Acct. Review
41. Land is purchased for $256,000. Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence and a legal fee of $8,500. What is the cost of the land?
A. $256,000
B. $281,000
C. $284,600
D. $282,200
44. An asset which costs $18,800 and has accumulated depreciation of $6,000 is sold for $11,600. What amount of gain or loss will be recognized when the asset is sold?
A. A gain of $1,200
B. A loss of $1,200
C. A loss of $7,200
D. A gain of $7,200
85. Harvard Company purchased equipment having an invoice price of $11,500. The terms of sale were 2/10, n/30, and Harvard paid within the discount period. In addition, Harvard paid a $160 delivery charge, $185 installation charge, and $931 sales tax. The amount recorded as the cost of this equipment is:
A. $11,845.
B. $12,776.
C. $11,615.
D. $12,546
86. Land and a warehouse were acquired for $890,000. What amounts should be recorded in the accounting records for land and for the warehouse if an appraisal showed the estimated values to be $400,000 for the land and $700,000 for the warehouse?
A. $400,000 for land; $490,000 for warehouse.
B. $323,960 for land; $566,040 for warehouse.
C. $400,000 for land; $700,000 for warehouse.
D. $190,000 for land; $700,000 for warehouse.
87. On March 2, 2009, Glen Industries purchased a fleet of automobiles at a cost of $550,000. The cars are to be depreciated by the straight-line method over five years with no salvage value. Glen uses the half-year convention to compute depreciation for fractional periods. The book value of the fleet of automobiles at December 31, 2010, will be:
A. $165,000.
B. $400,000.
C. $495,000.
D. $385,000.
88. On April 8, 2009, Jupitor Corp. acquired equipment at a cost of $480,000. The equipment is to be depreciated by the straight-line method over six years with no provision for salvage value. Depreciation for fractional years is computed by rounding the ownership period to the nearest month. Depreciation expense recognized in 2009 will be:
A. $53,333.
B. $66,667.
C. $60,000.
D. $80,000.
On April 30, 2009, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value.
89. Refer to the above data. Assume that in its financial statements, Tilton Products uses straight-line depreciation and the half-year convention. Depreciation expense recognized on this machinery in 2009 and 2010 will be:
A. $7,500 in 2009 and $11,000 in 2010.
B. $6,000 in 2009 and $12,000 in 2010
C. $5,000 in 2009 and $10,000 in 2010
D. $5,500 in 2009 and $11,000 in 2010
90. Refer to the above data. Assume that in its financial statements, Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in 2009 and 2010 will be:
A. $2,333 in 2009 and $7,000 in 2010.
B. $5,833 in 2009 and $10,000 in 2010.
C. $6,667 in 2009 and $10,000 in 2010.
D. $10,000 in 2009 and $10,000 in 2010.
91. Refer to the above data. Assume that in its financial statements, Tilton Products uses the 200%-declining-balance method and the half-year convention. Depreciation expense in 2009 and 2010 will be:
A. $11,000 in 2009 and $18,857 in 2010.
B. $22,000 in 2009 and $12,571 in 2010
C. $22,000 in 2009 and $7,857 in 2010.
D. $11,000 in 2009 and $22,000 in 2010
93. Refer to the above data. In the year 2015, Tilton Products sells this machinery for $4,500. At the date of sale, the machinery had been depreciated by Tilton Products to its estimated residual value of $8,000. This sale results in:
A. A $3,500 loss in both the company’s financial statements and income tax return.
B. No gain or loss in either the financial statements or income tax return.
C. A $3,500 loss in the financial statements, a $3,500 gain in the income tax return.
D. A $3,500 loss in the financial statements, but no gain or loss in the income tax return.
On April 2, 2009, Victor, Inc. acquired a new piece of filtering equipment. The cost of the equipment was $160,000 with a residual value of $20,000 at the end of its estimated useful lifetime of 4 years.
94. Refer to the above information. Assume that in its financial statements, Victor uses straight-line depreciation and rounds depreciation for fractional years to the nearest whole month. Depreciation recognized on this equipment in 2009 and 2010 will be:
A. $23,333 in 2009 and $35,000 in 2010.
B. $40,000 in 2009 and $30,000 in 2010.
C. $20,000 in 2009 and $35,000 in 2010
D. $26,250 in 2009 and $35,000 in 2010.
95. Refer to the above information. Assume that in its financial statements, Victor uses straight-line depreciation and the half-year convention. Depreciation recognized on this equipment in 2009 and 2010 will be:
A. $40,000 in 2009 and $30,000 in 2010.
B. $23,333 in 2009 and $30,000 in 2010
C. $17,500 in 2009 and $35,000 in 2010
D. $20,000 in 2009 and $35,000 in 2010
96. Refer to the above information. If Victor uses straight-line depreciation with the half-year convention, the book value of the equipment at December 31, 2010 will be:
A. $90,000.
B. $107,500.
C. $106,667.
D. $105,000.
97. Machinery acquired new on January 1 at a cost of $80,000 was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. On January 1, following six full years of use of the machinery, management decided that the estimate of useful life had been too long and that the machinery would have to be retired after three years, that is, at the end of the ninth year of service. Under this revised estimate, the depreciation expense for the seventh year of use would be:
A. $8,000.
B. $10,000.
C. $13,000.
D. $24,000.
99. Mayer Instrumentation sold a depreciable asset for cash of $300,000. The original cost of the asset was $1,200,000. Mayer recognized a gain of $45,000 on the sale. What was the amount of accumulated depreciation on the asset at the time of its sale?
A. $945,000.
B. $255,000.
C. $1,155,000.
D. $990,000.
100. Suffolk Associates sold office furniture for cash of $42,000. The accumulated depreciation at date of sale amounted to $38,000, and a gain of $18,000 was recognized on the sale. The original cost of the asset must have been:
A. $31,000.
B. $62,000.
C. $84,000.
D. $59,000.