $5,000 calculated on the straight-line basis and the balance of the Accumulated Depreciation account at the end of the year is $25,000. The remaining useful life of the plant asset is • Question 13 Grant Company has decided to change the estimate of the useful life of an asset that has been in service for 2 years. Which of the following statements describes the proper way to revise a useful life estimate? • Question 14 A company sells a plant asset that originally cost $240,000 for $80,000 on December 31, 2014. The accumulated depreciation account had a balance of $120,000 after the current year’s depreciation of $20,000 had been recorded. The company should recognize a • Question 15 The book value of an asset will equal its fair value at the date of sale if • Question 16 The following information is provided for Nguyen Company and Northwest Corporation. (in $ millions) Nguyen Company Northwest Corporation Net income 2014 $275 $390 Net sales 2014 1,500 4,100 Total assets 12/31/12 1,000 2,400 Total assets 12/31/13 1,050 3,000 Total assets 12/31/14 1,150 4,000 What is Northwest’s asset turnover ratio for 2014? • Question 17 Intangible assets are the rights and privileges that result from ownership of long-lived assets that • Question 18 Intangible assets • Question 19 Which of the following statements concerning financial statement presentation is false? • Question 20 Indicate whether each of the following expenditures should be classified as land (L), land improvements (LI), buildings (B), equipment (E), or none of these (X). o Question Selected Match Parking lots B. Land Improvements (LI) Electricity used by a machine E. None of these (X) Excavation costs C. Buildings (B) Interest on building construction loan C. Buildings (B) Cost of trial runs for machinery D. Equip


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