Reference no: EM132669334

Questions -

Q1- For each of the following amounts paid by a purchaser, determine whether the amount is debited to Land, Land Improvements, or Building.

Transaction Account Debited

Building permits

Cost of clearing land and removing unwanted buildings

Parking lot lighting

Delinquent property taxes on land Cost to renovate a building to make it ready for use

Taxes assessed to transfer ownership (title) of land

Q2- Obama Development Company purchased a used machine for $12,000. The machine required installation costs of $3000 and insurance while in transit of $1500. At which of the following amounts would the machine be recorded?

A) $12,000

B) $15,000

C) $13,500

D) $16,500

Q3- For each of the following expenditures, indicate whether the amount is debited to an asset account or to an expense account.

Transaction Account Debited

Paint job

Major engine overhaul

Tire replacement

Asset modified for new use

Routine maintenance that keeps a machine in normal operating condition

Replacement of a roof

Q4- Classify each of the following expenditures as capital expenditure (CE) or revenue expenditure (RE).

1. ________ Repair of transmission or engine

2. ________ Sales tax paid on the purchase price

3. ________ Training of personnel for initial operation of machinery

4. ________ Modification for new use

Q5) An asset is considered to be obsolete _.

A) only when it wears out

B) only at the end of its useful life

C) when it is fully depreciated

D) when a newer asset can perform the job more efficiently than the old asset can