ACCOUNTING

25. 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.

131. Goodwill:
A. Is not amortized, but is tested annually for impairment.
B. Is amortized using the straight-line method.
C. Is amortized using the units-of-production method.
D. May be amortized using either the straight-line or units-of-production method.
E. Is never amortized or tested for impairment.

 

132. A company’s old machine that cost $40,000 and had accumulated depreciation of $30,000 was traded in on a new machine having an estimated 20-year life with an invoice price of $50,000. The company also paid $43,000 cash, along with its old machine to acquire the new machine. If this transaction has commercial substance, the new machine should be recorded at:
A. $40,000.
B. $47,000.
C. $50,000.
D. $53,000.
E. $10,000.

 

133. Endor Fishing Company exchanged an old boat for a new one. The old boat had a cost of $260,000 and accumulated depreciation of $200,000. The new boat had an invoice price of $400,000. Endor received a trade in allowance of $100,000 on the old boat, which meant the company paid $300,000 in addition to the old boat to acquire the new boat. If this transaction lacks commercial substance, what amount of gain or loss should be recorded on this exchange?
A. $0 gain or loss.
B. $40,000 gain.
C. $40,000 loss.
D. $60,000 loss
E. $100,000 loss.

 

134. Huffington Company traded in an old delivery truck for a new one. The old truck had a cost of $75,000 and accumulated depreciation of $60,000. The new truck had an invoice price of $125,000. Huffington was given a $12,000 trade-in allowance on the old truck, which meant they paid $113,000 in addition to the old truck to acquire the new truck. If this transaction has commercial substance, what is the recorded value of the new truck?
A. $15,000
B. $75,000
C. $113,000
D. $125,000
E. $128,000

135. A company bought a new display case for $42,000 and was given a trade-in of $2,000 on an old display case, so the company paid $40,000 cash with the trade-in. The old case had an original cost of $37,000 and accumulated depreciation of $34,000. If the transaction has commercial substance, the company should record the new display case at:
A. $ 2,000.
B. $ 3,000.
C. $40,000.
D. $42,000.
E. $43,000.

136. A company purchased a machine valued at $66,000. It traded in an old machine for a $9,000 trade-in allowance and the company paid $57,000 cash with the trade-in. The old machine cost $44,000 and had accumulated depreciation of $36,000. This transaction has commercial substance. What is the recorded value of the new machine?
A. $ 8,000.
B. $ 9,000.
C. $57,000.
D. $65,000.
E. $66,000.

 

 

 

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