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Exam 9: Reporting and Interpreting Liabilities

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Question 61

True/False

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When an operational asset is acquired for non cash consideration,the cost of the asset received always is measured as the book value of the non cash consideration given up.

A) True
B) False

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Question 62

Multiple Choice

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The Land account would include all of the following costs except

A) drainage costs.
B) the cost of building a fence.
C) title fees.
D) the cost of tearing down a building.

E) A) and D)
F) A) and C)

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Question 63

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In conformity with the historical cost principle,cost (less any estimated residual value)is allocated to periodic expense over the periods benefited.

It is illegal to maintain two sets of books so we must adopt the same amortization method for both financial reporting and tax reporting.

What is an extraordinary repair to a building?

The following information is available for C Co.and P Co: (1)Compute the fixed asset turnover ratio for the year for both C Co.and P Co. a.C Co.__________ b.P Co.__________

Belton Corporation uses straight-line depreciation and,for assets acquired during the fiscal year,follows the policy of recording a full month's depreciation for all assets acquired on or before the 15^th of the month.No depreciation is recorded for the month if an asset is acquired after the 15^th.On May 22,20A,Belton purchased a car that cost $22,000 which had an estimated residual value of $2,000 and an estimated useful life of five years.To the nearest dollar,what is the amount of depreciation that should be recorded on the car for 20A?

How should an expenditure for an ordinary repair to factory equipment be recorded?

Tangible operational assets differ from intangible operational assets in that tangible assets have physical substance whereas intangible assets have no physical substance.

The book value of an operational asset initially declines less rapidly under the straight-line method than under the declining-balance method.

Which of the following is true of depletion recorded for natural resources?

In accounting for depreciation,acquisition cost and useful life usually are known quantities,whereas residual value is an estimate because it relates to an amount in the future.

Jeffers Inc.purchased a warehouse and the land upon which it was located.The total price was $450,000.The land was appraised for $180,000 while the warehouse was appraised for $360,000.What account balances should Jeffers show in its general ledger?

Expenditures made after the asset is in use are always capital expenditures.

Airbury Company acquired manufacturing equipment at an invoice price of $80,000 and paid $750 to have it delivered to the factory.$400 was spent to repair a door that was damaged while installing the equipment.At what amount should this equipment be recorded on the company's books?

Soule Corporation purchased a machine that had an original cost of $60,000 and an estimated residual value of $10,000.The useful life was expected to be 8 years and straight-line depreciation is used.At the end of 20E,the book value of the machine was $35,000.Soule sold the machine for $32,000 cash on October 1,20F. Required:A.Prepare the journal entry to record depreciation for 20F up to the date of sale.Round the amount to the nearest dollar.B.Prepare the journal entry to record the sale of the machine.

A change in the estimated useful life of a tangible operational asset may be required due to economic or technological changes.

Which of the following would not be included in the acquisition cost of a building?

Angstrom Corporation purchased a truck at a cost of $60,000.It has an estimated useful life of five years and estimated residual value of $5,000.At the beginning of year three,Angstrom's managers concluded that the total useful life would be four years,rather than five.There was no change in the estimated residual value.What is the amount of depreciation that Angstrom should record for year 3 under the straight-line method?

Residual value is which of the following?