Chapter 6

Question 1

what do you debit and credit

Event 4: Dryden records annual depreciation expense on December 31 using Straight-Line.

Debit:
[ Select ]

 Credit:  [ Select ]

Answer 1

Debit: deprecated expenses
represents the loss in the assets value
Credit: accumulated expenses

Question 2

what are long term operational assets

Answer 2

property, plant, equipment (supplies are not a long term asset)

Question 3

how to find allocated costs

Answer 3

find percents of each part of purchase out of total cost and apply it to the discounted value

Question 4

what are long term operational assets

Answer 4

assets that are used to generate revenue

Question 5

tangible

Answer 5

physical assets

Question 6

intangible

Answer 6

non physical assets

Question 7

property plant and equitment (PPE)

Answer 7

assets used to produce products or carry on admin and selling function

Question 8

what can and cannot Deprecation

Answer 8

anything but land deprecates

Question 9

what can deplete

Answer 9

natural resources (all are long term)

Question 10

indefinable useful lives

Answer 10

something that can become obsolete (not tangible)

Question 11

indefintite useful lives

Answer 11

something intangible that is useful for the foreseeable future

Question 12

amorization

Answer 12

applies to intagible indefinable assets

Question 13

basket purchase

Answer 13

the purchase of multiple assets in single transaction

Question 14

relative fair market value

Answer 14

each asset in basket purchase is assigned percent of total

market value of asset/market value of full basket purchase

Question 15

salvage value

Answer 15

expected selling price of asset at end of useful life

Question 16

straight line depreication formula

Answer 16

(purchase cost-salvage value)/uselife

Question 17

double decling method

Answer 17

(purchase cost-salvage value)/uselife *2

Question 18

units of production

Answer 18

(cost-salvage value)/estimated units of production *current amount of units produced

Question 19

maitnece cost

Answer 19

expensed in period incurred

Question 20

trademark

Answer 20

name or symbol that identifies a company

Question 21

copyright

Answer 21

legal production of creative work

Question 22

franchsies

Answer 22

exclusive right to sell product or service in geogrpahic areas

Question 23

goodwill

Answer 23

value attributed to things such as reputation and location

Question 24

what decreases A/D

Answer 24

extend the useful life NOT improve quality

Question 25

maintence cost recorded

Answer 25

expensed in period theyre incurred

Question 26

how to record improving the quality of a product

Answer 26

add the cost to the original cost

Question 27

given a patent has a useful life of 25 yrs and a legal life of 20 which amount used to determine amorization

Answer 27

20 years

Question 28

Benson Company paid $180,000 to purchase a competitor’s business. At the time of the purchase, the business had assets with a book value of $150,000 and a fair market value of $160,000. Benson assumed business liabilities of $20,000. what numbers do you use to determine the goodwill

Answer 28

(cash-liabilities)-fair market value