ACCOUNTING

120. A company discarded a display case originally purchased for $8,000. The accumulated depreciation was $7,200. The company should recognize a (an):
A. $0 gain or loss.
B. $800 loss.
C. $800 gain.
D. $8,000 loss.
E. $7,200 loss.

 

 121. A company had a bulldozer destroyed by fire. The bulldozer originally cost $125,000 with accumulated depreciation of $60,000. The proceeds from the insurance company were $90,000. The company should recognize:
A. A loss of $25,000.
B. A gain of $25,000.
C. A loss of $65,000.
D. A gain of $65,000.
E. A gain of $90,000.

122. Natural resources:
A. Include standing timber, mineral deposits, and oil and gas fields.
B. Are also called wasting assets.
C. Are long-term assets.
D. Are depleted.
E. All of these.

123. Depletion:
A. Is the process of allocating the cost of natural resources to periods in which they are consumed.
B. Is also called depreciation.
C. Is also called amortization.
D. Is an unrealized expense reported in equity.
E. Is the process of allocating the cost of intangibles to periods in which they are used.

 

124. A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. The depletion expense per ton of ore is:
A. $0.75.
B. $0.625.
C. $0.875.
D. $6.00.
E. $8.00.

125. A company purchased a mineral deposit for $800,000. It expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000. In the current year, the company mined and sold 90,000 tons of ore. Its depletion expense for the current period equals:
A. $ 15,000.
B. $ 60,000.
C. $150,000.
D. $ 56,250.

E. $139,500.

126. Intangible assets include:
A. Patents.
B. Copyrights.
C. Trademarks.
D. Goodwill.
E. All of these.

 

 127. Amortization:
A. Is the systematic allocation of the cost of an intangible asset to expense over its estimated useful life.
B. Is the process of allocating to expense the cost of a plant asset to the accounting periods benefiting from its use.
C. Is the process of allocating the cost of natural resources to periods when they are consumed.
D. Is an accelerated form of expensing an asset’s cost.
E. Is also called depletion.

 

 

 

128. A patent:
A. Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.
B. Gives its owner an exclusive right to manufacture and sell a patented item or to use a process for 20 years.
C. Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years.
D. Is the amount by which the value of a company exceeds the fair market value of a company’s net assets if purchased separately.
E. Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 17 years.

129. A copyright:
A. Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 70 years.
B. Gives its owner an exclusive right to manufacture and sell a patented item or to use a process for 20 years.
C. Gives its owner an exclusive right to manufacture and sell a device or to use a process for 50 years.
D. Is the amount by which the value of a company exceeds the fair market value of a company’s net assets if purchased separately.
E. Gives its owner the exclusive right to publish and sell a musical or literary work during the life of the creator plus 20 years.

 

130. A leasehold:
A. Is a short-term rental agreement.
B. Is the same as a patent.
C. Are the rights granted to the lessee by the lessor of a lease.
D. Is recorded as revenue expenditure when paid.
E. Is an investment asset.

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