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Exam 7: Long-Term Assets

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Question 81

Multiple Choice

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Return on assets is equal to:

A) Profit margin plus asset turnover.
B) Profit margin minus asset turnover.
C) Profit margin times asset turnover.

D) None of the above
E) All of the above

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Question 82

Multiple Choice

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Nanki Corporation purchased equipment at the beginning of 2018 for $650,000.In 2018 and 2019,Nanki depreciated the asset on a straight-line basis with an estimated useful life of 8 years and a $10,000 residual value.In 2020,due to changes in technology,Nanki revised the useful life to a total of six years (four more years) with zero residual value.What depreciation expense would Nanki record for the year 2020 on this equipment?

A) $108,333.
B) $106,667.
C) $122,500.

D) A) and B)
E) A) and C)

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Question 83

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The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 at the beginning and end of the year,respectively.Net income and sales for the year are $100,000 and $800,000,respectively.What is Hidden Valley's return on assets?

Bahama Catering purchased a commercial dishwasher by paying cash of $5,000.The dishwasher's fair value on the date of the purchase was $5,600.The company incurred $400 in transportation costs,$300 installation fees,and paid a $200 fine for illegal parking while the dishwasher was being delivered.For what amount will Bahama record the dishwasher?

A word,slogan,or symbol that distinctively identifies a company,product,or service is a:

An impairment loss is equal to the amount by which book value exceeds the fair value of a long-term asset.

The balance sheet of Hidden Valley Farms reports total assets of $450,000 and $550,000 at the beginning and end of the year,respectively.Net income and sales for the year are $100,000 and $800,000,respectively.What is Hidden Valley's profit margin?

Losses on the sale of long-term assets for cash:

The replacement of a major component increased the productive capacity of equipment from 10 units per hour to 18 units per hour.The expenditure for the replacement component should be debited to:

We record purchased intangible assets at their original cost plus all other costs necessary to get the asset ready for use.

On January 1,2018,Jacob Inc.purchased a commercial truck for $48,000 and uses the straight-line depreciation method.The truck has a useful life of eight years and an estimated residual value of $8,000.On December 31,2019,the truck was exchanged for a new truck valued at $60,000.Jacob received a trade allowance of $35,000 on the exchange with the remaining $25,000 paid in cash.What amount of gain or loss should Jacob Inc.record on December 31,2019?

The purchase of a new cooling system for $150,000 to upgrade an office building owned by the company would be accounted for as: