ACCT 2001 Exam 3 with accurate detailed || || || || || || ||
solutions
Lease payments are paid by the lessor - ✔✔False
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The installation costs for a new machine should be part of the cost of the machine and should be
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depreciated. - ✔✔True || ||
ABC Company purchased land with an old building. ABC plans to demolish the old building and
|| || || || || || || || || || || || || || || ||
then construct a new, modern building. The cost of demolishing the building will be part of the
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cost of the: - ✔✔Land
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A machine is purchased for $80,000. The transportation from the seller was $1000, installation
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costs were $1000 and taxes on the purchase price were $400. Testing runs of the new machine
|| || || || || || || || || || || || || || || || ||
cost $2000. What is the cost of the machine? - ✔✔$84000
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Book value of a plant asset equals the cost of the asset less the current year's depreciation expense
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- ✔✔False
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Double-declining-balance depreciation - ✔✔Ignores the residual value in computing || || || || || || || || ||
depreciation, except during the last year, is an accelerated depreciation method, is based on the
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book value of the plant asset
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Baker, Inc., purchased a tract of land, a small office building, and some equipment for
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$1,700,000. The appraised value of the land was $1,100,000, the building $660,000, and the
|| || || || || || || || || || || || || ||
equipment $440,000. What is the cost of the land? - ✔✔$850,000
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Depreciation creates a fund to replace the asset at the end of its useful life. - ✔✔False
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, The cost of a plant asset minus accumulated depreciation equals the asset's book value. - ✔✔True
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Depreciation is based on the expense recognition principle because it apportions the cost of the
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asset against the revenue generated over the asset's useful life. - ✔✔True
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Depreciation is a process of allocating the cost of a plant asset over its useful life. - ✔✔True
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On July 1, 2016, Roam Communications purchased a new piece of equipment that cost $45,000.
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The estimated useful life is 10 years and estimated residual value is $7,500.What is the
|| || || || || || || || || || || || || || ||
depreciation expense for 2016 if Roam || || || || ||
Roam uses the straight-line method? - ✔✔$1,875
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Which of the following is not a capital expenditure?
|| || || || || || || ||
A.
A complete overhaul of an air-conditioning system
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B.
The addition of a building wing
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C.
Replacement of an old motor with a new one in a piece of equipment || || || || || || || || || || || || ||
D.
A tune-up of a company vehicle
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E.
The cost of installing a piece of equipment - ✔✔D. The tune-up of a company vehicle
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solutions
Lease payments are paid by the lessor - ✔✔False
|| || || || || || || ||
The installation costs for a new machine should be part of the cost of the machine and should be
|| || || || || || || || || || || || || || || || || || ||
depreciated. - ✔✔True || ||
ABC Company purchased land with an old building. ABC plans to demolish the old building and
|| || || || || || || || || || || || || || || ||
then construct a new, modern building. The cost of demolishing the building will be part of the
|| || || || || || || || || || || || || || || || ||
cost of the: - ✔✔Land
|| || || ||
A machine is purchased for $80,000. The transportation from the seller was $1000, installation
|| || || || || || || || || || || || || ||
costs were $1000 and taxes on the purchase price were $400. Testing runs of the new machine
|| || || || || || || || || || || || || || || || ||
cost $2000. What is the cost of the machine? - ✔✔$84000
|| || || || || || || || || ||
Book value of a plant asset equals the cost of the asset less the current year's depreciation expense
|| || || || || || || || || || || || || || || || || ||
- ✔✔False
||
Double-declining-balance depreciation - ✔✔Ignores the residual value in computing || || || || || || || || ||
depreciation, except during the last year, is an accelerated depreciation method, is based on the
|| || || || || || || || || || || || || || ||
book value of the plant asset
|| || || || ||
Baker, Inc., purchased a tract of land, a small office building, and some equipment for
|| || || || || || || || || || || || || || ||
$1,700,000. The appraised value of the land was $1,100,000, the building $660,000, and the
|| || || || || || || || || || || || || ||
equipment $440,000. What is the cost of the land? - ✔✔$850,000
|| || || || || || || || || ||
Depreciation creates a fund to replace the asset at the end of its useful life. - ✔✔False
|| || || || || || || || || || || || || || || ||
, The cost of a plant asset minus accumulated depreciation equals the asset's book value. - ✔✔True
|| || || || || || || || || || || || || || ||
Depreciation is based on the expense recognition principle because it apportions the cost of the
|| || || || || || || || || || || || || || ||
asset against the revenue generated over the asset's useful life. - ✔✔True
|| || || || || || || || || || ||
Depreciation is a process of allocating the cost of a plant asset over its useful life. - ✔✔True
|| || || || || || || || || || || || || || || || ||
On July 1, 2016, Roam Communications purchased a new piece of equipment that cost $45,000.
|| || || || || || || || || || || || || || ||
The estimated useful life is 10 years and estimated residual value is $7,500.What is the
|| || || || || || || || || || || || || || ||
depreciation expense for 2016 if Roam || || || || ||
Roam uses the straight-line method? - ✔✔$1,875
|| || || || || ||
Which of the following is not a capital expenditure?
|| || || || || || || ||
A.
A complete overhaul of an air-conditioning system
|| || || || || ||
B.
The addition of a building wing
|| || || || ||
C.
Replacement of an old motor with a new one in a piece of equipment || || || || || || || || || || || || ||
D.
A tune-up of a company vehicle
|| || || || ||
E.
The cost of installing a piece of equipment - ✔✔D. The tune-up of a company vehicle
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