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GAMBY Medical & Business College
Department of Accounting Extension Program
Principle of Accounting II Exam II
PART TWO MATCHING
MATCH COLUMN A WITH THE CORRECT ANSWER WITH COLUMN B (0.50 points).
COLUMN A COLUMN B
E, k
11. Estimate of amount to be recovered at the end of a plant asset's useful life. A. Intangible assets
C 12. A process of allocating the cost of an intangible asset to expense over its estimated B. Obsolescence
useful life. C. Amortization
B 13. A condition which, because of new inventions & improvements, a plant asset can D. Book Value
no longer be used to produce goods or services with a competitive advantage. E. Salvage Value
F 14. A right granted that gives its owner the exclusive privilege to publish & sell
F. Copyright
musical, literary, or artistic work during the life of the creator.
D 15. The total cost of a plant asset less its accumulated depreciation. G. Land Improvements
H 16. The process of allocating the cost of natural resources to the periods when they
H. Depletion
are consumed.
I 17. An exclusive right granted to its owner to manufacture and sell an item, or to use
I. Patent
a process, for 17 years.
18. Assets that increase the benefits of land, have a limited useful life, and are subject
G J. Good will
to depreciation.
A 19. Rights, privileges, & competitive advantages that result from the ownership of
K. Scrape value
long-lived assets that do not possess physical substance.
J 20. The value of all favorable attributes that relate to a company that is not
L. Revenue Expenditure
attributable to any other specific asset.
1. GAMBY PLC purchased land, building and Equipment for $1,500,000 the expansion of its business. An appraiser valued the components of
the property if purchased separately as Land $400,000, Building $200,000 and Equipment $1,000,000. Determine the cost to be assigned
to each components. (3 points)
2. GAMBY purchased, in 2009, laboratory equipment for $18,000 also involved freight charges of $500, installation costs of
$2,500 and earned proceeds from the sale of scraps $1000. The estimated salvage value and useful life are $2,000 and 4 years,
respectively. Under the straight-line method, what will be the annual depreciation expense in each year? (3 points)
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GAMBY Medical & Business College
Department of Accounting Extension Program
Principle of Accounting II Exam II
Name -------------------------------------------Department ------------------------- ID --------------------
Answers
PART I - MULTIPLE CHOICE QUESTIONS
PART II - MATCHING
11. __E, K__ 13. B_____ 15. __D____ 17. ___I___ 19. __A____
12. __C____ 14. _F_____ 16. __H___ 18. __G___ 20. ___J___
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GAMBY Medical & Business College
Department of Accounting Extension Program
Principle of Accounting II Exam II
Cost of the Building = 0.125 x 1,500,000
= $ 187,500
Appraisal rate of Equipment = 1,000,000/1,600,000
= 0.625
Cost of the Equipment = 0.625 x 1,500,000
= $ 937,500
3. Cost of Laboratory Equipment = Cos + Cost of Fright + Cost of Installation – Proceed from Sales
= $ 18,000 + $ 500 + $ 2,500 - $ 1,000
= $ 20,000
Depreciation Expense = ($ 20,000 - $ 2,000)/4
= $ 4,500
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