Question 1

On October 1, 2015, Nurix Company purchased a patent for $200,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only 10 years. What will be the balance in the patent account on September 30, 2016?

Accepted Answer

The answer of On October 1, 2015, Nurix Company purchased...

Question 2

Which of the following is an intangible asset?

Accepted Answer

Goodwill is an intangible asset that represents the value of a company or brand name, reputation, customer base, etc. Plant and machinery, building, and land are all fixed assets and tangible assets as they have a physical existence.

Question 3

On October 1, 2015, Nurix Company purchased a patent for $200,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only 10 years. Journalize the amortization expense for 2015. Assume straight-line amortization.

Accepted Answer

The answer of On October 1, 2015, Nurix Company purchased...

Question 4

On Jan 1^st, 2015, Server Solutions paid $200,000 to acquire Tabletz Inc., an electronic gadget-advertising website. At the time of the acquisition, Tabletz's balance sheet reported total assets of $200,000 and liabilities of $100,000. The fair market value of Tabletz's assets was $200,000. The fair market value of its liabilities was $100,000. At the end of 2018, they measured goodwill and found its fair value to be $60,000. Calculate and record the impairment of goodwill.

Accepted Answer

The answer of On Jan 1^st, 2015, Server Solutions paid...

Question 5

On October 1, 2015, Nurix Company purchased a patent for $100,000 cash. Although the patent gives legal protection for 20 years, it is expected to be used for only eight years. Journalize the purchase of the patent.

Accepted Answer

The answer of On October 1, 2015, Nurix Company purchased...

Question 6

The asset turnover ratio is calculated by dividing cost of goods sold by average total assets.

Accepted Answer

The asset turnover ratio is calculated by dividing net sales or revenue by average total assets, not the cost of goods sold.

Question 7

Baker Inc. had reported the following details for the year ended December 31, 2012:  The company's beginning total assets and liabilities were $14,000,000 and $8,000,000, respectively. Calculate the asset turnover ratio for 2012.

Accepted Answer

The answer of Baker Inc. had reported the following details...

Question 8

Which of the following accounting methods is usually used to compute amortization expense?

Accepted Answer

Straight-line method is typically used to compute amortization expense as it evenly distributes the cost of an intangible asset over its expected useful life.

Question 9

Which of the following is true of asset turnover ratio?

Accepted Answer

Asset turnover ratio measures how efficiently a business is using its average total assets to generate sales. It is calculated by dividing net sales by average total assets.

Question 10

Server Solutions paid $200,000 to acquire Tabletz an electronic gadget-advertising website. At the time of the acquisition, Tabletz's balance sheet reported total assets of $200,000 and liabilities of $100,000. The fair market value of Tabletz's assets was $200,000. The fair market value of its liabilities was $100,000. Journalize the acquisition of Tabletz in the books of Server Solutions.

Accepted Answer

The answer of Server Solutions paid $200,000 to acquire Tabletz...

Question 11

Which of the following is the correct accounting treatment for a patent?

Accepted Answer

A patent is an intangible asset and should be capitalized and amortized over its useful life, which is typically 20 years or less. Therefore, the correct accounting treatment for a patent is to capitalize it and amortize it over its useful life. Option A is incorrect as it suggests that a patent is a current asset, which is incorrect. Option B is incorrect as depreciation is used for tangible assets, whereas impairment is used for both tangible and intangible assets that have suffered a loss in value. Option D is incorrect as expenses are recognized in the period in which they are incurred, but a patent is an asset that provides future economic benefits and should be capitalized.

Question 12

On October 1, 2015, Nurix Company purchased a patent for $100,000 cash. Although the patent gives legal protection for 20 years, it is expected to be used for only eight years. Journalize the amortization expense for 2015. Assume straight-line amortization.

Accepted Answer

The answer of On October 1, 2015, Nurix Company purchased...

Question 13

The asset turnover ratio measures the amount of net sales generated for each average dollar of total assets invested.

Accepted Answer

The statement is true. The asset turnover ratio is calculated by dividing net sales by average total assets. It gives an indication of how efficiently a company is using its assets to generate sales.

Question 14

Which of the following is true of goodwill?

Accepted Answer

Goodwill is not amortized, but is tested annually for impairment. Option A is incorrect because goodwill acquired after June 2019 is no longer subject to amortization. Option B is partially correct as only acquired goodwill needs to be recorded, not created goodwill. Option C is incorrect as goodwill is not expensed when acquired.

Question 15

The type of intangible asset related to the rights of original music and media is known as:

Accepted Answer

A copyright is a legal right that grants the creator of an original work the exclusive right to use, distribute and reproduce their work. This includes music, literature, movies, and other forms of media. Goodwill refers to the value of a company's reputation and customer base, while a trademark is a symbol, phrase, or design that identifies and distinguishes a company's products or services. A patent grants the holder exclusive rights to an invention for a limited period of time, but does not apply to music and media.

Question 16

Maple Company had net sales of $200,550 for the year ended December 31, 2015. Its beginning and ending total assets were $75,200 and $110,500, respectively. Determine Maple's asset turnover ratio for the year ended December 31, 2015.

Accepted Answer

The answer of Maple Company had net sales of $200,550...

Question 17

In 2015, a company purchased a small business for $250,000. The market value of the small business's assets was $400,000, and the market value of the liabilities was $200,000. The company recorded goodwill of $50,000 at the time of acquisition. At the end of 2016, it measured the goodwill and found it had a remaining fair value of only $20,000. At year-end 2016, the company will:

Accepted Answer

The company will need to record an impairment loss to reflect the decrease in the fair value of goodwill from $50,000 to $20,000. This decrease in value represents a permanent loss in value, which is why an impairment loss must be recorded. Choices A, C, and D do not accurately reflect the situation.

Question 18

On January 1, 2012 Hillop Inc. had total assets of $360,000. During the year, the company purchased new machinery worth $80,000 and promised to pay the amount due after two years. Throughout the year, it earned revenue of $50,000 every month. Calculate the asset turnover ratio.

Accepted Answer

Asset Turnover Ratio = Sales/Total Assets

Total assets at the beginning of the year = $360,000

New machinery purchased during the year = $80,000

Total assets at the end of the year = $360,000 + $80,000 = $440,000

Revenue earned monthly = $50,000

Revenue earned for the year = $50,000 x 12 = $600,000

Asset turnover ratio = $600,000/$400,000 = 1.5 times

Therefore, the correct answer is C) 1.5 times.

Question 19

Roggers Company's beginning and ending total assets in the year 2015 were $18,000,000 and $22,000,000, respectively. Its assets turnover ratio for the year was calculated to be 1.75 times. Calculate the amount of net sales for the year 2015.

Accepted Answer

We can use the formula: Net Sales = Assets Turnover Ratio x Average Total Assets
Average Total Assets = (Beginning Total Assets + Ending Total Assets) / 2
Average Total Assets = ($18,000,000 + $22,000,000) / 2 = $20,000,000
Net Sales = 1.75 x $20,000,000 = $35,000,000
Therefore, the correct choice is (C).

Question 20

Server Solutions paid $200,000 to acquire Tabletz Inc., an electronic gadget-advertising website. At the time of the acquisition, Tabletz's balance sheet reported total assets of $200,000 and liabilities of $100,000. The fair market value of Tabletz's assets was $200,000. The fair market value of its liabilities was $100,000. How much goodwill did Server Solutions purchase as part of the acquisition of Tabletz?

Accepted Answer

Goodwill represents the premium paid over the fair market value of the net assets acquired in an acquisition. In this case, Server Solutions paid $200,000 to acquire Tabletz Inc., and Tabletz's fair market value of assets and liabilities were both $200,000 and $100,000 respectively. Hence, the net assets of Tabletz were $100,000 ($200,000 - $100,000). Since Server Solutions paid $200,000 for the acquisition, the goodwill amount would be $100,000 ($200,000 - $100,000). Therefore, the correct answer is option C.

Quiz 10: Plant Assets, Natural Resources, and Intangibles

On October 1, 2015, Nurix Company purchased a patent for $200,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only 10 years. What will be the balance in the patent account on September 30, 2016?

Which of the following is an intangible asset?

On October 1, 2015, Nurix Company purchased a patent for $200,000 cash. Although the patent gives legal protection for 20 years, the patent is expected to be used for only 10 years. Journalize the amortization expense for 2015. Assume straight-line amortization.

On October 1, 2015, Nurix Company purchased a patent for $100,000 cash. Although the patent gives legal protection for 20 years, it is expected to be used for only eight years. Journalize the purchase of the patent.

The asset turnover ratio is calculated by dividing cost of goods sold by average total assets.

Baker Inc. had reported the following details for the year ended December 31, 2012: The company's beginning total assets and liabilities were $14,000,000 and $8,000,000, respectively. Calculate the asset turnover ratio for 2012.

Which of the following accounting methods is usually used to compute amortization expense?

Which of the following is true of asset turnover ratio?

Which of the following is the correct accounting treatment for a patent?

On October 1, 2015, Nurix Company purchased a patent for $100,000 cash. Although the patent gives legal protection for 20 years, it is expected to be used for only eight years. Journalize the amortization expense for 2015. Assume straight-line amortization.

The asset turnover ratio measures the amount of net sales generated for each average dollar of total assets invested.

Which of the following is true of goodwill?

The type of intangible asset related to the rights of original music and media is known as:

Maple Company had net sales of $200,550 for the year ended December 31, 2015. Its beginning and ending total assets were $75,200 and $110,500, respectively. Determine Maple's asset turnover ratio for the year ended December 31, 2015.

On January 1, 2012 Hillop Inc. had total assets of $360,000. During the year, the company purchased new machinery worth $80,000 and promised to pay the amount due after two years. Throughout the year, it earned revenue of $50,000 every month. Calculate the asset turnover ratio.

Roggers Company's beginning and ending total assets in the year 2015 were $18,000,000 and $22,000,000, respectively. Its assets turnover ratio for the year was calculated to be 1.75 times. Calculate the amount of net sales for the year 2015.