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
A)Operating
B)Investing
C)Financing
D)Not separately reported on a statement of cash flows

Accepted Answer

Purchase of equipment is a capital expenditure and falls under the category of investing activities on the statement of cash flows.

Question 2

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?
A)Income statement
B)Balance sheet
C)Statement of cash flows
D)Statement of retained earnings

Accepted Answer

The statement of cash flows shows the inflows and outflows of cash during the year, including cash used for the purchase of property, plant, and equipment.

Question 3

Identify where each of the following accounts would be reported on Coca-Cola's financial statements.
-Accumulated amortization
A)Balance Sheet-Property, Plant, and Equipment
B)Balance Sheet-Intangible Assets
C)Balance Sheet-Current Assets
D)Balance Sheet-Other Assets
E)Income Statement-Operating Section
F)Income Statement-Other Revenue and Expense Section
G)Statement of Cash Flows

Accepted Answer

Accumulated amortization is reported on the balance sheet under intangible assets. It represents the cumulative amount of amortization expense that has been recognized on intangible assets over time, reducing their book value.

Question 4

Aliquippa Co.purchased equipment at the beginning of 2016 for $60,000.In addition, Aliquippa paid $2,000 for delivery of the equipment to its plant and $1,000 for installation of the equipment.The equipment has an estimated residual value of $7,000 and an estimated life of 7 years or 70,000 hours of operation.Aliquippa is looking at alternative depreciation methods for the equipment.Calculate the following: A. The depreciation expense for the year 2016 using the straight-line depreciation method.
B. The total accumulated depreciation at December 31,2017 , using the units-of-production depreciation method. Assume that the equipment is operated for 15,000 hours in 2016 and 12,000 hours in 2017.

C. The book value of the equipment at December 31, 2016, using the double-declining-balance depreciation method.
D. Which of the above methods is considered accelerated?
E. What are the advantages of using an accelerated depreciation method as compared to the straight-line method for lowering taxes early in the life of the equipment?

Accepted Answer

The answer of Aliquippa Co.purchased equipment at the beginning of...

Question 5

Identify where each of the following accounts would be reported on Coca-Cola's financial statements.
-Research and development costs
A)Balance Sheet-Property, Plant, and Equipment
B)Balance Sheet-Intangible Assets
C)Balance Sheet-Current Assets
D)Balance Sheet-Other Assets
E)Income Statement-Operating Section
F)Income Statement-Other Revenue and Expense Section
G)Statement of Cash Flows

Accepted Answer

Research and development costs would be reported on the Income Statement in the Operating Section.

Question 6

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:
-Depreciation expense
A)Operating
B)Investing
C)Financing
D)Not separately reported on a statement of cash flows

Accepted Answer

Depreciation expense is a non-cash item that is added back to net income when preparing the operating activities section of the statement of cash flows using the indirect method. It is considered an operating activity because it is related to the ongoing operations of the business.

Question 7

Identify where each of the following accounts would be reported on Coca-Cola's financial statements.
-Patents
A)Balance Sheet-Property, Plant, and Equipment
B)Balance Sheet-Intangible Assets
C)Balance Sheet-Current Assets
D)Balance Sheet-Other Assets
E)Income Statement-Operating Section
F)Income Statement-Other Revenue and Expense Section
G)Statement of Cash Flows

Accepted Answer

Patents are intangible assets and would be reported on the balance sheet under the Intangible Assets section.

Question 8

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given.Some answers may be used more than once, while others may not be used at all.
-This method minimizes taxable income (early in the asset's life).
A)Straight-line
B)Units-of-productionc.
C)Double-declining-balance
D)MACRS

Accepted Answer

The answer of Given the following list of methods of...

Question 9

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
A)Operating
B)Investing
C)Financing
D)Not separately reported on a statement of cash flows

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 10

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:
-Proceeds from the sale of a building
A)Operating
B)Investing
C)Financing
D)Not separately reported on a statement of cash flows

Accepted Answer

Proceeds from the sale of a building would be classified as an investing activity, as it represents a cash inflow from the sale of a long-term asset.

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:
-Cost incurred to acquire a patent
A)Operating
B)Investing
C)Financing
D)Not separately reported on a statement of cash flows

Accepted Answer

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

Question 12

Identify where each of the following accounts would be reported on Coca-Cola's financial statements.
-Goodwill
A)Balance Sheet-Property, Plant, and Equipment
B)Balance Sheet-Intangible Assets
C)Balance Sheet-Current Assets
D)Balance Sheet-Other Assets
E)Income Statement-Operating Section
F)Income Statement-Other Revenue and Expense Section
G)Statement of Cash Flows

Accepted Answer

Goodwill is an intangible asset and therefore should be reported on the balance sheet under "Intangible Assets." It should not be reported on the income statement or statement of cash flows.

Question 13

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)Operating
B)Investing
C)Financing
D)Not separately reported on a statement of cash flows

Accepted Answer

Payment of research and development costs is an operating expense and would be reported on the statement of cash flows under the operating activities section using the indirect method.

Question 14

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given.Some answers may be used more than once, while others may not be used at all.
-Early in the life of the asset, this method maximizes net income.
A)Straight-line
B)Units-of-productionc.
C)Double-declining-balance
D)MACRS

Accepted Answer

Straight-line method evenly distributes the depreciable cost over the useful life of the asset, resulting in a consistent depreciation expense each year. This will maximize net income early in the life of the asset as the depreciation expense will be lower compared to other methods, such as the double-declining-balance method, where larger amounts of depreciation are charged in the early years.

Question 15

​Imperial Corp.purchased land and a building for $425,000.The appraised values of the land and the building were $150,000 and $450,000, respectively.In addition, the attorney was paid $10,000 for handling the closing on the property. A. What amounts will be recorded as the costs of the land and building?
B. What is the accounting justification against increasing the land and building accounts for their appraised values?

Accepted Answer

The answer of ​Imperial Corp.purchased land and a building for...

Question 16

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
A)Operating
B)Investing
C)Financing
D)Not separately reported on a statement of cash flows

Accepted Answer

Amortization of a copyright is a non-cash expense that is included in the operating activities section of the statement of cash flows using the indirect method.

Question 17

Identify where each of the following accounts would be reported on Coca-Cola's financial statements.
-Amortization expense
A)Balance Sheet-Property, Plant, and Equipment
B)Balance Sheet-Intangible Assets
C)Balance Sheet-Current Assets
D)Balance Sheet-Other Assets
E)Income Statement-Operating Section
F)Income Statement-Other Revenue and Expense Section
G)Statement of Cash Flows

Accepted Answer

Amortization expense represents the depreciation of intangible assets, such as patents or trademarks. It would be reported as an expense in the operating section of the income statement.

Question 18

Identify where each of the following accounts would be reported on Coca-Cola's financial statements.
-Accumulated depreciation
A)Balance Sheet-Property, Plant, and Equipment
B)Balance Sheet-Intangible Assets
C)Balance Sheet-Current Assets
D)Balance Sheet-Other Assets
E)Income Statement-Operating Section
F)Income Statement-Other Revenue and Expense Section
G)Statement of Cash Flows

Accepted Answer

Accumulated depreciation is the total amount of depreciation expense that has been recorded for an asset since it was acquired. It is reported on the balance sheet under the property, plant, and equipment section as a contra asset account.

Question 19

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given.Some answers may be used more than once, while others may not be used at all.
-This method is the best for management bonus plans.
A)Straight-line
B)Units-of-productionc.
C)Double-declining-balance
D)MACRS

Accepted Answer

The straight-line method of depreciation is best for management bonus plans because it results in a consistent expense amount each year. This predictability helps in planning and budgeting for bonuses, as the depreciation expense does not fluctuate dramatically from year to year, unlike methods that front-load or vary the expense.

Question 20

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given.Some answers may be used more than once, while others may not be used at all.
-This method is the easiest to use.
A)Straight-line
B)Units-of-productionc.
C)Double-declining-balance
D)MACRS

Accepted Answer

Straight-line is the easiest to use and is often recommended for small businesses or simple depreciation calculations.

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

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?

Identify where each of the following accounts would be reported on Coca-Cola's financial statements. -Accumulated amortization

Identify where each of the following accounts would be reported on Coca-Cola's financial statements. -Research and development costs

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: -Depreciation expense

Identify where each of the following accounts would be reported on Coca-Cola's financial statements. -Patents

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given.Some answers may be used more than once, while others may not be used at all. -This method minimizes taxable income (early in the asset's life) .

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

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: -Proceeds from the sale of a building

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

Identify where each of the following accounts would be reported on Coca-Cola's financial statements. -Goodwill

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

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given.Some answers may be used more than once, while others may not be used at all. -Early in the life of the asset, this method maximizes net income.

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

Identify where each of the following accounts would be reported on Coca-Cola's financial statements. -Amortization expense

Identify where each of the following accounts would be reported on Coca-Cola's financial statements. -Accumulated depreciation

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given.Some answers may be used more than once, while others may not be used at all. -This method is the best for management bonus plans.

Given the following list of methods of depreciation, select the method that is best for the situation or purpose given.Some answers may be used more than once, while others may not be used at all. -This method is the easiest to use.