40.
Which statement is false?
41.
On March 1, Wright Company purchased new equipment for $50,000 by paying cash. Other
costs associated with the equipment were: transportation costs, $1,000; sales tax paid $4,000;
and installation cost, $2,500. At what amount will the equipment be recorded on a balance
sheet?
42.
On August 1, Red Company purchased computer equipment for $10,000 cash and also gave
100 shares of White common stock that Red Company held as an investment. The White
common stock cost Red Company $5,000 and on August 1 had a fair value of $4,200. The
installation costs for the computer equipment were $700 and shipping costs were $500. What
amount should be the total amount debited to the computer equipment account?
43.
Salvia Company recently purchased a truck. The price negotiated with the dealer was $40,000.
Salvia also paid sales tax of $2,000 on the purchase, shipping and preparation costs of $3,000,
and insurance for the first year of operation of $4,000. At what amount should the truck be
recorded on the balance sheet prior to recording depreciation expense?
44.
Which of the following equipment related costs is not capitalized on a balance sheet?
45.
Which of the following costs associated with a land purchase is not a component of the land
cost reported on a balance sheet?
46.
Smith Company exchanges assets to acquire a building. The market price of the Smith stock
on the exchange date was $35 per share and the building’s book value on the books of the
seller was $250,000.
Which of the following is correct for Smith Company when Smith issues 10,000 shares of $10
par value common stock and pays $20,000 cash in exchange for the building?
47.
Smith Company exchanges assets to acquire a building. The market price of the Smith stock
on the exchange date was $35 per share and the building’s book value on the books of the
seller was $250,000.
Which of the following is incorrect for Smith Company when Smith issues 10,000 shares of
$10 par value common stock and pays $20,000 cash in exchange for the building?
48.
Smith Company exchanges assets to acquire a building. The market price of the Smith stock
on the exchange date was $35 per share and the building’s book value on the books of the
seller was $250,000.
Which of the following journal entries is correct for Smith Company when Smith issues 10,000
shares of $10 par value common stock and pays $20,000 cash in exchange for the building?
49.
Which of the following is true when a company constructs an asset for its own use?
50.
A company acquires land by issuing 10,000 shares of its $10 par value common stock which is
currently trading at $20 per share, and the appraised value of the land is $250,000. Which of
the following statements correctly describes the recording of the land?
51.
If an expenditure related to a depreciable asset is incorrectly treated as a capital expenditure,
instead of as repairs and maintenance expense, which of the following statements is true?
52.
Which of the following statements is incorrect?
53.
Which of the following statements is incorrect?
54.
Gilbert Company made an ordinary repair to a delivery truck during 2016 at a cost of $500 and
capitalized the repair cost. What is the effect on the 2016 financial statements as a result of
the incorrect capitalization?
55.
Which of the following would most likely not be recorded as ordinary repairs and
maintenance?
56.
What is the effect on the 2016 financial statements when a capital expenditure during 2016
was incorrectly recorded as a repairs and maintenance expense?
57.
Which of the following best describes the objective of depreciation?
58.
Which of the following is correct?
59.
Which of the following does not properly describe the depreciation process?
60.
Which of the following describes the effect of recording depreciation expense at year-end?
61.
On January 1, 2016, Woodstock, Inc. purchased a machine costing $40,000. Woodstock also
paid $1,000 for transportation and installation. The expected useful life of the machine is 6
years and the residual value is $5,000.
How much is the annual depreciation expense assuming use of the straight-line depreciation
method?
62.
On January 1, 2016, Woodstock, Inc. purchased a machine costing $40,000. Woodstock also
paid $1,000 for transportation and installation. The expected useful life of the machine is 6
years and the residual value is $5,000.
If Woodstock uses the straight-line depreciation method, which of the following statements is
incorrect?
63.
A machine, acquired for a cash cost of $15,000, is being depreciated on a straight-line basis of
$2,700 per year. The residual value was estimated to be 10% of cost. The estimated useful life
is
64.
Warren Company plans to depreciate a new building using the double declining-balance
depreciation method. The building cost $800,000. The estimated residual value of the building
is $50,000 and it has an expected useful life of 25 years.
What is the building‘s book value at the end of the first year?
65.
Warren Company plans to depreciate a new building using the double declining-balance
depreciation method. The building cost $800,000. The estimated residual value of the building
is $50,000 and it has an expected useful life of 25 years.
Assuming the first year’s depreciation expense was recorded properly, what would be the
amount of depreciation expense for the second year?
66.
Which method of depreciation results in periodic depreciation expense that fluctuates from
one period to the next, not necessarily in a steadily upward or downward direction?
67.
Hill Inc. purchased an asset on January 1, 2016. Hill chose an accelerated depreciation
method to depreciate the asset. Which of the following is correct if Hill would have chosen the
straight-line depreciation method instead?
68.
On January 1, 2016, Pyle Company purchased an asset that cost $50,000 and had no
estimated residual value. The estimated useful life of the asset is 8 years and straight-line
depreciation is used. An error was made in 2016 because the total amount of the asset’s cost
was debited to an expense account for 2016 and no depreciation was recorded. Pretax income
for 2016 was $42,000. How much is the correct 2016 pretax income?