2004 Spring Accounting_011_final_exam_Spring_2004_answers

2004 Spring Accounting_011_final_exam_Spring_2004_answers -...

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Temple University Fox School of Business and Management Dr. Steven Balsam Accounting 011 Final Exam-Answer Key May 6, 2004 Instructions: You have 150 minutes. Answer the questions on the pages provided and please remember to show all work so that you may receive partial credit. Also please put your name on each page in case the pages get separated. Good luck!
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Name _____________________________ 1. When a plant asset is acquired by issuance of common stock, the cost of the plant asset is properly measured by the a. par value of the stock. b. stated value of the stock. c. book value of the stock. d. market value of the stock 2. 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 a. the nominal cost of taking title to it. b. its market 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. 3. The sale of a depreciable asset resulting in a loss indicates that the proceeds from the sale were a. less than current market value. b. greater than cost. c. greater than book value. d. less than book value . Use the following information for questions 4 through 6. On March 1, 2004, Fairly Company purchased land for an office site by paying $360,000 cash. Fairly began construction on the office building on March 1. The following expenditures were incurred for construction: Date Expenditures March 1, 2004 $240,000 April 1, 2004 336,000 May 1, 2004 600,000 June 1, 2004 960,000 The office was completed and ready for occupancy on July 1. To help pay for construction, $480,000 was borrowed on March 1, 2004 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2004 was a $200,000, 12%, 6-year note payable dated January 1, 2004. 4. The weighted-average accumulated expenditures on the construction project during 2004 were a. $256,000. b. $1,956,000. c. $208,000. d. $464,000. ($600,000 × 4/12) + ($336,000 × 3/12) + ($600,000 × 2/12) + ($960,000 × 1/12) = $464,000. 2
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Name _____________________________ 5. The actual interest cost incurred during 2004 was a. $60,000. b. $67,200. c. $33,600. d. $56,000. ($480,000 × 9% × 10/12) + ($200,000 × 12%) = $60,000 6. Assume the weighted-average accumulated expenditures for the construction project are $580,000. The amount of interest cost to be capitalized during 2004 is a. $52,200. b. $55,200. c. $60,000. d. $67,200. 7. Wriglee, Inc. went to court this year and successfully defended its patent from infringe-ment by a competitor. The cost of this defense should be charged to a. patents and amortized over the legal life of the patent. b.
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2004 Spring Accounting_011_final_exam_Spring_2004_answers -...

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