2009-08-04_172654_happy_2

# 2009-08-04_172654_happy_2 - 1. In 2007, Redford Company...

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1. In 2007, Redford Company paid \$1,000,000 to purchase land containing a total estimated 160,000 tons of extractable mineral deposits. The estimated value of the property after the mineral has been removed is \$200,000. Extraction activities began in 2008, and by the end of the year, 20,000 tons had been recovered and sold. In 2009, geological studies indicated that the total amount of mineral deposits had been underestimated by 25,000 tons. During 2009, 30,000 tons were extracted, and 28,000 tons were sold. What is the depletion rate per ton (rounded to the nearest cent) in 2009? A. \$4.24 C. \$4.85 B. \$4.32 D. \$5.19 2. When a company replaces an old asphalt roof on its plant with a new fiberglass insulated roof, which of the following types of expenditure has occurred? A. Ordinary repairs and maintenance C. Rearrangement B. Addition D. Betterment 3. Post Company’s depreciation policy on machinery and equipment is as follows: • A full year’s depreciation is taken in the year of an asset’s acquisition. • No depreciation is taken in the year of an asset’s disposition. • The estimated useful life is five years. • The straight-line method is used. On June 30, 2007, Post sold for \$230,000 a machine acquired in 2004 for \$420,000. The accumulated depreciation for this machine was \$216,000 at December 31, 2006, and the original estimated salvage value was \$60,000. How much gain or (loss) on the disposal should Post record in 2007? A. A \$14,000 gain C. A \$26,000 loss B. A \$26,000 gain D. A \$34,000 loss Book Value of the machine at Dec 31, 2007 = \$420,000 - \$216,000 = \$204,000 Gain on Disposal = \$230,000 - \$204,000 = \$26,000 4. Nimbus Inc., purchased certain plant assets under a deferred payment contract. The agreement was to pay \$30,000 per year for 10 years. The plant assets should be valued at A. \$300,000. B. \$300,000 plus imputed interest. C. present value of \$30,000 annuity for 10 years at an imputed interest rate. D. future value of \$30,000 annuity for 10 years at an imputed interest rate. 5. On February 12, Laker Company purchased a tract of land as a factory site for \$175,000.

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An existing building on the property was razed and construction was begun on a new factory building in March of the same year. Additional data are available as follows: Cost of razing old building \$ 35,000 Title insurance and legal fees to purchase land 12,500 Architect’s fees 42,500 New building construction cost 875,000 The recorded cost of the completed factory building should be A. \$910,000. C. \$930,000. B. \$917,500
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## 2009-08-04_172654_happy_2 - 1. In 2007, Redford Company...

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