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Question
The process of allocating the cost of a plant asset to expense in the accounting periods benefiting from its use is called depletion.
A) True
B) False
Answer
This answer is hidden. It contains 13 characters.
Related questions
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Foreign exchange rates fluctuate due to changing ________ and ________ conditions.
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Investments in equity securities where the investor has a significant, but not controlling influence, are accounted for using the ________ method.
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On January 1, 2014, Rickson Corporation purchased 7,500 shares of AutoTech as a long-term investment for a total of $235,000. The 7,500 shares represent 30% of the outstanding (25,000) shares of AutoTech. Prepare the journal entries for Rickson to record the following transactions and events:December 31, 2014: AutoTech reported net income of $66,000 for 2014.February 1, 2015: Sold 1,875 of the AutoTech shares for $34 per share. In addition, $1,350 in fees and commissions were paid by Rickson on this sale. November 1, 2015: Rickson received a $0.90 per share cash dividend from AutoTech. December 31, 2015: AutoTech reported net loss of $46,000 for 2015.
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Scotsland Company had the following transactions relating to investments in trading securities during the year. Prepare the required general journal entries for these transactions.May 4 Scotsland purchased 600 shares of Lobe Company stock at $120 per share plus a$750 brokerage fee.July 1 Scotsland received a $2.50 per share cash dividend on the Lobe Company stock.Sept. 15 Sold 300 shares of Lobe Company stock for $125 per share, less a $450 brokerage fee.Dec. 31 The fair value of the Lobe Company stock (the only investment that Scotsland owns) is $124 per share. The balance of the Fair value AdjustmentTrading account had a zero balance prior to adjustment.
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A company reported net sales of $850,000, net income of $200,000 and average total assets of
$575,000. Calculate its return on total assets.
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On May 1 of the current year, a company paid $200,000 to purchase 7%, 10-year bonds with a par value of $200,000; interest is paid semiannually on May 1 and November 1. The company intends to hold the bonds until they mature. Prepare the journal entries to record (1) the bond purchase, (2) the receipt of the first semiannual interest payment on November 1 of the current year, (3) the accrual of interest for year-end December 31, and (4) the receipt of the second semiannual payment on May 1.
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On May 1 of the current year, a company paid $200,000 cash to purchase 6%, 10-year bonds with a par value of $200,000; interest is paid semiannually each May 1 and November 1. The company intends to hold these bonds until they mature. Prepare the journal entry to record the receipt of the first semiannual interest payment on November 1.
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On May 1 of the current year, a company paid $200,000 cash to purchase 6%, 10-year bonds with a par value of $200,000; interest is paid semiannually each May 1 and November 1. The company intends to hold these bonds until they mature. Prepare the journal entry to record the bond purchase.
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Explain how equity securities having significant influence are accounted for and reported in the financial statements. Include a discussion of the criterion for these securities in terms of an investee's voting stock.
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Explain how to account for held-to-maturity debt securities at and after acquisition and how they are reported in the financial statements.
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Explain how to record the sale of trading securities.
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Discuss the reasons companies make investments.
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On February 15, Jewel Company buys 7,000 shares of Marcelo Corp. common stock at $28.53 per share plus a brokerage fee of $400. The stock is classified as long-term available-for-sale securities. This is the company's first and only investment in available-for-sale securities. On March 15, Marcelo declares a dividend of $1.15 per share payable to stockholders of record on April 15. Jewel received the dividend on April 15 and ultimately sells half of the Marcelo stock on November 17 of the current year for $29.30 per share less a brokerage fee of $250. The journal entry to record the purchase on February 15 is:A) Debit Long-Term Investments-HTM $199,710; credit Cash $199,710.B) Debit Long-Term Investments-Trading $200,110; credit Cash $200,110.C) Debit Long-Term Investments-Trading $199,710; credit Cash $199,710.D) Debit Long-Term Investments-AFS $199,710; credit Cash $199,710.E) Debit Long-Term Investments-AFS $200,110; credit Cash $200,110.
Q:
All of the following statements regarding other comprehensive income are true except:
A) Other comprehensive income includes pension adjustments.
B) Other comprehensive income includes unrealized gains and losses on available-for-sale securities.
C) Other comprehensive income is not considered when calculating comprehensive income.
D) Other comprehensive income includes foreign currency adjustments.
E) Accumulated other comprehensive income is defined as the cumulative impact of other comprehensive income.
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On January 4, Year 1, Barber Company purchased 5,000 shares of Convell Company for $59,500 plus a broker's fee of $1,000. Convell Company has a total of 25,000 shares of common stock outstanding and it is presumed the Barber Company will have a significant influence over Convell. During each of the next two years, Convell declared and paid cash dividends of $0.85 per share, and its net income was $72,000 and $67,000 for Year 1 and Year 2, respectively. The January 12, Year 3, entry to record Barber's sale of 3,000 shares of Convell Company stock, which represents 60% of Barber's total investment, for $39,000 cash should be:A) Debit Cash $39,000; debit Loss on Sale of Investment $21,500; credit Long-Term Investments $60,500.B) Debit Cash $39,000; debit Loss on Sale of Investment $8,200; credit Long-Term Investments$47,280.C) Debit Cash $39,000; debit Loss on Sale of Investment $8,880; credit Long-Term Investments$47,880.D) Debit Cash $39,000; credit Gain on Sale of Investment $8,750; credit Long-Term Investments $30,250.E) Debit Cash $39,000; credit Gain on Sale of Investment $2,700; credit Long-Term Investments $36,300.
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Pravis Corporation owns 30% of Kuster Corporation. Pravis Corporation received $9,000 in cash dividends from Kuster Corporation. The entry to record receipt of these dividends is:A) Debit Cash, $9,000; credit Interest Revenue, $9,000.B) Debit Cash, $9,000; credit Dividend Revenue, $9,000.C) Debt Long-Term Investment, $9,000; credit Cash, $9000.D) Debit Cash, $9,000; credit Long-Term Investments, $9,000.E) Debit Unrealized Gain-Equity, $9,000; credit Cash, $9,000.
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Marjam Company owns 51,000 shares of MacKenzie Company's 100,000 outstanding shares of common stock. MacKenzie Company pays $25,000 in total cash dividends to its shareholders. Marjam's entry to record this transaction should include a:A) Credit to Dividend Revenue for $25,000.B) Credit to Long-Term investments for $12,750.C) Credit to Long-Term Investments for $25,000.D) Debit to Dividend Revenue for $12,750.E) Debit to Interest Revenue for $12,750.
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McVeigh Corp. owns 40% of Gondor Company's common stock. McVeigh received $41,200 in cash dividends from Gondor. The entry to record this transaction should include a:A) Credit to Cash for $41,200.B) Credit to Long-Term Investments for $103,000.C) Debit to Dividends for $103,000.D) Credit to Long-Term Investments for $41,200.E) Debit to Dividend Revenue for $41,200.
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MotorCity, Inc. purchased 40,000 shares of Shaw common stock for $232,000. This represents 40% of the outstanding stock. The entry to record the transaction includes a:A) Debit to Short-Term Investment-AFS for $232,000.B) Debit to Long-Term Investments for $92,800.C) Debit to Long-Term Investments for $232,000.D) Debit to Long-Term Investments-HTM for $232,000.E) Credit to Long-Term Investments for $92,800.
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Trading securities are:A) Intended to be held to maturity.B) Reported at historical cost, adjusted for the amortized amount of any difference between cost and maturity value.C) Recorded at cost and remain at cost over the life of the investment.D) Always classified as Long-Term Investments.E) Reported at fair value on the balance sheet.
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Investments can be classified as all but which of the following:A) Held-to-maturity debt securities.B) Available-for-sale equity securities.C) Available-for-sale debt securities.D) Trading securities.E) Intangible investments.
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Select the correct statement from the following:A) Total asset turnover reflects the percent of net income in each dollar of net sales.B) Return on total assets analysis is beneficial in evaluating a company but is not useful for competitor analysis.C) High returns on total assets are desirable.D) Profit margin reflects a company's ability to produce net sales from total assets.E) Return on total assets can be separated into gross margin ratio and price-earnings ratio.
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Use the following financial statements and additional information to (1) prepare a statement of cash flows for the year ended December 31, 20X2 using the indirect method, and (2) compute the company's cash flow on total assets ratio for 20X2.Derby Company Balance Sheets At December 31 20X2 20X1Assets: Cash$ 85,600 $ 65,200Accounts receivable, net72,850 56,750Merchandise inventory157,750 144,850Prepaid expenses6,080 12,680Equipment280,600 245,600Accumulated depreciation-Equipment (80,600) (97,600Total assets$522,280 $427,480 Liabilities: Accounts payable$ 52,850 $ 45,450Income taxespayable15,240 12,240Notes payable(long term) 59,200 79,200Total liabilities$127,290 $136,890Equity: Common stock200,000 150,000Paid-in capitalin excess of par53,000 40,000Retained earnings 141,990 100,59 0Total equity$394,990 $290,590Total liabilities and equity $522,280 $427,480Derby Company Income StatementFor Year Ended December31, 20X2 Sales $488,000Cost of goods sold$212,540 Depreciation expense43,000 Other operating expenses106,260 Interest expense 6,400(368,200Other gains(losses): Gain on sale of equipment 4,700Income beforetaxes 124,500Income taxesexpense 41,100Net income $ 83,400Additional Informationa. A $20,000 note payable is retired at its carrying value in exchange for cash.b. The only changes affecting retained earnings are net income and cash dividends paid.c. New equipment is acquired for $120,000 cash.d. Received cash for the sale of equipment that had cost $85,000, yielding a gain of $4,700.e. Prepaid expenses relate to Other Expenses on the income statement.f. All purchases and sales of merchandise inventory are on credit.
Q:
Use the following income statement and information about changes in noncash current assets and liabilities to (1) prepare only the cash flows from operating activities section of the statement of cash flows using the indirect method and (2) compute the company's cash flow on total assets ratio for the year assuming that average total assets are $525,250.DaveyCompany Income StatementFor Year Ended December 31Sales $880,000Cost of goodssold 487,000Gross profit $393,000Operating expenses: Salaries expense $144,000 Rent expense 76,000 Depreciation expense 45,000 Amortization expense 22,000 Utilities expenses 12,000 299,000Income from operations $ 94,000Loss on sale of equipment 14,000Income before taxes $ 80,000Income tax expense 28,500Net Income $ 51,500 Changes in current asset and current liability accounts for the year that relate to operations follow.Increase in accounts receivable $ 32,000Increase in accounts payable (all accountspayable transactions are for inventory) 13,500Decrease in prepaid expenses 9,200Decrease in merchandise inventory 14,000Decrease in long-term notes payable 20,000
Q:
A company reported net income of $318,000, operating cash flows of $218,000, total cash flows of
$184,000, and average total assets of $898,000. Calculate its cash flow on total assets ratio.
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A corporation reported average total assets in Year 1 of $397,350 and $440,800 in Year 2. Its net operating cash flow for Year 1 was $35,667 and $35,790 for Year 2. Calculate the cash flow on total assets ratio for both years. Comment on the results.
Q:
A company reported operating cash flows in Year 1 of $33,100 and $26,220 in Year 2. Its average total assets in Year 1 were $262,000 and $313,000 in Year 2. Calculate the cash flow on total assets ratio for both years. Comment on the results.
Q:
Use the information provided to calculate the cash paid for insurance for the period
Prepaid insurance, beginning-year $ 7,000
Insurance expense.. 16,800
Prepaid insurance, year-end... 3,400
Cash paid for insurance.. $
Q:
Use the information provided below to calculate the cash paid for interest for the period.
Interest payable, beginning-year... $4,200
Interest expense. 26,700
Interest payable, year-end. 3,000
Cash paid for interest $
Q:
For each of the following separate cases, use the information provided to calculate the missing cash inflow or cash outflow using the direct method.(a) Accounts receivable balances: Beginning of year ……………………… $ 60,000 End of year …………………………….. 63,000 Sales revenue(all on credit) …………….. 395,000 Cash received from customers $_____(b) Accounts payable balances: Beginning of year ………………………. $ 42,000 End of year……………………………… 31,000 Merchandise inventory balances: Beginning of year ……………………… 50,000 End of year …………………………….. 52,500 Cost of goods sold……………………….. 250,000 Cash paid for merchandise inventory……. $______(c) Interest payable balances: Beginning of year ……………………... $7,500 Endof year ……………………………. 8,200 Interest expense ………………………… 31,000 Cash paid for interest …………………… $______