Find gain or loss will be reported on the income statement

Assignment Help Financial Accounting

Reference no: EM1310331

Q1. Richard Company purchased a building on a tract of land and allocated the entire cost of the purchase to building. Normally it depreciates buildings over 20 years using the straight-line method with zero residual value and does not depreciate land. Because of its accounting treatment of the purchase, Richard's income before taxes for the next 20 years will be x
A.overstated
B.understated
C.unaffected
D.in conformance with GAAP

Q2.Which of the following accounts would not be reported in the Property, Plant, and Equipment section of a balance sheet?
A.Land
B.Buildings
C.Accumulated Depreciation, Buildings
D.Depreciation Expense, Buildings

Q3.On January 2, 2000, Carlyn Company sold a machine for $15,000 that it had used for several years. The machine cost $43,000, and had accumulated depreciation of $18,000 at the time of sale. What gain or loss will be reported on the income statement for the sale of the machine?
A.gain of $10,000
B.loss of $3,000
C.loss of $10,000
D.gain of $3,000

Q4. Roberto Corp. purchased land and a building for a combined cost of $900,000. Roberto must
A.record the $900,000 acquisition cost in an account called Land and Buildings
B.depreciate the $900,000 acquisition cost, less any residual value, over the expected useful life of the building
C.allocate the $900,000 acquisition cost to separate Land and Buildings accounts based on fair market values
D.record the $900,000 acquisition cost as an expense if separate acquisition costs cannot be determined

Q5.DMR purchased equipment at the beginning of 2000 for $7,000. DMR decided to depreciate the equipment over a 4-year period using the straight-line method. DMR estimated its salvage value at $1,000. Which of the following statements is correct concerning DMR's financial statements at December 31, 2000?
A.The book value of the equipment is $6,000
B.The book value of the equipment is $5,500
C.The total accumulated depreciation is $2,500
D.Depreciation expense for 2000 is $1,400

Reference no: EM1310331

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