When a plant asset is acquired by issuance of common stock, the cost of the
plant asset is properly measured by the
par value of the stock.
stated value of the stock.
book value of the stock.
market value of the stock
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
the nominal cost of taking title to it.
its market value.
one dollar (since the site cost nothing but should be included in the balance
the value assigned to it by the company's directors.
The sale of a depreciable asset resulting in a loss indicates that the proceeds
from the sale were
less than current market value.
greater than cost.
greater than book value.
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
Fairly began construction on the office building on March 1. The following
expenditures were incurred for construction:
March 1, 2004
April 1, 2004
May 1, 2004
June 1, 2004
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.
The weighted-average accumulated expenditures on the construction project
during 2004 were