Reference no: EM13480187
1) Which of the following is not capitalized when a piece of production equipment is acquired for a factory?
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Sales taxes.
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Installation costs.
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Transportation costs.
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Ordinary repairs.
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2) On January 1, 200X Post Company purchased a machine for $80,000. The machine had a salvage value of $8,000 and a useful life of 10 years. Using straight line depreciation, the accounting entry for recording depreciation expense for the second year of operation would be:
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Debit depreciation expense - $7,200, credit accumulated depreciation - $7,200.
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Debit depreciation expense - $8,000, credit accumulated depreciation - $8,000.
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Debit depreciation expense - $8,000, credit machine - $8,000.
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Debit depreciation expense - $4,000, credit machine - $4,000.
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3) Post Company uses straight- line depreciation for all of its depreciable assets. Post sold a piece of machinery on December 31, 2009, that it purchased on January 1, 2009 for $ 2,000. The asset had a five- year life and zero residual value.Accumulated depreciation was $400. If the sales price of the used machine was $ 1,200, the resulting gain or loss on disposal was which of the following amounts?
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Loss of $ 400.
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Loss of $800
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Gain of $400
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Gain of $ 1,200.
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4) Post Company purchased a patent on January 1, 200X for $50,000.The patent has a useful life of 10 years.The accounting entry to record the patent amortization expense for the first year would be:
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Debit patent amortization expense $50,000; credit patent $50,000.
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Debit patent amortization expense $5,000; credit patent $5,000.
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Debit patent $50,000; credit accounts payable $50,000.
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Debit patent $5,000; credit accounts payable $5,000.
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