ACCT 201 Principles of Financial Accounting
Practice Exam - Chapter 8
Reporting & Analyzing Long-Term Assets
Dr. Fred Barbee

Solution to Short-Problem #1

Short Problem #1

Match each of the following terms a through j with the appropriate definitions 1 through 10.

a.
Extraordinary repairs

b.
Obsolescence

c.
Amortization

d.
Depletion

e.
Salvage Value

f.
Book Value

g.
Land Improvements

h.
Copyright

i.
Inadequacy

j.
Patent

e

1.
Estimate of amount to be recovered at the end of a plant asset's useful life.

a

2.
Major repairs that extend the useful life of a plant asset beyond prior expectations.

c

3.
A process of allocating the cost of an intangible asset to expense over its estimated useful life.

h

4.
A right granted that gives its owner the exclusive privilege to publish and sell musical, literary, or artistic work during the life of the creator plus 50 years.

b

5.
A condition which, because of new inventions and improvements, a plant asset can no longer be used to produce goods or services with a competitive advantage.

f

6.
The total cost of a plant asset less its accumulated depreciation.

d

7.
The process of allocating the cost of natural resources to the periods when they are consumed.

j

8.
An exclusive right granted to its owner to manufacture and sell an item, or to use a process, for 17 years.

i

9.
A condition where the capacity of plant assets is too small to meet the company's productive demands.

g

10.
Assets that increase the benefits of land, have a limited useful life, and are subject to depreciation.

a.	Extraordinary repairs
b.	Obsolescence
c.	Amortization
d.	Depletion
e.	Salvage Value
f.	Book Value
g.	Land Improvements
h.	Copyright
i.	Inadequacy
j.	Patent

e	1.	Estimate of amount to be recovered at the end of a plant asset's useful life.
a	2.	Major repairs that extend the useful life of a plant asset beyond prior expectations.
c	3.	A process of allocating the cost of an intangible asset to expense over its estimated useful life.
h	4.	A right granted that gives its owner the exclusive privilege to publish and sell musical, literary, or artistic work during the life of the creator plus 50 years.
b	5.	A condition which, because of new inventions and improvements, a plant asset can no longer be used to produce goods or services with a competitive advantage.
f	6.	The total cost of a plant asset less its accumulated depreciation.
d	7.	The process of allocating the cost of natural resources to the periods when they are consumed.
j	8.	An exclusive right granted to its owner to manufacture and sell an item, or to use a process, for 17 years.
i	9.	A condition where the capacity of plant assets is too small to meet the company's productive demands.
g	10.	Assets that increase the benefits of land, have a limited useful life, and are subject to depreciation.