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Quiz Chpts 10 & 11
Quiz Chpts 10 & 11
Quiz Chpts 10 & 11
The weighted-average accumulated expenditures on the construction project during 2010 were
a. $384,000.
b. $2,934,000.
c. $312,000.
d. $696,000.
80.
Assume the weighted-average accumulated expenditures for the construction project are $870,000.
The amount of interest cost to be capitalized during 2010 is
a. $78,300.
b. $82,800.
c. $90,000.
d. $100,800.
91.
Dodson Company traded in a manual pressing machine for an automated pressing machine and gave
$8,000 cash. The old machine cost $93,000 and had a net book value of $71,000. The old machine had
a fair market value of $60,000.
Which of the following is the correct journal entry to record the exchange?
a. Equipment
Loss on Exchange
Accumulated Depreciation
Equipment
Cash
68,000
11,000
22,000
b. Equipment
Equipment
Cash
68,000
c. Cash
Equipment
Loss on Exchange
Accumulated Depreciation
Equipment
8,000
60,000
11,000
22,000
93,000
8,000
60,000
8,000
d. Equipment
123,000
Accumulated Depreciation
Equipment
Cash
101,000
22,000
93,000
8,000
117.
Durler Company traded machinery with a book value of $180,000 and a fair value of $300,000. It
received in exchange from Hoyle Company a machine with a fair value of $270,000 and cash of
$30,000. Hoyles machine has a book value of $285,000. What amount of gain should Durler recognize
on the exchange?
a. $ -0b. $12,000
c. $30,000
d. $120,000
118.
Hoyle Company traded machinery with a book value of $285,000 and a fair value of $270,000. It
received in exchange from Durler Company a machine with a fair value of $300,000. Hoyle also paid
cash of $30,000 in the exchange. Durlers machine has a book value of $285,000. What amount of gain
or loss should Hoyle recognize on the exchange?
a. $30,000 gain
b. $ -0c. $1,500 loss
d. $15,000 loss
120.
Sutherland Company purchased machinery for $320,000 on January 1, 2007. Straight-line depreciation
has been recorded based on a $20,000 salvage value and a 5-year useful life. The machinery was sold
on May 1, 2011 at a gain of $6,000. How much cash did Sutherland receive from the sale of the
machinery?
a. $46,000.
b. $54,000.
c. $66,000.
d. $86,000.
72.
Krause Corporation purchased factory equipment that was installed and put into service January 2, 2010,
at a total cost of $60,000. Salvage value was estimated at $4,000. The equipment is being depreciated
over four years using the double-declining balance method. For the year 2011, Krause should record
depreciation expense on this equipment of
a. $14,000.
b. $15,000.
c. $28,000.
d. $30,000.
76.
On January 1, 2010, Graham Company purchased a new machine for $2,100,000. The new machine
has an estimated useful life of nine years and the salvage value was estimated to be $75,000.
Depreciation was computed on the sum-of-the-years'-digits method. What amount should be shown in
Graham's balance sheet at December 31, 2011, net of accumulated depreciation, for this machine?
a. $1,695,000
b. $1,335,000
c. $1,306,666
d. $1,244,250
82.
95.
Robertson Inc. bought a machine on January 1, 2000 for $300,000. The machine had an expected life
of 20 years and was expected to have a salvage value of $30,000. On July 1, 2010, the company
reviewed the potential of the machine and determined that its undiscounted future net cash flows
totaled $150,000 and its discounted future net cash flows totaled $105,000. If no active market exists
for the machine and the company does not plan to dispose of it, what should Robertson record as an
impairment loss on July 1, 2010?
a. $
0
b. $ 8,250
c. $15,000
d. $53,250
102.
Percy Resources Company acquired a tract of land containing an extractable natural resource. Percy is
required by its purchase contract to restore the land to a condition suitable for recreational use after it
has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be
2,000,000 tons, and that the land will have a value of $1,200,000 after restoration. Relevant cost
information follows:
Land
Estimated restoration costs
$9,000,000
1,800,000
If Percy maintains no inventories of extracted material, what should be the charge to depletion expense
per ton of extracted material?
a. $3.90
b. $4.50
c. $4.80
d. $5.40
Use the following information for question 115:
On January 1, 2010, Guzman Company purchased a machine costing $150,000. The machine is in the
MACRS 5-year recovery class for tax purposes and has an estimated $30,000 salvage value at the end of its
economic life.
*115.
Assuming the company uses the general MACRS approach, the amount of MACRS deduction for tax
purposes for the year 2010 is
a. $30,000.
b. $60,000.
c. $48,000.
d. $24,000.
118.
A machine with a five-year estimated useful life and an estimated 10% salvage value was acquired on
January 1, 2009. The depreciation expense for 2011 using the double-declining balance method would
be original cost multiplied by
a. 90% 40% 40%.
b. 60% 60% 40%.
c. 90% 60% 40%.
d. 40% 40%.
Ans.
Item
Ans.
Item
Ans.
Item
91.
78.
80.
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
117.
118.
b
d
120.
Derivation
78.
80.
91.
117.
118.
120.
Ans.
Item
Ans.
Item
Ans.
Item
Ans.
Item
95.
72.
Item
Ans.
102.
Item
a
115.
118.
DERIVATIONS Computational 11
No. Answer
Ans.
b
82.
76.
Ans.
Derivation
72.
78.
82.
95.
102.
115.
118.
Conceptual.
a
b