Use the information presented below for Sunside Villas, Inc. for 2007 and 2006 to answer the questions that follow. Sunside Villas uses the straight-line depreciation method.
|
|
2007
|
2006
|
|
Property, Plant, and Equipment
|
$250,000
|
$190,000
|
|
Accumulated Depreciation
|
100,000
|
85,000
|
|
Depreciation Expense
|
62,500
|
47,500
|
|
Net Sales
|
1,000,000
|
900,000
|
|
Total Assets
|
625,000
|
475,000
|
Q1. Using the data of 2007, determine the average life of Sunside Villas' property, plant, and equipment rounded to one decimal place.
A.1.61 years
B.2.50 years
C.4.00 years
D.10.00 years
Q2.Using the data for 2007, determine the average age of Sunside Villas' property, plant, and equipment.
A.1.61 years
B.2.50 years
C.4.00 years
D.10.00 years
Q3.Determine the asset turnover ratio for Sunside Villas for 2007.
A.1.60 times
B.1.82 times
C.4.55 times
D.4.00 times
Q4.During the year, Sunside Villas sold some equipment that had an original cost of $57,500. Which statement is true concerning transactions that may have occurred during the period?
A.Royal purchased additional equipment during the year
B.The selling price of the equipment sold was reported with net sales
C.The equipment that was sold had a book value of $12,500
D.The equipment had not been reported with Property, Plant and Equipment
Q5.If a company's asset turnover ratio decreased from 2006 to 2007, which of the following conclusions can be made?
A.The company was more efficient during 2007 in using its assets to produce profits
B.The company produced fewer sales in 2007 for each dollar invested in assets
C.The company was less profitable in 2006
D.The company is overinvested in assets in 2007