Question

Question 5

A plant site donated by a township to a manufacturer that plans to open a new factory should be recorded on the manufacturer's books at ___________.

Question 5 options:

A. the nominal cost of taking title to it i

B. Its fair value

C. one dollar (since the site cost nothing but should be included in the balance sheet)

D. the value assigned to it by the company's directors

Question 6

Which of the following costs are capitalized for self-constructed assets?

Question 6 options:

A.   Materials and labor only

B.    Labor and overhead only

C.    Materials and overhead only

D.   Materials, labor, and overhead

Question 7

Which of the following is not a difference between the accounting treatment for depreciation and cost depletion?

Question 7 options:

A. Depletion applies to natural resources while depreciation applies to plant and equipment.

B. Depletion refers to the physical exhaustion or consumption of the asset while depreciation refers to the wear, tear, and obsolescence of the asset.

C. Many formulas are used in computing depreciation but only one is used to any extent in computing depletion.

D. The cost of the asset is the starting point from which computation of the amount of the periodic charge is made to operations for depreciation, but the fair value reassessed each year as the starting point for the periodic charge for depletion.

Question 8

The cost of land does not include _________.

Question 8 options:

A.   costs of grading, filling, draining, and clearing

B.    costs of removing old buildings

C.    costs of improvements with limited lives

D.   special assessments

Question 9

Lynch Printing Company determines that a printing press used in its operations has suffered a permanent impairment in value because of technological changes. An entry to record the impairment should _________.

Question 9 options:

A.   recognize an extraordinary loss for the period

B.    include a credit to the equipment accumulated depreciation account

C.    include a credit to the equipment account

D.   not be made if the equipment is still being used

Question 10

Which of the following principles best describes the conceptual rationale for the methods of matching depreciation expense with revenues?

Question 10 options:

A.   Associating cause and effect

B.    Systematic and rational allocation

C.    Immediate recognition

D.   Partial recognition

Question 11

A major objective of Modified Accelerated Cost Recovery System (MACRS) for tax depreciation is to ____________.

Question 11 options:

A.   reduce the amount of depreciation deduction on business firms' tax returns

B.    assure that the amount of depreciation for tax and book purposes will be the same

C.    help companies achieve a faster write-off of their capital assets

D.   require companies to use the actual economic lives of assets in calculating tax depreciation

Question 12

The asset turnover ratio is computed by dividing _____________.

Question 12 options:

A.   net income by ending total assets

B.    net income by average total assets

C.    net sales by ending total assets

D.   net sales by average total assets

Question 13

Which of following is not a similarity in the accounting treatment for depreciation and cost depletion?

Question 13 options:

A.   The estimated life is based on economic or productive life.

B.    Assets subject to either are reported in the same classification on the balance sheet.

C.    The rates may be changed upon revision of the estimated productive life used in the original rate computations.

D.   Both depreciation and depletion are based on time.

Question 14

The debit for a sales tax properly levied and paid on the purchase of machinery preferably would be a charge to ____________.

Question 14 options:

A.   the machinery account

B.    a separate deferred charge account

C.    miscellaneous tax expense (which includes all taxes other than those on income)

D.   accumulated depreciation-machinery

Question 15

Which of the following is not a capital expenditure?

Question 15 options:

A.   Repairs that maintain an asset in operating condition

B.    An addition

C.    A betterment

D.   A replacement

Question 16

Pike Co. purchased a machine on July 1, 2012, for $800,000. The machine has an estimated useful life of five years and a salvage value of $160,000. The machine is being depreciated from the date of acquisition by the 150% declining-balance method. For the year ended December 31, 2012, Pike should record depreciation expense on this machine of ______________.

Question 16 options:

A.   $240,000

B.    $160,000

C.    $120,000

D.   $96,000

Question 17

Balcom Corporation acquires a coal mine at a cost of $1,500,000. Intangible development costs total $360,000. After extraction has occurred, Balcom must restore the property (estimated fair value of the obligation is $180,000), after which it can be sold for $510,000. Balcom estimates that 5,000 tons of coal can be extracted. What is the amount of depletion per ton?

Question 17 options:

A. $306

B. $510

C. $300

D. $372

Question 18

Messersmith Company is constructing a building. Construction began in 2012 and the building was completed 12/31/12. Messersmith made payments to the construction company of $1,500,000 on 7/1, $3,150,000 on 9/1, and $3,000,000 on 12/31. Average accumulated expenditures were __________________.

Question 18 options:

A.   $1,537,500

B.    $1,800,000

C.    $4,650,000

D.   $7,650,000

Question 19

In 2012, MegaStores reported net income of $5.7 billion, net sales of $164.7 billion, and average total assets of $61.0 billion. What is MegaStores' return on total assets?

Question 19 options:

A.   9.3%

B.    10.7%

C.    37.0%

D.   270%

Question 20

Hardin Company received $60,000 in cash and a used computer with a fair value of $180,000 from Page Corporation for Hardin Company's existing computer having a fair value of $240,000 and an undepreciated cost of $225,000 recorded on its books. The transaction has no commercial substance. How much gain should Hardin recognize on this exchange, and at what amount should the acquired computer be recorded, respectively?

Question 20 options:

A. $0 and $165,000

B. $1,153 and $166,153

C. $15,000 and $180,000

D. $60,000 and $225,000

Question 21

In 2012, MegaStores reported net income of $5.7 billion, net sales of $164.7 billion, and average total assets of $61.0 billion. What is MegaStores' asset turnover ratio?

Question 21 options:

A.   0.37 times

B.    0.09 times

C.    2.7 times

D.   10.7 times

Question 22

On January 2, 2012, York Corp. replaced its boiler with a more efficient one. The following information was available on that date:

Purchase price of new boiler $170,000

Carrying amount of old boiler $10,000

Fair value of old boiler $4,000

Installation cost of new boiler $20,000

The old boiler was sold for $4,000. What amount should York capitalize as the cost of the new boiler?

Question 22 options:

A.   $190,000

B.    $186,000

C.    $180,000

D.   $170,000

Question 23

Matile Co. purchased machinery that was installed and ready for use on January 3, 2012, at a total cost of $115,000. Salvage value was estimated at $15,000. The machinery will be depreciated over five years using the double-declining balance method. For the year 2013, Matile should record depreciation expense on this machinery of ______________.

Question 23 options:

A.   $24,000

B.    $27,600

C.    $30,000

D.   $46,000

Question 24

On February 1, 2012, Nelson Corporation purchased a parcel of land as a factory site for $250,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2012. Costs incurred during this period are listed below:

Demolition of old building

$20,000

Architect's fees

$35,000

Legal fees for title investigation and purchase contract

$5,000

Construction costs

$1,290,000

(Salvaged materials resulting from demolition were sold for $10,000.)
Nelson should record the cost of the land and new building, respectively, as ________________.

Question 24 options:

A.   $275,000 and $1,315,000

B.    $260,000 and $1,330,000

C.    $260,000 and $1,325,000

D.   $265,000 and $1,325,000

Question 25

On January 1, 2012, Graham Company purchased a new machine for $2,800,000. The new machine has an estimated useful life of nine years and the salvage value was estimated to be $100,000. Depreciation was computed on the sum-of-the-years'-digits method. What amount should be shown in Graham's balance sheet at December 31, 2013, net of accumulated depreciation, for this machine?

Question 25 options:

A.   $2,260,000

B.    $1,780,000

C.    $1,742,221

D.   $1,659,000

Answer 1

5)Correct option is "B"-ts fair value

PLant site donated should be recorded at its market value .

6)correct option is "D" -Materials, labor, and overhead

All cost incurred to make asset ready for use is to be capitalised .

7)correct option is "D" -The cost of the asset is the starting point from which computation of the amount of the periodic charge is made to operations for depreciation, but the fair value reassessed each year as the starting point for the periodic charge for depletion

Carrying value of asset is used under both method.

8)correct option is "c" -costs of improvements with limited lives

This is an example of land improvement,