Reference no: EM133051296
Questions -
Q1. Stratton Corporation purchased a piece of land for $50,000. Stratton paid attorney's fees of $5,000 and brokers' commissions of $4,000 in connection with the purchase. An old building on the land was torn down at a cost of $2,000, and proceeds from the scrap were $500. How much is the total cost of the land?
a. $60,500
b. $59,000
c. $61,000
d. $50,000
Q2. When using the straight-line depreciation method, which of the following is not a factor affecting the computation of depreciation?
a. Cost
b. Book value
c. Useful life
d. Salvage value
Q3. On September 1, 2021, West Buy purchased an asset for $9,000, with a $1,500 estimated salvage value, and a 4-year useful life. How much is the 2021 depreciation expense using the straight-line method?
a. $625
b. $2,250
c. $750
d. $1,875
Q4. Juliana Trucking Inc. purchased a new semi-truck on January 1, 2021, for $200,000. Its useful life is expected to be 4 years and its salvage value is estimated at $25,000. What is the depreciation for 2021 using the declining-balance method at a double the straight-line rate?
a. $43,750
b. $87,500
c. $100,000
d. $50,000
Q5. If you bought a new truck for $40,000 for your auto parts delivery service, and you estimated that the truck would last you 200,000 miles with a salvage value of $4,000, what would be your depreciation expense for the first year in which you used the truck for 12,500 miles?
a. $2,500
b. $1,250
c. $2,250
d. $2,000
Q6. On January 1, 2021, Brenda Company purchased some equipment for $15,000. The estimated salvage value and useful life are $3,000 and 4 years, respectively. On January 1, 2023, the company determines that the asset's remaining useful life is 3 years. What is the revised depreciation expense for 2023 if the company uses the straight-line method?
a. $2,000
b. $2,500
c. $2,250
d. $4,000
Q7. Hoogenboom Company has decided to sell one of its old manufacturing machines on June 30, 2021. The machine was purchased for $80,000 on January 1, 2017 and was depreciated on a straight-line basis over a 10-year life assuming no salvage value. If the machine was sold for $26,000, how much is the gain or loss to be recorded at the time of the sale?
a. $46,000 loss
b. $22,000 loss
c. $54,000 gain
d. $18,000 loss
Q8. Which of the following measures provides an indication of how efficient a company is in employing its assets?
a. Asset turnover ratio
b. Profit margin ratio
c. Debt to total assets ratio
d. Current ratio
Q9. Kim & Co. incurred $150,000 of research and development costs in its laboratory to develop a new product. It spent $20,000 in legal fees for a patent granted on January 2, 2021. On July 31, 2023, Pierce paid $15,000 for legal fees in a successful defense of the patent. What is the total amount that should be debited to Patents through July 31, 2023?
a. $35,000
b. $185,000
c. $150,000
d. $7,500
Q10. If a company reports goodwill as an intangible asset on its books, what is the one thing you know with certainty?
a. The company is a valuable company worth investing in.
b. The company purchased another company.
c. The company has a well-established brand name.
d. The goodwill will generate a lot of positive business for the company for many years to come.