Practice Exam 2 - ACCT 3367 Gleim Review 2 Property Plant...

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ACCT 3367 Gleim Review 2 Property, Plant, and Equipment Depreciation, Impairments, and Depletion Intangible Assets [Fact Pattern #1] Nella Corporation, which computes depreciation to the nearest whole month, placed a new piece of equipment in operation on July 1, Year 1. It was expected to produce 400,000 units of product in its estimated useful life of 8 years. Total cost was $300,000; salvage value was estimated to be $30,000. Nella employs a calendar year for financial reporting purposes. Actual production for the past 3 years was as follows: Year 1 -- 34,000 units Year 2 -- 62,500 units Year 3 -- 58,400 units [1] (Refers to Fact Pattern #1) If Nella uses the double-declining-balance method of depreciation, the amount of depreciation computed (rounded to the nearest dollar) for this equipment for financial reporting purposes in Year 3 would be A. $49,219 B. $75,000 C. $44,297 D. $42,188 [2] In January Year 1, Huff Mining Corporation purchased a mineral mine for $3.6 million with removable ore estimated by geological surveys at 2,160,000 tons. The property has an estimated value of $360,000 after the ore has been extracted. Huff incurred $1,080,000 of development costs preparing the property for the extraction of ore. During Year 3, 270,000 tons was removed and 240,000 tons was sold. For the year ended December 31, Year 3, Huff should include what amount of depletion in its cost of goods sold? A. $360,000 B. $400,800 C. $540,000 D. $480,000 [3] Under what conditions may goodwill be recorded? A. Never. B. When net assets are amortized to a point below 33-1/3% of the fair value of the entity. C. When a business is acquired. D. When a formal appraisal is made.
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ACCT 3367 Gleim Review 2 Property, Plant, and Equipment Depreciation, Impairments, and Depletion Intangible Assets [4] LEO Co. incurred the following costs for medical research and development: Compensation to lab personnel $ 500,000 Materials used 800,000 Electron microscope used in several R&D projects 4,000,000 Depreciation on the above microscope 400,000 Troubleshooting with regard to commercial production of a drug 100,000 The total R&D costs on LEO’s income statement should be A. $5,800,000 B. $5,700,000 C. $1,800,000 D. $1,700,000 [5] Technological feasibility of a computer software product is established when the enterprise has completed all planning, designing, coding, and testing activities that are necessary to establish that the product can be produced to meet its designed specifications, including functions, features, and technical performance requirements. For a computer software product for which the process of creation includes a detail program design, which of the following is not required as evidence that technological feasibility has been established? A. Completion of a working model of the software product. B. Review of the detail program design for high-risk development issues. C. Completion of the product design and the detail program design. D. Confirmation of the completeness of the detail program design and its consistency with the product design.
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ACCT 3367 Gleim Review 2 Property, Plant, and Equipment Depreciation, Impairments, and Depletion Intangible Assets [6] Howard Corp. was incorporated in Year 1 and began operations on January 1, Year 2. The following costs were incurred in Year 1:
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Practice Exam 2 - ACCT 3367 Gleim Review 2 Property Plant...

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