财务会计英语 练习及答案ch10

财务会计英语 练习及答案

CHAPTER 10

FIXED ASSETS AND INTANGIBLE ASSETS

财务会计英语 练习及答案

财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

Chapter 10—Fixed Assets and Intangible Assets

TRUE/FALSE

1. Long-lived assets that are intangible in nature, used in the operations of the business, and not

held for sale in the ordinary course of business are called fixed assets.

ANS: F DIF: 1 OBJ: 01

2. The acquisition costs of property, plant, and equipment should include all normal, reasonable

and necessary costs to get the asset in place and ready for use.

ANS: T DIF: 1 OBJ: 01

3. When land is purchased to construct a new building, the cost of removing any structures on the

land should be charged to the building account.

ANS: F DIF: 2 OBJ: 01

4. Land acquired as a speculation is reported under Investments on the balance sheet.

ANS: T DIF: 1 OBJ: 01

5. To a major resort, timeshare properties would be classified as property, plant and equipment.

ANS: T DIF: 2 OBJ: 01

6. Standby equipment held for use in the event of a breakdown of regular equipment is reported as

property, plant, and equipment on the balance sheet.

ANS: T DIF: 2 OBJ: 01

7. The cost of repairing damage to a machine during installation is debited to a fixed asset account.

ANS: F DIF: 1 OBJ: 01

8. During construction of a building, the cost of interest on a construction loan should be charged

to an expense account.

ANS: F DIF: 2 OBJ: 01

9. The cost of computer equipment does of the equipment.

ANS: F DIF: 1 OBJ: 01

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

10. Functional depreciation occurs when a fixed asset is no longer able to provide services at the

level for which it was intended.

ANS: T DIF: 1 OBJ: 01

11. The normal balance of the accumulated depreciation account is debit.

ANS: F DIF: 1 OBJ: 01

12. As a company depreciates a piece of equipment, it cash flow goes up.

ANS: F DIF: 3 OBJ: 01

13. When cities give land or buildings to a company to locate in the community, no entry is made

since there is no cost to the company.

ANS: F DIF: 2 OBJ: 01

14. All property, plant, and equipment assets are depreciated over time.

ANS: F DIF: 2 OBJ: 01

15. The book value of a fixed asset reported on the balance sheet represents its market value on that

date.

ANS: F DIF: 1 OBJ: 01

16. The depreciable cost of a building is the same as its acquisition cost.

ANS: F DIF: 1 OBJ: 02

17. It is necessary for a company to use the same depreciation method for all of its depreciable

assets.

ANS: F DIF: 2 OBJ: 02

18. It is necessary for a company to use the same depreciation method for financial statements

and for determining income taxes.

ANS: T DIF: 01 OBJ: 02

19. An estimate of the amount which an asset can be sold at the end of its useful life is called

residual value.

ANS: T DIF: 1 OBJ: 02

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

20. Over 80% of the six-hundred largest corporations use the straight line depreciation method for

financial reporting purposes.

ANS: T DIF: 1 OBJ: 02

21. The units of production depreciation method matches expenses against revenue the best.

ANS: T DIF: 2 OBJ: 02

22. Once the useful life of a depreciable asset has been estimated and the amount to be depreciated

each year has been determined, the amounts can be changed.

ANS: F DIF: 1 OBJ: 02

23. Residual value is relevant when calculating declining-balance depreciation.

ANS: T DIF: 1 OBJ: 02

24. The declining-balance method is an accelerated depreciation method.

ANS: T DIF: 1 OBJ: 02

25. The double declining balance depreciation method calculates depreciation each year by taking

twice the straight line rate times the book value of the asset at the beginning of each year.

ANS: T DIF: 1 OBJ: 02

26. The amount of depreciation expense for the first full year of use of a fixed asset costing $95,000,

with an estimated residual value of $5,000 and a useful life of 5 years, is $19,000 by the

straight-line method.

ANS: F DIF: 3 OBJ: 02

27. The amount of depreciation expense for a fixed asset costing $95,000, with an estimated

residual value of $5,000 and a useful life of 5 years or 20,000 operating hours, is $21,375 by the units-of-production method during a period when the asset was used for 4,500 hours.

ANS: F DIF: 3 OBJ: 02

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

28. The amount of the depreciation expense for the second full year of use of a fixed asset costing

$100,000, with an estimated residual value of $5,000 and a useful life of 4 years, is $25,000 by the declining-balance method at twice the straight-line rate.

ANS: T DIF: 3 OBJ: 02

29. When depreciation estimates are revised, all years of the asset’s life are affected.

ANS: F DIF: 2 OBJ: 02

30. For income tax purposes most companies use an accelerated deprecation method called double

declining balance.

ANS: F DIF: 1 OBJ: 02

31. Assets may be grouped according to common traits and depreciated by using a single composite

rate.

ANS: T DIF: 1 OBJ: 02

32. Capital expenditures are costs of acquiring, constructing, adding, or replacing property, plant

and equipment.

ANS: T DIF: 1 OBJ: 03

33. Capital expenditures are costs that are charged to Stockholders' Equity accounts.

ANS: F DIF: 1 OBJ: 03

34. The cost of new equipment is called a revenue expenditure because it will help generate

revenues in the future.

ANS: F DIF: 1 OBJ: 03

35. Expenditures that increase operating efficiency or capacity for the remaining useful life of a

fixed asset are betterments.

ANS: T DIF: 1 OBJ: 03

36. The cost of replacing an engine in a truck is an example of ordinary maintenance.

ANS: F DIF: 1 OBJ: 03

37. Though a piece of equipment is still being used, the equipment should be removed from the

accounts if it has been fully depreciated.

ANS: F DIF: 1 OBJ: 04

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

38. If an asset has been fully depreciated, depreciation should be recorded prior to removing it

from service and the accounting records.

ANS: T DIF: 1 OBJ: 04

39. When selling a piece of equipment for cash, a loss will result when the proceeds of the sale are

less than the book value of the asset.

ANS: T DIF: 1 OBJ: 04

40. When a property, plant, and equipment asset is sold for cash, any gain or loss on the asset sold

should be recorded.

ANS: T DIF: 1 OBJ: 04

41. Ordinary gains from the sale of fixed assets should be reported in the other income section of

the income statement.

ANS: T DIF: 1 OBJ: 04

42. A gain can be realized when a fixed asset is discarded.

ANS: F DIF: 2 OBJ: 04

43. When old equipment is traded in for a new equipment, the difference between the list price and

the trade in allowance is called boot.

ANS: T DIF: 1 OBJ: 04

44. When exchanging fixed assets, an accountant will always arrive at the same cost basis for the

new asset, regardless of the method used to compute the cost basis.

ANS: F DIF: 2 OBJ: 04

45. When a plant asset is traded for another of similar asset, losses on the asset traded are

recognized.

ANS: F DIF: 2 OBJ: 04

46. When exchanging equipment, if the trade-in allowance is greater than the book value a loss

results.

ANS: F DIF: 2 OBJ: 04

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

47. Since gains are not recognized in the exchange of similar assets, the cost basis of the new asset

is equal to the book value of the old asset plus boot.

ANS: T DIF: 2 OBJ: 04

48. If a fixed asset with a book value of $10,000 is traded for a similar fixed asset, and a trade-in

allowance of $15,000 is granted by the seller, the buyer would report a gain on disposal of fixed assets of $5,000.

ANS: F DIF: 3 OBJ: 04

49. A capital lease is accounted for as if the asset has been purchased.

ANS: T DIF: 1 OBJ: 05

50. Taking a periodic physical inventory of fixed assets is an internal control procedure.

ANS: T DIF: 1 OBJ: 06

51. There is a need to keep the accounting records for a fully depreciated asset.

ANS: T DIF: 1 OBJ: 06

52. Minerals removed from the earth are classified as intangible assets.

ANS: F DIF: 1 OBJ: 07

53. The method used to calculate the depletion of a natural resource is the straight line method.

ANS: F DIF: 1 OBJ: 07

54. Intangible assets differ from property, plant and equipment assets in that they lack physical

substance.

ANS: T DIF: 1 OBJ: 08

55. The transfer to expense of the cost of intangible assets attributed to the passage of time or

decline in usefulness is called amortization.

ANS: T DIF: 1 OBJ: 08

56. The cost of a patent with a remaining legal life of 10 years and an estimated useful life of 7 years

is amortized over 10 years.

ANS: F DIF: 2 OBJ: 08

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

57. Costs associated with normal research and development activities should be treated as

intangible assets.

ANS: F DIF: 1 OBJ: 08

58. Patents are exclusive rights to manufacture, use, or sell a particular product or process.

ANS: T DIF: 1 OBJ: 08

59. When a major corporation develops its own trademark and over time it becomes very valuable,

the trademark may

ANS: T DIF: 2 OBJ: 08

60. When a company establishes an outstanding reputation and has a competitive advantage

because of it, the company should record goodwill on its financial statements.

ANS: F DIF: 2 OBJ: 08

61. The difference between the balance in a fixed asset account and its related accumulated

depreciation account is the asset's book value.

ANS: T DIF: 1 OBJ: 09

62. The higher the ratio of fixed assets to long-term liabilities the greater the margin of safety.

ANS: T DIF: 2 OBJ: 10

63. The-sum-of-the-years'-digits method is the only depreciation method that does not consider the

plant asset's estimated residual value in the depreciation equation.

ANS: F DIF: 1 OBJ: App

64. The amount of depreciation expense for the first full year of use of a fixed asset costing $65,000,

with an estimated residual value of $5,000 and a useful life of 5 years, is $20,000 by the

sum-of-the-years’-digits method.

ANS: T DIF: 3 OBJ: App

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

MULTIPLE CHOICE

1. A characteristic of a fixed asset is that it is

a. intangible

b. used in the operations of a business

c. held for sale in the ordinary course of the business

d. none of the above

ANS: B DIF: 1 OBJ: 01

2. Land acquired so it can be resold in the future is listed in the balance sheet as a(n)

a. fixed asset

b. current asset

c. investment

d. intangible asset

ANS: C DIF: 1 OBJ: 01

3. Which of the following should be included in the acquisition cost of a piece of equipment?

a. transportation costs

b. installation costs

c. testing costs prior to placing the equipment into production

d. all of the above

ANS: D DIF: 1 OBJ: 01

4. Which of the following is included in the cost of constructing a building?

a. insurance costs during construction

b. cost of paving parking lot

c. cost of repairing vandalism damage during construction

d. cost of removing the demolished building existing on the land when it was

purchased

ANS: A DIF: 1 OBJ: 01

5. Which of the following is included in the cost of land?

a. cost of paving a parking lot

b. brokerage commission

c. outdoor parking lot lighting attached to the land

d. fences on the land

ANS: B DIF: 1 OBJ: 01

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

6. Factors contributing to a decline in the usefulness of a fixed asset may be divided into the

following two categories

a. salvage and functional

b. physical and functional

c. residual and salvage

d. functional and residual

ANS: B DIF: 1 OBJ: 01

7. Accumulated Depreciation

a. is used to show the amount of cost expiration of intangibles

b. is the same as Depreciation Expense

c. is a contra asset account

d. is used to show the amount of cost expiration of natural resources

ANS: C DIF: 1 OBJ: 01

8. A building with an appraisal value of $137,000 is made available at an offer price of $142,000.

The purchaser acquires the property for $30,000 in cash, a 90-day note payable for $40,000, and a mortgage amounting to $60,000. The cost basis recorded in the buyer's accounting records to recognize this purchase is

a. $137,000

b. $142,000

c. $130,000

d. $100,000

ANS: C DIF: 3 OBJ: 01

9. A used machine with a purchase price of $77,000, requiring an overhaul costing $8,000,

installation costs of $5,000, and special acquisition fees of $2,000, would have a cost basis of a. $92,000

b. $91,000

c. $87,000

d. $86,000

ANS: A DIF: 2 OBJ: 01

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

10. A new machine with a purchase price of $94,000, with transportation costs of $8,000,

installation costs of $6,000, and special acquisition fees of $2,000, would have a cost basis of a. $ 96,000

b. $108,000

c. $102,000

d. $110,000

ANS: D DIF: 3 OBJ: 01

11. A fixed asset's estimated value at the time it is to be retired from service is called

a. book value

b. residual value

c. market value

d. carrying value

ANS: B DIF: 1 OBJ: 02

12. All of the following below are needed for the calculation of depreciation except

a. cost

b. residual value

c. estimated life

d. book value

ANS: D DIF: 1 OBJ: 02

13. The method of determining depreciation that yields successive reductions in the periodic

depreciation charge over the estimated life of the asset is

a. units-of-production

b. declining-balance

c. straight-line

d. time-valuation

ANS: B DIF: 2 OBJ: 02

14. When the amount of use of a fixed asset varies from year to year, the method of determining

depreciation expense that best matches allocation of cost with revenue is

a. declining-balance

b. straight-line

c. units-of-production

d. MACRS

ANS: C DIF: 2 OBJ: 02

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

15. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated

life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours?

a. $8,000

b. $20,000

c. $12,000

d. $21,667

ANS: B DIF: 3 OBJ: 02

16. Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an estimated

life of 5 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300

hours?

a. $30,000

b. $32,500

c. $34,000

d. $40,000

ANS: A DIF: 3 OBJ: 02

17. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated

life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the declining-balance method at double the straight-line rate?

a. $15,000

b. $30,000

c. $16,250

d. $32,500

ANS: C DIF: 3 OBJ: 02

18. The most widely used depreciation method is

a. straight-line

b. sum-of-the-years-digits

c. declining-balance

d. units-of-production

ANS: A DIF: 1 OBJ: 02

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

19. Equipment with a cost of $80,000, an estimated residual value of $5,000, and an estimated life

of 15 years was depreciated by the straight-line method for 5 years. Due to obsolescence, it was determined that the useful life should be shortened by 5 years and the residual value changed to zero. The depreciation expense for the current and future years is

a. $5,500

b. $11,000

c. $10,000

d. $5,000

ANS: B DIF: 3 OBJ: 02

20. The depreciation method that does not use residual value in calculating the first year's

depreciation expense is

a. straight-line

b. units-of-production

c. declining-balance

d. none of the above

ANS: C DIF: 1 OBJ: 02

21. The costs incurred for property, plant and equipment can be classified into four stages. Which

item below is one of those stages?

a. in-service stage

b. preliminary stage

c. preacquisition stage

d. use stage

ANS: D DIF: 1 OBJ: 03

22. Expenditures that add to the utility of fixed assets for more than one accounting period are

a. committed expenditures

b. revenue expenditures

c. current expenditures

d. capital expenditures

ANS: D DIF: 1 OBJ: 03

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

23. A capital expenditure results in a debit to

a. an expense account

b. a capital account

c. a liability account

d. an asset account

ANS: D DIF: 1 OBJ: 03

24. Which of the following below is an example of a capital expenditure?

a. cleaning the carpet in the front room

b. tune-up for a company truck

c. replacing an engine in a company car

d. replacing all burned-out light bulbs in the factory

ANS: C DIF: 1 OBJ: 03

25. In acquiring costs for property, plant and equipment, which stage below is associated with

revenue expenditures?

a. Acquisition stage

b. in-service stage

c. preliminary stage

d. preacquisition stage

ANS: C DIF: 2 OBJ: 03

26. When a company replaces a component of property, plant and equipment, which statement

below does account for one of the steps to this process?

a. book value of the replaced component is written off to depreciation expense

b. the asset cost of the replaced component is credited

c. any cost to remove the old component is charged to expense

d. the identifiable direct costs associated with the new component are capitalized

ANS: B DIF: 2 OBJ: 03

27. A fixed asset with a cost of $42,000 and accumulated depreciation of $38,500 is traded for a

similar asset priced at $60,000. Assuming a trade-in allowance of $5,000, the cost basis of the new asset is

a. $58,000

b. $58,500

c. $60,000

d. $61,500

ANS: B DIF: 3 OBJ: 04

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

28. A fixed asset with a cost of $40,000 and accumulated depreciation of $35,000 is traded for a

similar asset priced at $50,000. Assuming a trade-in allowance of $3,000, the cost basis of the new asset is

a. $55,000

b. $48,000

c. $52,000

d. $50,000

ANS: D DIF: 3 OBJ: 04

29. A fixed asset with a cost of $40,000 and accumulated depreciation of $36,500 is traded for a

similar asset priced at $60,000. Assuming a trade-in allowance of $3,000, the recognized loss on the trade is

a. $1,000

b. $3,500

c. $ 500

d. $1,500

ANS: C DIF: 3 OBJ: 04

30. A fixed asset with a cost of $30,000 and accumulated depreciation of $27,500 is sold for $3,500.

What is the amount of the gain or loss on disposal of the fixed asset?

a. $2,500 loss

b. $1,000 loss

c. $2,500 gain

d. $1,000 gain

ANS: D DIF: 3 OBJ: 04

31. The Brock Company acquired new machinery with a price of $15,200 by trading in similar old

machinery and paying $12,700. The old machinery originally cost $9,000 and had accumulated depreciation of $5,000. In recording this transaction, Brock Company should record

a. the new machinery at $16,700

b. the new machinery at $12,700

c. a gain of $1,500

d. a loss of $1,500

ANS: D DIF: 3 OBJ: 04

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

32. When a company discards machinery that is fully depreciated, this transaction would be

recorded with the following entry

a. debit Accumulated Depreciation; credit Machinery

b. debit Machinery; credit Accumulated Depreciation

c. debit Cash; credit Accumulated Depreciation

d. debit Depreciation Expense; credit Accumulated Depreciation

ANS: A DIF: 3 OBJ: 04

33. When a company sells machinery at a price equal to its book value, this transaction would be

recorded with an entry that would include the following:

a. debit Cash and Accumulated Depreciation; credit Machinery

b. debit Machinery; credit Cash and Accumulated Depreciation

c. debit Cash and Machinery; credit Accumulated Depreciation

d. debit Cash and Depreciation Expense; credit Accumulated Depreciation

ANS: A DIF: 3 OBJ: 04

34. When a company exchanges machinery and receives a trade-in allowance greater than the book

value, this transaction would be recorded with the following entry:

a. debit Machinery and Accumulated Depreciation; credit Machinery, Cash, and Gain

on Disposal

b. debit Machinery and Accumulated Depreciation; credit Machinery and Cash

c. debit Cash and Machinery; credit Accumulated Depreciation

d. debit Cash and Machinery; credit Accumulated Depreciation and Machinery

ANS: B DIF: 3 OBJ: 04

35. When a company exchanges machinery and receives a trade-in allowance less than the book

value, this transaction would be recorded with the following entry:

a. debit Machinery and Accumulated Depreciation; credit Machinery and Cash

b. debit Cash and Machinery; credit Accumulated Depreciation

c. debit Cash and Machinery; credit Accumulated Depreciation and Machinery

d. debit Machinery, Accumulated Depreciation, and Loss on Disposal; credit

Machinery and Cash

ANS: D DIF: 3 OBJ: 04

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

36. In a lease contract, the party who legally owns the asset is the

a. lessee

b. lessor

c. operator

d. banker

ANS: B DIF: 1 OBJ: 05

37. All leases are classified as either

a. capital leases or long-term leases

b. capital leases or operating leases

c. operating leases or current leases

d. long-term leases or current leases

ANS: B DIF: 1 OBJ: 05

38. The journal entry for recording an operating lease payment would

a. be a memo entry only

b. debit the fixed asset and credit Cash

c. debit an expense and credit Cash

d. debit a liability and credit Cash

ANS: C DIF: 1 OBJ: 05

39. Which one of the following is an internal control procedure for fixed assets?

a. limiting access to computers

b. allowing the sole user of an asset to determine when it is time to dispose of it

c. requiring competitive bids for asset purchases

d. purchasing assets only from approved vendors

ANS: B DIF: 1 OBJ: 06

40. The accumulated depletion account is

a. an expense account

b. an intangible asset account

c. reported on the income statement as other expense

d. reported on the balance sheet as a deduction from the cost of the mineral deposit

ANS: D DIF: 1 OBJ: 07

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财务会计英语 练习及答案

Chapter 10—Fixed Assets and Intangible Assets

41. The process of transferring the cost of metal ores and other minerals removed from the earth to

an expense account is called

a. depletion

b. deferral

c. amortization

d. depreciation

ANS: A DIF: 1 OBJ: 07

42. The Weber Company purchased a mining site for $500,000 on July 1, 2005. The company

expects to mine ore for the next 10 years and anticipates that a total of 100,000 tons will be recovered. The estimated residual value of the property is $80,000. During 2005 the company extracted 6,000 tons of ore. The depletion expense for 2005 is

a. $12,600

b. $42,000

c. $25,200

d. $50,000

ANS: C DIF: 3 OBJ: 07

43. Expenditures for research and development are generally recorded as

a. current operating expenses

b. assets and amortized over their estimated useful life

c. assets and amortized over 40 years

d. current assets

ANS: A DIF: 1 OBJ: 08

44. The term applied to the amount of cost to transfer to expense resulting from a decline in the

utility of intangible assets is

a. amortization

b. depletion

c. depreciation

d. allocation

ANS: A DIF: 1 OBJ: 08

45. XYZ Company purchased a patent from ABC for $144,000. At the time of purchase the patent

had been in existence for 8 years. What is the first year's amortization?

a. $7,200

b. $18,000

c. $12,000

d. $144,000

ANS: C DIF: 3 OBJ: 08

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