Question 1:
Which of the following items is typically included in the cost of a capital asset?
i. purchase price
ii. shipping costs
iii. site preparation and set up costs
iv. legal costs associated with the purchase
i
i& ii
i, ii, & iii
i, ii, iii & iv
Question 2:
Darwin Company purchased machinery on January 1, 2007 for $15,000. The machinery is estimated to have a three-year useful life with residual value of $2,400. The machine will be used in the three years 2007, 2008, and 2009 to produce 3,000, 2,000, and 1,000 units respectively. If the company uses the units-of-activity method, what will be the accumulated depreciation for the machinery on December 31, 2008?
$4,200
$6,300
$10,500
$12,600
Question 3:
Caricature's Inc. bought new computers on January 1 for $18,000 to improve the quality of their animation. The computers have a useful life of 8 years but Caricature's Inc. thinks that continuing technology developments will likely mean they will replace the computers after 4 years, at which time they will be worth $2,000. If they use straight-line depreciation, the depreciation expense for the first year will be
$2,000.
$2,250.
$4,000.
$4,500.
Question 4:
A depreciable asset with a cost of $42,500 has a residual value of $2,500 and a useful life of 8 years. Total estimated units of output are 80,000 and in year 1; 5,200 units were produced. Under the straight-line method and the units-of-activity method the depreciation expense for the first year would be
|
|
Straight-line
|
Units-of-activity
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Question 6:
In 2017 as part of a property purchase, Melrose Ltd. incurred and paid 2016 property taxes. These costs should be
recognized as an impairment loss.
recognized on the Statement of Income as an expense.
recognized as a capital cost.
not be taken into consideration, these costs are irrelevant.
Question 7:
Which of the following would not be capitalized as part of a purchased asset's cost?
non-refundable taxes
installation cost
shipping costs
insurance costs
Question 8:
On January 1, 2017, Bronson Co. purchased some equipment that initially cost $52,800. Additional costs included freight costs $300, non-refundable taxes $6,400, and installation $500. Estimated residual value is $2,000. The company uses a straight-line rate of 10%. Depreciation expense for 2017 was
$6,130.
$5,900.
$5,800.
$5,930.
Question 9:
Which of the following costs associated with the purchase of an asset is/are not capitalized as part of the asset's cost?
provincial sales tax
legal costs of purchase
transportation costs
all of the above costs are capitalized
Question 10:
Which of the following is an example of an intangible with an indefinite life?
A copyright on a song.
A patent on a new technology.
The development costs of a new drug.
The goodwill value assigned to the excess purchase price when purchasing a company.