Acc557 Financial Accounting: Week 7 Study Guide (Chapters 9 and 10) - Version 2

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Acc557 Financial Accounting
Week 7 Study Guide (Chapters 9 and 10) - Version 2

Multiple Choice Question 136
An asset was purchased for $150,000. It had an estimated salvage value of $30,000 and an estimated useful life of 10 years. After 5 years of use, the estimated salvage value is revised to $24,000 but the estimated useful life is unchanged. Assuming straight-line depreciation, depreciation expense in year 6 would be

Multiple Choice Question 65
The cost of land does not include
accrued property taxes assumed by the purchaser.
title fees.
real estate brokers' commission.
annual property taxes.

Multiple Choice Question 143
Costs incurred to increase the operating efficiency or useful life of a plant asset are referred to as
expense expenditures.
capital expenditures.
ordinary repairs.
revenue expenditures

Multiple Choice Question 187
Identify the item below where the terms are not related.
Oil well—depletion

Multiple Choice Question 127
Equipment with a cost of $240,000 has an estimated salvage value of $15,000 and an estimated life of 4 years or 15,000 hours. It is to be depreciated using the units-of-activity method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours?

Multiple Choice Question 113
Farr Company purchased a new van for floral deliveries on January 1, 2013. The van cost $48,000 with an estimated life of 5 years and $12,000 salvage value at the end of its useful life. The double-declining-balance method of depreciation will be used. What is the balance of the Accumulated Depreciation account at the end of 2014?

Multiple Choice Question 109
Mott Company uses the units-of-activity method in computing depreciation. A new plant asset is purchased for $36,000 that will produce an estimated 100,000 units over its useful life. Estimated salvage value at the end of its useful life is $3,000. What is the depreciation cost per unit?

Multiple Choice Question 171
The current carrying value of Kane’s $900,000 face value bonds is $897,000. If the bonds are retired at 103, what would be the amount Kane would pay its bondholders?

IFRS Multiple Choice Question 327
Which of the following statements about liabilities is incorrect? Companies sometimes show
long-term liabilities before current assets.
liabilities in order of magnitude.
current liabilities netted against current assets.
liabilities before assets

Multiple Choice Question 114
Pickett Company typically sells subscriptions on an annual basis, and publishes six times a year. The magazine sells 80,000 subscriptions in January at $15 each. What entry is made in January to record the sale of the subscriptions?
Subscriptions Receivable 1,200,000
Subscription Revenue 1,200,000

Prepaid Subscriptions 1,200,000
Cash 1,200,000

Cash 1,200,000
Unearned Subscription Revenue 1,200,000

Subscriptions Receivable 200,000
Unearned Subscription Revenue 200,000

Multiple Choice Question 63
Liabilities are classified on the balance sheet as current or

Multiple Choice Question 183
Townson Co. has outstanding $100 million of 7% bonds, due in 7 years, and callable at 104. The bonds were issued at par and are selling today at a market price of 94. If Townson Co. calls $10 million of these bonds it will report:
An unrealized gain.
Neither gains nor losses are recognized on early retirements of debt.
A $400,000 loss.
A $700,000 gain.

Multiple Choice Question 194
The times interest earned ratio is computed by dividing
income before income taxes and interest expense by interest expense.
net income by interest expense.
income before income taxes by interest expense.
income before interest expense by interest expense.

Multiple Choice Question 123
Which one of the following payroll taxes does not result in a payroll tax expense for the employer?
Federal unemployment tax
State unemployment tax
FICA tax
Federal income tax

IFRS Multiple Choice Question 328
The effective-interest method for amortization of bond discounts is required under
GAAP only.
IFRS only.
Both GAAP and IFRS.
Neither GAAP or IFRS.
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