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WGU D104 INTERMEDIATE ACCOUNTING II TESTS UNITS 4-6
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, WGU D104 Tests Units 4-6
Unit 4 Test_A
1
A company purchases an asset on April 5 of the current year. The company would like to
use the depreciation policy that will result in the highest deprecation expense in the last
year of its useful life. Which depreciation policy should be used?
• Half-year convention
Correct! Half-year convention will depreciate the asset for six months in the year of
acquisition and six months in the final year of the useful life. This policy results in
the highest depreciation expense in the last year of the useful life.
2
A pizza delivery chain buys several assets with varying useful lives at the start of the
year and is trying to determine which special depreciation method to use. The following
assets were purchased:
• 12 delivery trucks
• 4 pizza ovens
• 6 point-of-sale systems
• 20 sets of tables and chairs
Which depreciation method allows the pizza delivery chain to use one rate to depreciate
all the assets?
• Composite
Correct! The company can create an average rate and average estimated useful
life to depreciate all the assets using one rate. This method can be used for
dissimilar assets with varying useful lives.
3
A company wants to calculate a loss on impairment on an asset.
How is the loss calculated?
• Carrying value less the fair value
Correct! The carrying amount of the asset less the fair value is the correct formula
for determining a loss on impairment.
4
The asset turnover for a company in the most recent accounting year is 1.50.
Which statement accurately describes the meaning of this ratio?
• The company generated net sales of $1.50 per dollar of assets in the most recent
year.
Correct! The asset turnover, calculated as net sales divided by the simple average
of current year and prior year total assets, defines how efÏciently a company uses
its assets to generate sales.
5
A company purchased and placed into service a piece of machinery with an original cost
of $100,000. It estimates a 10-year useful life with no salvage value. At the beginning of
Year 8, when accumulated depreciation was $70,000 and the asset's book value was
$30,000, the company estimates that it will use the machine for a total of 12 years.
Which statement describes the proper accounting treatment beginning with Year 8?
• The company will depreciate the $30,000 book value over the next five years.
WGU D104 INTERMEDIATE ACCOUNTING II TESTS UNITS 4-6
\\
, WGU D104 Tests Units 4-6
Unit 4 Test_A
1
A company purchases an asset on April 5 of the current year. The company would like to
use the depreciation policy that will result in the highest deprecation expense in the last
year of its useful life. Which depreciation policy should be used?
• Half-year convention
Correct! Half-year convention will depreciate the asset for six months in the year of
acquisition and six months in the final year of the useful life. This policy results in
the highest depreciation expense in the last year of the useful life.
2
A pizza delivery chain buys several assets with varying useful lives at the start of the
year and is trying to determine which special depreciation method to use. The following
assets were purchased:
• 12 delivery trucks
• 4 pizza ovens
• 6 point-of-sale systems
• 20 sets of tables and chairs
Which depreciation method allows the pizza delivery chain to use one rate to depreciate
all the assets?
• Composite
Correct! The company can create an average rate and average estimated useful
life to depreciate all the assets using one rate. This method can be used for
dissimilar assets with varying useful lives.
3
A company wants to calculate a loss on impairment on an asset.
How is the loss calculated?
• Carrying value less the fair value
Correct! The carrying amount of the asset less the fair value is the correct formula
for determining a loss on impairment.
4
The asset turnover for a company in the most recent accounting year is 1.50.
Which statement accurately describes the meaning of this ratio?
• The company generated net sales of $1.50 per dollar of assets in the most recent
year.
Correct! The asset turnover, calculated as net sales divided by the simple average
of current year and prior year total assets, defines how efÏciently a company uses
its assets to generate sales.
5
A company purchased and placed into service a piece of machinery with an original cost
of $100,000. It estimates a 10-year useful life with no salvage value. At the beginning of
Year 8, when accumulated depreciation was $70,000 and the asset's book value was
$30,000, the company estimates that it will use the machine for a total of 12 years.
Which statement describes the proper accounting treatment beginning with Year 8?
• The company will depreciate the $30,000 book value over the next five years.
