1. A capital expenditure would appear on the
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a.
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income statement under operating expenses.
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b.
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balance sheet under fixed assets.
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c.
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balance sheet under current assets.
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d.
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income statement under other expenses.
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2. Which of the following expenditures would NOT be included in the cost of an asset?
3.A company acquired some land for $80,000 to construct a new office complex. Legal fees paid were $2,300, delinquent taxes assumed were $3,400, and $5,850 was paid to remove an old building from which salvaged materials sold for $1,950. What is the cost basis for the land?
4.Book value is defined as
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a.
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current market value less residual value.
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b.
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cost less residual value.
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c.
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current market value less accumulated depreciation.
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d.
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cost less accumulated depreciation.
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5. Which method of depreciation considers residual value in computing the normal periodic depreciation?
6.A machine was purchased for $60,000. It has a useful life of 5 years and a residual value of $6,000. Under the straight-line method, what is annual depreciation expense?
7.Equipment was purchased for $18,000. It has a useful life of 5 years and a residual value of $2,000. What is depreciation expense for year one under the double-declining-balance method?
8.Goodwill is
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a.
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amortized similar to other intangibles.
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b.
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only written down if an impairment in value occurs.
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c.
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charged to expense immediately.
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d.
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amortized over 40 years or its economic life, whichever is shorter.
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9.NBC Company purchased a patent from ABC for $144,000. At the time of purchase the patent had been in existence for 10 years. What is the first year's amortization?
10.Fixed assets are ordinarily presented in the balance sheet
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a.
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at current market values.
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b.
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c.
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at cost less accumulated depreciation
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d.
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in a separate section along with intangible assets.
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