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Chapter 09 - Long-Term Assets: Fixed and Intangible
Copyright Cengage Learning. Powered by Cognero.
Page 51
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.09-03 - LO: 09-03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.13 - Long-term Assets Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:24 PM
DATE MODIFIED:
10/16/2017 5:33 PM
126. On December 31, Strike Company sold one of its batting cages for $55,000. The equipment had an initial cost of
$310,000 and has accumulated depreciation of $260,000. Depreciation has been taken up to the end of the year. What is
the amount of the gain or loss on this transaction?
a.
loss of $55,000
b.
loss of $5,000
c.
gain of $5,000
d.
gain of $55,000
ANSWER:
c
RATIONALE:
Gain on sale = Selling price – Book value of asset = $55,000 – ($310,000 – $260,000)
= $5,000
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.09-03 - LO: 09-03
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.13 - Long-term Assets Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:24 PM
DATE MODIFIED:
10/16/2017 5:33 PM
127. On December 31, Strike Company traded in one of its batting cages for another one that has a cost of $500,000.
Strike receives a trade-in allowance of $11,000. The old equipment had an initial cost of $215,000 and has accumulated
depreciation of $185,000. Depreciation has been recorded up to the end of the year. The difference will be paid in
cash. What is the amount of the gain or loss on this transaction?
a.
loss of $11,000
b.
gain of $11,000
c.
loss of $19,000
d.
no loss or gain will be recorded
ANSWER:
c
RATIONALE:
Loss on exchange = Trade-in allowance – Book value of asset = $11,000 – ($215,000
– $185,000) = $19,000
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Challenging
129. Overhauling an engine in a large truck
ANSWER:
c
POINTS:
1
130. Exterior and interior painting
ANSWER:
a
POINTS:
1
131. Paving a new parking lot
ANSWER:
b
POINTS:
1
132. New landscaping
ANSWER:
b
POINTS:
1
133. Installing a new air conditioning system in an old building
ANSWER:
b
POINTS:
1
134. Resurfacing a pool in an apartment building
ANSWER:
c
POINTS:
1
135. Adding refrigerant to an air conditioning system
ANSWER:
a
POINTS:
1
136. Fixing damage due to a car accident
ANSWER:
a
POINTS:
1
156. Cost assessed by city for paving a public street that borders land on which a new business location will be
constructed
ANSWER:
c
POINTS:
1
Chapter 09 - Long-Term Assets: Fixed and Intangible
ANSWER:
c
POINTS:
1
164. Mickey Mouse
ANSWER:
c
POINTS:
1
Chapter 09 - Long-Term Assets: Fixed and Intangible
Copyright Cengage Learning. Powered by Cognero.
Page 58
ANSWER:
i
POINTS:
1
170. Loss on Disposal of Asset
ANSWER:
i
POINTS:
1
171. Loss from Impaired Goodwill
ANSWER:
i
POINTS:
1
172. Research and Development Costs
ANSWER:
h
POINTS:
1
173. What is the cost of the land, based upon the following data?
Land purchase price
$178,000
Broker's commission
15,000
Payment for the demolition
and removal of existing building
5,000
Cash received from the sale of materials
salvaged from the demolished building
2,000
ANSWER:
Cost of land = Land purchase price + Broker's commission + Payment for the
demolition and removal of existing building – Cash received from the sale of materials
salvaged from demolished building = $178,000 + $15,000 + $5,000 – $2,000 =
$196,000
POINTS:
1
DIFFICULTY:
Bloom's: Applying
Easy
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
LEARNING OBJECTIVES:
FNMN.WAJO.19.09-01 - LO: 09-01
ACCREDITING STANDARDS:
ACCT.ACBSP.APC.13 - Long-term Assets Reporting
ACCT.AICPA.FN.03 - Measurement
BUSPROG: Analytic
DATE CREATED:
7/22/2017 6:24 PM
DATE MODIFIED:
10/16/2017 5:36 PM
174. Falcon Company acquired an adjacent lot to construct a new warehouse, paying $40,000 and giving a short-term note
for $410,000. Legal fees paid were $13,275, delinquent taxes assessed were $14,500, and fees paid to remove an old
building from the land were $15,800. Materials salvaged from the demolition of the building were sold for $6,800. A
contractor was paid $890,000 to construct the new warehouse. Determine the cost of the land to be reported on the
balance sheet and show your work.
ANSWER:
Initial cost of land ($40,000 + $410,000)
$450,000
Plus:
Legal fees
$13,275
Delinquent taxes
14,500
Demolition of building
15,800
43,575
$493,575
