Question 1

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method:
-Purchase of equipment for cash

Accepted Answer

Purchase of equipment is considered an investing activity as it involves acquiring a long-term asset.

Question 2

Burgess Company purchased an asset on January 1, 2014, for $10,000. The asset was expected to have a ten-year life and a $1,000 salvage value. The company uses the straight-line method of depreciation. On January 1, 2016, the company determines that the asset will last only five more years. Calculate the amount of depreciation for 2016.
Depreciation for 2014 and 2015: $10,000 - $1,000/10 years =

Accepted Answer

The answer of Burgess Company purchased an asset on January...

Question 3

Acquisition cost is also known as historical cost with respect to property plant and equipment.

Accepted Answer

Acquisition cost is also known as historical cost for property plant and equipment.

Question 4

Mayflower Company had a machine with a cost of $123,000 and accumulated depreciation of $87,000 that was sold at for a gain of $5,000. What amount of cash was received from the sale?

Accepted Answer

To find the cash received from the sale, we need to use the formula: 
Cash received = Selling price - Book value
Book value = Cost - Accumulated depreciation
In this case, the machine was sold at a gain, which means the selling price is higher than the book value. Therefore, we need to add the gain to the book value to find the selling price. 
Book value = $123,000 - $87,000 = $36,000
Selling price = $36,000 + $5,000 = $41,000
Cash received = $41,000

Question 5

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method:
-Loss of the sale of equipment

Accepted Answer

Under the indirect method, non-cash items such as losses or gains on the sale of equipment are adjusted in the operating activities section to reconcile net income to net cash provided by operating activities.

Question 6

Select the financial statement on which the user would most likely find the answer to the question given.
-What amount of cash was used for to purchase property, plant, and equipment during the year?

Accepted Answer

The statement of cash flows provides information about the cash inflows and outflows from all activities, including investing activities such as purchasing property, plant, and equipment. The income statement shows revenues and expenses, while the balance sheet and statement of retained earnings provide information about the company's assets, liabilities, and equity.

Question 7

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method:
-Cost incurred to acquire a patent

Accepted Answer

The cost incurred to acquire a patent is considered an investing activity because it involves the purchase of a long-term asset.

Question 8

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method:
-Payment of research and development costs

Accepted Answer

Payment of research and development costs is a cash outflow related to operating activities, as it is a cost incurred in the normal course of business operations.

Question 9

A machine with a cost of $100,000 and accumulated depreciation of $80,000 was sold at a loss of $6,000. What amount of cash was received from the sale?

Accepted Answer

The answer of A machine with a cost of $100,000...

Question 10

At December 31, 2015, Ashland Company has the following amounts on its financial statements:

Accepted Answer

The answer of At December 31, 2015, Ashland Company has...

Question 11

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method:
-Amortization of a copyright

Accepted Answer

Amortization of a copyright is a non-cash expense related to operating activities and should be reported as such on the statement of cash flows using the indirect method.

Question 12

Hawk Company purchased an asset on January 1, 2014, for $10,000. The asset was expected to have a ten-year life and a $1,000 salvage value. The company uses the straight-line method of depreciation. On January 1, 2016, the company made a major repair to the asset of $5,000, extending its life. The asset is expected to last ten years from January 1, 2016. Calculate the amount of depreciation for 2016.

Accepted Answer

The answer of Hawk Company purchased an asset on January...

Question 13

Interest is never a part of the cost of property, plant, and equipment or intangible assets.

Accepted Answer

Interest can be a part of the cost of property, plant, and equipment or intangible assets if they were financed through borrowing. The interest incurred during the construction or acquisition period can be capitalized as part of the asset cost.

Quiz 8: Operating Assets: Property, Plant, and Equipment, and Intangibles

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method: -Purchase of equipment for cash

Acquisition cost is also known as historical cost with respect to property plant and equipment.

Mayflower Company had a machine with a cost of $123,000 and accumulated depreciation of $87,000 that was sold at for a gain of $5,000. What amount of cash was received from the sale?

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method: -Loss of the sale of equipment

Select the financial statement on which the user would most likely find the answer to the question given. -What amount of cash was used for to purchase property, plant, and equipment during the year?

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method: -Cost incurred to acquire a patent

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method: -Payment of research and development costs

A machine with a cost of $100,000 and accumulated depreciation of $80,000 was sold at a loss of $6,000. What amount of cash was received from the sale?

At December 31, 2015, Ashland Company has the following amounts on its financial statements:

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method: -Amortization of a copyright

Interest is never a part of the cost of property, plant, and equipment or intangible assets.