81. The inclusion of the intangible asset goodwill in the financial statements of a company indicates:
A. That the company has a favorable reputation with its customers.
B. A monopoly position in the industry or superior management.
C. An unbroken record of annual earnings and dividends.
D. That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets.
82. Expenditures for research and development intended to lead to new products of commercial value:
A. Should be recorded as intangible assets and amortized during the years in which benefits are expected.
B. Should be charged to expense when incurred.
C. Should be capitalized only if patents are expected to be granted.
D. Should be classified as deferred charges.
83. The basic purpose of the matching principle is to allocate the cost of an asset to expense over the years in which the asset contributes to revenue. Current accounting practice does not strictly apply this principle to expenditures for:
A. Natural resources.
B. Research and development.
C. Trademarks.
D. Equipment.
84. The adjusting entries to record depreciation or amortization expense, or to write down assets that have become impaired:
A. Reduce both net income and cash balances.
B. Reduce net income, but have no direct effect on cash balances.
C. Decrease cash balances, but have no direct effect upon net income.
D. Affect neither net income nor cash balances.
85. Harvard Company purchased equipment having an invoice price of $11,500. The terms of sale were 2/10, n/30, and Harvard paid within the discount period. In addition, Harvard paid a $160 delivery charge, $185 installation charge, and $931 sales tax. The amount recorded as the cost of this equipment is:
A. $11,845.
B. $12,776.
C. $11,615.
D. $12,546
86. Land and a warehouse were acquired for $890,000. What amounts should be recorded in the accounting records for land and for the warehouse if an appraisal showed the estimated values to be $400,000 for the land and $700,000 for the warehouse?
A. $400,000 for land; $490,000 for warehouse.
B. $323,960 for land; $566,040 for warehouse.
C. $400,000 for land; $700,000 for warehouse.
D. $190,000 for land; $700,000 for warehouse.
87. On March 2, 2009, Glen Industries purchased a fleet of automobiles at a cost of $550,000. The cars are to be depreciated by the straight-line method over five years with no salvage value. Glen uses the half-year convention to compute depreciation for fractional periods. The book value of the fleet of automobiles at December 31, 2010, will be:
A. $165,000.
B. $400,000.
C. $495,000.
D. $385,000.
88. On April 8, 2009, Jupitor Corp. acquired equipment at a cost of $480,000. The equipment is to be depreciated by the straight-line method over six years with no provision for salvage value. Depreciation for fractional years is computed by rounding the ownership period to the nearest month. Depreciation expense recognized in 2009 will be:
A. $53,333.
B. $66,667.
C. $60,000.
D. $80,000.
On April 30, 2009, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $8,000 residual value.
89. Refer to the above data. Assume that in its financial statements, Tilton Products uses straight-line depreciation and the half-year convention. Depreciation expense recognized on this machinery in 2009 and 2010 will be:
A. $7,500 in 2009 and $11,000 in 2010.
B. $6,000 in 2009 and $12,000 in 2010
C. $5,000 in 2009 and $10,000 in 2010
D. $5,500 in 2009 and $11,000 in 2010
90. Refer to the above data. Assume that in its financial statements, Tilton Products uses straight-line depreciation and rounds depreciation for fractional years to the nearest month. Depreciation expense recognized on this machinery in 2009 and 2010 will be:
A. $2,333 in 2009 and $7,000 in 2010.
B. $5,833 in 2009 and $10,000 in 2010.
C. $6,667 in 2009 and $10,000 in 2010.
D. $10,000 in 2009 and $10,000 in 2010.