41. Land is purchased for $256,000. Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence and a legal fee of $8,500. What is the cost of the land?
A. $256,000
B. $281,000
C. $284,600
D. $282,200
42. If the 150% declining balance method is being used and an asset has a useful life of 20 years what is the depreciation rate?
A. 7.5%
B. 10%
C. 15%
D. Some other amount
43. Machinery is purchased on May 15, 2009 for $50,000 with a $5,000 salvage value and a five year life. The half year convention is followed. What method of depreciation will give the highest amount of depreciation expense in year 2?
A. Straight line
B. Double declining balance
C. 150% declining balance
D. Amount cannot be determined
Straight line: ($50, 000 - $5,000)/5 = $9,000
Double Declining Balance: $50,000 ? 2/5 = $20,000/2 = $10,000: $40,000 ? 2/5 = $16,000
150% Declining Balance $50,000 ? 1.5/5 = $15,000/2 = $7,500; $42,500 ? 1.5/5 = $12,750
44. An asset which costs $18,800 and has accumulated depreciation of $6,000 is sold for $11,600. What amount of gain or loss will be recognized when the asset is sold?
A. A gain of $1,200
B. A loss of $1,200
C. A loss of $7,200
D. A gain of $7,200
($18,800 - $6,000) - $11,600 = $1,200 loss
45. The entry to record amortization on a copyright would include:
A. A debit to amortization expense
B. A debit to accumulated amortization
C. A debit to copyright
D. A credit to amortization expense
46. The cost of a new windshield wiper on a delivery vehicle would be classified as:
A. A capital expenditure
B. A revenue expenditure
C. Part of the cost of goods sold
D. An unusual and infrequent expense
47. Which of the following would not be considered part of the cost of equipment recently purchased?
A. Sales tax.
B. Transportation charges.
C. Installation and setup charges.
D. All three are capitalized costs.
48. Armstrong Company recently acquired a new computer system. Which of the following costs associated with the computer should not be debited to the Equipment account?
A. Insurance coverage purchased by United to cover the computer during shipment from the manufacturer.
B. Wages paid to system programmers hired to prepare the new computer for use.
C. Replacement of several circuit boards damaged during installation.
D. Installation of new electrical power supplies required for the computer.
49. Coca-Cola's famous name printed in distinctive typeface is an example of:
A. A trademark.
B. A patent.
C. A copyright.
D. Goodwill.
50. When comparing the units-of-output method of depreciation with straight-line depreciation:
A. The depreciation expense in the first year will always be greater under units-of-output method.
B. The depreciation expense in the first year will always be less under the units-of-output method.
C. The depreciation expense in the first year will always be the same.
D. The depreciation expense in the first year may be greater than, equal to, or less under the units-of-output method.