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Chapter 06 Accounting for and Presentation of Property, Plant, and
Equipment, and Other Noncurrent Assets Answer Key
Multiple Choice Questions
1.
When a firm buys land on which there is a building, and the building is torn down so that
an appropriate new building can be constructed on the land:
2.
Expenditures capitalized as long-lived assets generally include those expenditures that:
3.
Which of the following accounting concepts/principles is most significant in the
development of a capitalization policy?
4.
Which of the following statements best describes the process of accounting for
depreciation?
5.
The entry to record depreciation expense:
6.
The net book value of a depreciable asset is:
7.
It is not unusual for a company to use different depreciation methods for book and tax
purposes. When this happens, the firm usually:
8.
The present value concept is widely applied in business because:
9.
When an accelerated depreciation method is used to calculate depreciation expense:
10.
Moped, Inc. purchased machinery at a cost of $44,000 on January 1, 2017. The expected
useful life is 5 years and the asset is expected to have salvage value of $4,000. Moped
depreciates its assets using the double-declining balance method.
What is the firm's depreciation expense for the year ended December 31, 2017?
11.
Moped, Inc. purchased machinery at a cost of $44,000 on January 1, 2017. The expected
useful life is 5 years and the asset is expected to have salvage value of $4,000. Moped
depreciates its assets using the double-declining balance method.
What is the accumulated depreciation for this asset on December 31, 2018?
12.
Moped, Inc. purchased machinery at a cost of $44,000 on January 1, 2017. The expected
useful life is 5 years and the asset is expected to have salvage value of $4,000. Moped
depreciates its assets using the double-declining balance method.
What is the firm's gain or loss if the machinery is sold for $22,000 on December 31, 2018?
13.
When a machine having a net book value of $15,000 is sold for $12,000:
14.
If there is a loss on the disposal of a depreciable asset:
15.
Which of the following could be a correct journal entry to record the disposition of
equipment?
16.
The Modified Accelerated Cost Recovery System (MACRS) specifies which of the following
depreciation methods for buildings?
17.
The Modified Accelerated Cost Recovery System (MACRS) specifies which of the following
depreciation methods for land?
18.
If an organization has an obligation to pay $25,000 to a supplier two years from now, the
present value of the obligation:
19.
Depreciation, in accounting, is a process that results in:
20.
Present Value of
$1 Discount Rate
Present Value of
an Annuity of $1
Discount Rate
Periods
8%
10%
8%
10%
5
0.6806
0.6209
3.9927
3.7908
7
0.5835
0.5132
5.2064
4.8684
9
0.5002
0.4241
6.2469
5.7590
The present value of $6,000 to be received in 7 years at 10% is:
21.
Present Value of
$1 Discount Rate
Present Value of
an Annuity of $1
Discount Rate
Periods
8%
10%
8%
10%
5
0.6806
0.6209
3.9927
3.7908
7
0.5835
0.5132
5.2064
4.8684
9
0.5002
0.4241
6.2469
5.7590
The present value of $6,000 to be received every year for 9 years, at 10%, is:
