ACING MBA 510 FINAL CHAPTER 8 EXAM WITH THE LATEST A+
QUESTIONS AND ANSWERS STUDY COMPANION.
These are tangible assets that have a useful life for over one period
Plant assets
These must be used in operations and if not, then must be recorded as long term
investments
Plant assets
Cost reported on balance sheet is expensed on income statement as depreciation
expense over the accounting periods during its useful life for all plant assets
except?
Land
Land has a __________ life
Undefinite
For a plant asset to be recorded at cost, it must be what 3 things?
1. Normal
2. Reasonable
3. Necessary
If the plant asset is damaged then it must be added to what account?
Expense account
The assets are: (1) the showroom building, a separate building used to service
customer cars, and various parking lots, (2) a nearby acre of land not currently
used by the auto dealership, (3) new and used cars and trucks for sale to
customers, and (4) a car that is used to provide rides to customers who prefer to
wait at home while their cars are serviced. The assets that are classified as plant
assets on the company's balance sheet include _____.
1 and 4
This is the process of allocating the cost of a plant asset to expense in the
accounting periods benefitting from its use
Depreciation
3 factors that determine depreciation are:
, 1. Cost
2. Salvage value
3. Useful life
This consists of all necessary and reasonable expenditures to acquire it and
prepare it for its use
Cost
This estimate of the assets residual, scrap, or trade-in value at the end of its
useful life
Salvage value
This estimate of the length of time it will be productively used in a company's
operations
Useful life
This is part of the acquisition cost of an asset that is expected to be recovered
when the asset is disposed at the end of its usefulness to its owner
Salvage value
The primary purpose of depreciation is to:
Allocate the cost of a plant asset over its useful life in conformity with the matching (or
expense recognition) principle
This depreciation method charges the same amount of expense to each period of
the asset's useful life
Straight-line method
What is the equation used to compute depreciation using the straight-line
method?
(Cost - Salvage Value) / Useful life
What is the adjusting journal entry for depreciation using the straight-line
method?
(Debit) Depreciation
(Credit) Accumulated depreciation
This value goes down every year by the calculated accumulated depreciation,
which then equals to the book value at the end of the period
Accumulated depreciation
QUESTIONS AND ANSWERS STUDY COMPANION.
These are tangible assets that have a useful life for over one period
Plant assets
These must be used in operations and if not, then must be recorded as long term
investments
Plant assets
Cost reported on balance sheet is expensed on income statement as depreciation
expense over the accounting periods during its useful life for all plant assets
except?
Land
Land has a __________ life
Undefinite
For a plant asset to be recorded at cost, it must be what 3 things?
1. Normal
2. Reasonable
3. Necessary
If the plant asset is damaged then it must be added to what account?
Expense account
The assets are: (1) the showroom building, a separate building used to service
customer cars, and various parking lots, (2) a nearby acre of land not currently
used by the auto dealership, (3) new and used cars and trucks for sale to
customers, and (4) a car that is used to provide rides to customers who prefer to
wait at home while their cars are serviced. The assets that are classified as plant
assets on the company's balance sheet include _____.
1 and 4
This is the process of allocating the cost of a plant asset to expense in the
accounting periods benefitting from its use
Depreciation
3 factors that determine depreciation are:
, 1. Cost
2. Salvage value
3. Useful life
This consists of all necessary and reasonable expenditures to acquire it and
prepare it for its use
Cost
This estimate of the assets residual, scrap, or trade-in value at the end of its
useful life
Salvage value
This estimate of the length of time it will be productively used in a company's
operations
Useful life
This is part of the acquisition cost of an asset that is expected to be recovered
when the asset is disposed at the end of its usefulness to its owner
Salvage value
The primary purpose of depreciation is to:
Allocate the cost of a plant asset over its useful life in conformity with the matching (or
expense recognition) principle
This depreciation method charges the same amount of expense to each period of
the asset's useful life
Straight-line method
What is the equation used to compute depreciation using the straight-line
method?
(Cost - Salvage Value) / Useful life
What is the adjusting journal entry for depreciation using the straight-line
method?
(Debit) Depreciation
(Credit) Accumulated depreciation
This value goes down every year by the calculated accumulated depreciation,
which then equals to the book value at the end of the period
Accumulated depreciation
