Question

1) Gagner Clinic purchases land for $175,000 cash. The clinic assumes $1,500 in property taxes due on the land. The title and attorney fees totaled $1,000. The clinic has the land graded for $2,200. What amount does Gagner Clinic record as the cost for the land?

a. $157,200

b. $175,000

c. $179,700

d. $157,500

Which one of the following items is not considered a part of the cost of a truck purchased for business use?

a. Sales tax

Truck license plate

Freight charges

Cost of lettering on side of truck

Presto Company purchased equipment and these costs were incurred:

Cash price	$45,000
Sales taxes	3,500
Insurance during transit	640
Installation and testing	860
Total costs	$50,000

Presto will record the acquisition cost of the equipment as

$45,000.

$48,500.

$49,140.

$50,000.

The book value of an asset is equal to the

a asset's fair value less its historical cost.

b blue book value relied on by secondary markets.

c replacement cost of the asset.

d asset's cost less accumulated depreciation.

The units-of-activity method is generally not suitable for

a helicopters.

b buildings.

c delivery equipment.

d factory machinery.

Answer 1

1

Cost for the land = 175000+1500+1000+2200 = $179700

Option C is correct

2

Truck license plate is not considered a part of the cost of a truck purchased for business use

Option B is correct

3

Presto will record the acquisition cost of the equipment as $50000

Option D is correct

4

The book value of an asset is equal to the asset's cost less accumulated depreciation.

Option D is correct

5

The units-of-activity method is generally not suitable for buildings.

Option B is correct