42 The cost of a patent must be amortized over a 20 year period 43 The cost of

42 the cost of a patent must be amortized over a 20

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42. The cost of a patent must be amortized over a 20-year period.
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43.The cost of a patent should be amortized over its legal life or useful life,whichever is shorter. 44.The balances of the major classes of plant assets and accumulated depreciationby major classes should be disclosed in the balance sheet or notes.45.The asset turnover is calculated as total sales divided by ending total assets. 46.Research and development costs can be classified as a property, plant, andequipment item or as an intangible asset. 47.An exchange of plant assets has commercial substance if the future cash flowschange as a result of the exchange. 48.Companies record a gain or loss on the exchange of plant assets because mostexchanges have commercial substance. 49.When plant assets are exchanged, the cost of the new asset is the book value ofthe old asset plus any cash paid.50.When constructing a building, a company is permitted to include theacquisition cost and certain interest costs incurred in financing the project.51.Recognition of depreciation permits the accumulation of cash for thereplacement of the asset.52.When an asset is purchased during the year, it is not necessary to recorddepreciation expense in the first year under the declining-balance depreciation 55.Research and development costs should be charged to expense when incurred.
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a 56. A loss on the exchange of plant assets occurs when the fair market value of the old asset is less than its book value. MULTIPLE CHOICE QUESTIONS 57.The cost of a purchased building includes all of the following except a.closing costs.b.real estate broker's commission.c.remodeling costs.d.All of these answers are correct. 58.A company purchased land for $90,000 cash. Real estate brokers' commissionwas $5,000 and $7,000 was spent for demolishing an old building on the landbefore construction of a new building could start. Under the historical costprinciple, the cost of land would be recorded at
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59.Which one of the following items is notconsidered a part of the cost of a truckpurchased for business use?
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