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ACC 410B Final Exam MCQs

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Question;ACC410B ? May 2014 Name ______________________________Final ExamMultiple Choice QuestionsPlace an ?X? next to your selected answer1. On January 15, 2013, Talbot Corporation purchased a parcel of land as a factory site for $450,000. An old building on the property was demolished, and construction began on a new building which was completed on November 31, 2013. Salvaged materials resulting from the demolition were sold for $12,000. Costs incurred during this period included: Demolition of old building, $35,000, Architect's fees, $15,000, Legal fees for title investigation and purchase contract, $7,000, and Construction costs, $1,000,000. Talbot should record the cost of the land and new building, respectively, as ____ $450,000 and $1,000,000____ $450,000 and $1,015,000____ $480,000 and $1,015,000____ $485,000 and $1,003,0002. In which of the following situations should a company record a cost as a capital expenditure? ____ The cost increases the quality of assets.____ The cost increases the quantity of assets.____ The cost increases the useful life of an asset.____ All of the above costs should be recorded as capital expenditures.3. On January 2, 2013, Apple Valley Produce began construction of a new processing plant. The plant was expected to be finished and ready for use on September 30, 2014. Expenditures for construction during 2013 were as follows: January 2, 2013, $500,000, July 1, 2013, $1,200,000, and December 31, 2013, $1,000,000. To fund this project, on January 2, 2013, Apple Valley borrowed $1,800,000 on a construction loan at 10% interest. This loan was outstanding during the construction period. The company also had $5,000,000 in 9% bonds outstanding in 2013. The interest capitalized for 2013 should be: ____ $110,000____ $118,333____ $99,000____ $180,0004. On March 1, 2004, Tucker Corporation purchased a new machine for $355,000. At the time of acquisition, the machine was estimated to have a useful life of ten years and an estimated salvage value of $19,000. The company has recorded monthly depreciation using the straight-line method. On July 1, 2013, the machine was sold for $45,000. What gain should be recognized from the sale of the machine? ____ $21,333____ $3,600____ $2,800____ $19,0005. On July 2, 2013, Peak Power Corporation purchased machinery for $80,000. Salvage value was estimated to be $5,000. The machinery will be depreciated over ten years using the double-declining balance method. If depreciation is computed on the basis of the nearest full month, Peak Power should record depreciation expense on this machinery for 2014 of ____ $14,400____ $13,500____ $8,000____ $7,5006. At the beginning of 2013, Brennan Corporation purchased a delivery truck for $80,000. The truck was estimated to have a useful life of 150,000 miles and a salvage value of $5,000. It was driven 29,000 miles in 2013 and 33,000 miles in 2014. What is the depreciation expense for 2014? ____ $14,500____ $15,467____ $16,500____ $17,6007. Volmer Corporation owns machinery with a book value of $400,000. It is estimated that the machinery will generate future cash flows of $375,000. The machinery has a fair value of $325,000. Volmer should recognize a loss on impairment of ____ $ -0-____ $25,000____ $50,000____ $75,0008. Plymouth Mining Corporation acquired, for $5,500,000, a tract of land containing an extractable natural resource. Geological surveys estimate that the recoverable reserves will be 1,000,000 tons. Plymouth is required by its purchase contract to restore the land at an estimated cost of $750,000. The land is expected to have a value of $1,250,000 after restoration. Plymouth maintains no inventories of extracted materials. What is the amount of depletion per ton? ____ $4.25____ $5.00____ $5.50____ $6.259. Titan Corporation acquired a patent on September 28, 2013. Titan paid cash of $65,000 to the seller. Legal fees of $2,000 were paid related to the acquisition. At what amount should Titan record the patent on its books? ____ $2,000____ $63,000____ $65,000____ $67,00010. Hodgson Company's December 31, 2014 balance sheet reports assets of $8,500,000 and liabilities of $4,500,000. All of Hodgson's book values approximate their fair value, except for land, which has a fair value that is $500,000 greater than its book value. On December 31, 3014, Motley Corporation paid $10,500,000 to acquire Hodgson. What amount of goodwill should Motley record as a result of this purchase? ____ $6,000,000____ $4,500,000____ $2,000,000____ $ -0-11. Innovative Technologies, Inc. incurred research and development costs of $150,000 and legal fees of $42,000 to acquire a patent. The patent has a legal life of 20 years and a useful life of 10 years. What amount should Innovative Technologies record as Patent Amortization Expense in the first year? ____ $19,200____ $7,500____ $4,200____ $ 2,100

 

Paper#41948 | Written in 18-Jul-2015

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