2301 exam3 2007-V2 - ACCT 2301 1. Land acquired so it can...

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ACCT 2301 Exam 3 1. Land acquired so it can be resold in the future is listed in the balance sheet as a(n)
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a. fixed asset b. current asset c. investment 2
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d. intangible asset 3
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2. Which of the following should be included in the acquisition cost of a piece of equipment? 4
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a. transportation costs b. installation costs c. testing costs prior to placing the equipment into production 5
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d. all are correct 6
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3. A building with an appraisal value of $137,000 is made available at an offer price of $142,000. The purchaser acquires the property for $30,000 in cash, a 90-day note payable for $40,000, and a mortgage amounting to $60,000. The cost basis recorded in the buyer's accounting records to recognize this purchase is 7
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a. $137,000 b. $142,000 c. $130,000 8
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d. $100,000 9
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4. A new machine with a purchase price of $94,000, with transportation costs of $8,000, installation costs of $6,000, and special acquisition fees of $2,000, would have a cost basis of 10
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a. $ 96,000 b. $108,000 c. $102,000 11
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d. $110,000 12
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5. Expenditures that add to the utility of fixed assets for more than one accounting period are 13
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a. committed expenditures b. revenue expenditures c. current expenditures 14
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d. capital expenditures 15
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6. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 5,000 hours? 16
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a. $8,000 b. $20,000 c. $12,000 17
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d. $21,667 18
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7. Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an estimated life of 5 years or 12,000 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,300 hours? 19
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a. $30,000 b. $32,500 c. $34,000 20
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d. $40,000 21
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8. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 4 years or 18,000 hours. What is the amount of depreciation for the second full year, using the double declining-balance method ? 22
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a. $15,000 b. $30,000 c. $16,250 23
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d. $32,500 24
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9. If a fixed asset, such as a computer, were purchased on January 1st for $1,950 with an estimated life of 3 years and a salvage or residual value of $150, the journal entry for monthly expense under straight-line depreciation is: (Note: EOM indicates the last day of each month.) 25
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a. EOM Depreciation Expense 50.00 Accumulated Depreciation 50.00 b. EOM Depreciation Expense 600.00 Accumulated Depreciation 600.00 c. EOM Accumulated Depreciation 600.00 Depreciation Expense 600.00 26
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d. EOM Accumulated Depreciation 50.00 Depreciation Expense 50.00 27
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Computer equipment was acquired at the beginning of the year at a cost of $56,000 that has an estimated residual value of $3,000 and an estimated useful life of 5 years. Determine the 2nd year’s depreciation using straight-line depreciation. 28
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2301 exam3 2007-V2 - ACCT 2301 1. Land acquired so it can...

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