Chapter 10: Fixed Assets and Intangible Assets
101.The accumulated depletion of a natural resource is reported on the
a.balance sheet as depreciation from the cost of the resource
b.income statement as a deduction from revenues
c.income statement as an increase in revenue
d.balance sheet as a deduction from the cost of the resource
102.The process of transferring the cost of metal ores and other minerals removed from the earth to an expenseaccount is called
a.deferral
b.depreciation
c.amortization
d.depletion
103.Sands Company purchased mining rights for $500,000. They expect to harvest 1 million tons of ore over the nextfive years. During the current year, Sands mined 350,000 tons of ore. The entry to record the depletion wouldinclude
a.a credit to Accumulated Depletion for $350,000
b.a debit to Accumulated Depletion for $175,000
c.a debit to Depletion Expense for $175,000
d.a credit to Depletion Expense for $350,000
104.The natural resources of some companies include
a.metal ores, copyrights, and supplies
b.timber, equipment, and patents
c.minerals, trademarks, and land
d.timber, metal ores, and minerals
105.The Weber Company purchased a mining site for $1,750,000 on July 1. The company expects to mine ore for thenext 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated residual value of theproperty is $150,000. During the first year, the company extracted 6,500 tons of ore. The depletion expense is
a. $15,000
b. $16,000
c. $17,500
d. $26,000
106.Expenditures for research and development are generally recorded as
a.assets and amortized over their estimated useful life
b.current operating expenses
c.assets and amortized over 40 years
d.current assets
107.The term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangibleassets is
a.allocation
b.depreciation
c.amortization
d.depletion
108.Xtra Company purchased a business from Argus for $96,000 above the fair value of its net assets. Argus haddeveloped the goodwill over 12 years. How much would Xtra amortize the goodwill for its first year?
a.not enough information to calculate amortization
b.$7,000
c. $8,000
d. goodwill is not amortized
109.Which intangible assets are amortized over their useful life?
a.goodwill
b.patents
c.trademarks
d.all of the above
110.The name, term, or symbol used to identify a business and its products is called
a.goodwill
b.a trademark
c.a patent
d.a copyright
