ACCY 201 EXAM 2 2026 INTRODUCTORY
ACCOUNTING ASSESSMENT QUESTIONS
SOLUTIONS GRADED A+
◉ What are examples of tangible assets?
Answer: Land, land improvements, buildings, equipment, and
natural resources.
◉ What are examples of intangible assets?
Answer: Patents, trademarks, copyrights, franchises, and goodwill.
◉ How are tangible assets recorded?
Answer: At their original cost plus all expenditures necessary to get
the asset ready for use.
◉ What costs are included in the capitalized cost of land?
Answer: Purchase price, real estate commissions, back property
taxes, clearing costs, and costs for leveling the land.
◉ What is a common mistake when calculating the cost of land?
Answer: Ignoring or incorrectly adding cash received from the sale
of salvaged materials.
,◉ What are land improvements?
Answer: Amounts spent to enhance the land, such as parking lots,
sidewalks, and landscaping.
◉ What costs are included in the capitalized cost of buildings?
Answer: Realtor commissions, legal fees, and remodeling costs.
◉ What types of costs are included in the capitalized cost of
equipment?
Answer: Purchase price, sales tax, shipping, installation, and any
costs to prepare the asset for use.
◉ How are natural resources recorded?
Answer: At cost plus all other costs necessary to get the resource
ready for use.
◉ What is the accounting treatment for purchased intangible assets?
Answer: Recorded at their original cost plus all costs necessary to
get the asset ready for use.
◉ How are internally developed intangible assets treated in
accounting?
,Answer: Most costs are expensed in the income statement in the
period incurred.
◉ What is the duration of a patent's exclusive rights?
Answer: 20 years.
◉ What costs are capitalized when a patent is purchased?
Answer: The purchase price plus legal and filing fees.
◉ What is the accounting treatment for copyrights?
Answer: Similar to patents; they are granted for the life of the
creator plus 70 years.
◉ What are trademarks?
Answer: Words, slogans, or symbols that distinctly identify a
company, product, or service.
◉ How often can trademarks be renewed?
Answer: Indefinitely for 10-year periods.
◉ What is the treatment for advertising costs in accounting?
Answer: Reported as an expense in the income statement in the
period incurred.
, ◉ What are research and development (R&D) costs treated as in
accounting?
Answer: Reported as an expense in the income statement, not as an
intangible asset.
◉ What is the total capitalized cost of land if the purchase price is
$2,500,000 and there are additional costs?
Answer: $2,950,000 (including commissions, taxes, and leveling
costs).
◉ What is included in the capitalized cost of equipment?
Answer: Purchase price, sales tax, transportation, shipping
insurance, and installation costs.
◉ What is the key point regarding tangible assets?
Answer: They are recorded at cost plus all costs necessary to get
them ready for use.
◉ What happens to property taxes for the current period after the
purchase of land?
Answer: They are expensed as incurred.
ACCOUNTING ASSESSMENT QUESTIONS
SOLUTIONS GRADED A+
◉ What are examples of tangible assets?
Answer: Land, land improvements, buildings, equipment, and
natural resources.
◉ What are examples of intangible assets?
Answer: Patents, trademarks, copyrights, franchises, and goodwill.
◉ How are tangible assets recorded?
Answer: At their original cost plus all expenditures necessary to get
the asset ready for use.
◉ What costs are included in the capitalized cost of land?
Answer: Purchase price, real estate commissions, back property
taxes, clearing costs, and costs for leveling the land.
◉ What is a common mistake when calculating the cost of land?
Answer: Ignoring or incorrectly adding cash received from the sale
of salvaged materials.
,◉ What are land improvements?
Answer: Amounts spent to enhance the land, such as parking lots,
sidewalks, and landscaping.
◉ What costs are included in the capitalized cost of buildings?
Answer: Realtor commissions, legal fees, and remodeling costs.
◉ What types of costs are included in the capitalized cost of
equipment?
Answer: Purchase price, sales tax, shipping, installation, and any
costs to prepare the asset for use.
◉ How are natural resources recorded?
Answer: At cost plus all other costs necessary to get the resource
ready for use.
◉ What is the accounting treatment for purchased intangible assets?
Answer: Recorded at their original cost plus all costs necessary to
get the asset ready for use.
◉ How are internally developed intangible assets treated in
accounting?
,Answer: Most costs are expensed in the income statement in the
period incurred.
◉ What is the duration of a patent's exclusive rights?
Answer: 20 years.
◉ What costs are capitalized when a patent is purchased?
Answer: The purchase price plus legal and filing fees.
◉ What is the accounting treatment for copyrights?
Answer: Similar to patents; they are granted for the life of the
creator plus 70 years.
◉ What are trademarks?
Answer: Words, slogans, or symbols that distinctly identify a
company, product, or service.
◉ How often can trademarks be renewed?
Answer: Indefinitely for 10-year periods.
◉ What is the treatment for advertising costs in accounting?
Answer: Reported as an expense in the income statement in the
period incurred.
, ◉ What are research and development (R&D) costs treated as in
accounting?
Answer: Reported as an expense in the income statement, not as an
intangible asset.
◉ What is the total capitalized cost of land if the purchase price is
$2,500,000 and there are additional costs?
Answer: $2,950,000 (including commissions, taxes, and leveling
costs).
◉ What is included in the capitalized cost of equipment?
Answer: Purchase price, sales tax, transportation, shipping
insurance, and installation costs.
◉ What is the key point regarding tangible assets?
Answer: They are recorded at cost plus all costs necessary to get
them ready for use.
◉ What happens to property taxes for the current period after the
purchase of land?
Answer: They are expensed as incurred.
