chapter 8 sections 1-5

Corazon Company purchased an asset with a list price of $14,000. Corazon paid $500 of transportation-in cost, $800 to train an employee to operate the equipment, and $200 to insure the asset against theft after it has been set up in the factory. The asset was purchased under terms 1/20/n30 and Corazon paid for the asset within the discount period. Based on this information, Corazon would capitalize the asset on its books at

$15,160

On January 1, Year 1, Raven Limo Service, Inc. paid $64,000 cash to purchase a limousine. The limo was expected to have a six year useful life and a $10,000 salvage value. On January 1, Year 5 the limo was sold for $30,000 cash. Assuming Raven uses straight-line depreciation, the Company would recognize a

$2,000 gain

On January 1, Year 1, Raven Limo Service, Inc. paid $64,000 cash to purchase a limousine. The limo was expected to have a six year useful life and a $10,000 salvage value. On January 1, Year 5 the limo was sold for $26,000 cash. Assuming Raven uses straight-line depreciation, the Company would recognize a

$2,000 loss.

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the double-declining-balance method, the amount of book value shown on the Year 3 balance sheet is

$8,000.

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four-year useful life and an $8,000 salvage value. If Marino uses the straight-line method, the amount of depreciation expense recognized on the Year 2 income statement is

($48,000 Cost - $8,000 Salvage) ÷ 4 Year life = $10,000 10,000

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the double-declining-balance method, Which of the following shows how the adjusting entry to recognize depreciation expense at the end of Year 3 will affect the Company's financial statements?

(4,000) NA

Harbor Co. made a basket purchase. Specifically, the Company paid cash to purchase land, a building and equipment. The appraised market value of the individual items was greater than the purchase price. Which of the following shows how this purchase will affect a company's financial statements?

-IA

On January 1, Year 5, Raven Limo Service, Inc. sold a used limo that had cost $64,000 and had accumulated depreciation of $36,000. The limo was sold for $30,000 cash. Which of the following shows how the sale of the limo would affect Raven's financial statements?

30,000 IA

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four-year useful life and an $8,000 salvage value. If Marino uses the straight-line method, the amount of accumulated depreciation shown on the Year 2 balance sheet is

20,000

On January 1, Year 5, Raven Limo Service, Inc. Raven sold a used limo that had cost $64,000 and had accumulated depreciation of $36,000. The limo was sold for $26,000 cash. Which of the following shows how the sale of the limo would affect Raven's financial statements?

26,000+(28,000)=NA+(2,000)NA−2,000=(2,000)26,000 IA

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four-year useful life and an $8,000 salvage value. If Marino uses the straight-line method, the amount of book value shown on the Year 2 balance sheet is

28,000

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the double-declining-balance method, the amount of depreciation expense recognized on the Year 3 income statement is

4,000

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four year useful life and an $8,000 salvage value. If Marino uses the double-declining-balance method, the amount of accumulated depreciation shown on the Year 3 balance sheet is

40,000

Sable Co. paid $400,000 for a purchase that included land, a building, and equipment. An appraiser estimated the market value of the land to be $100,000, the building to be $350,000, and the equipment to be $50,000. Based on this information the cost that would be allocated to each of the assets is

80,000 $280,000 $40,000 Land: $400,000 × 20% = $80,000 Building: $400,000 × 70% = $280,000Equipment: $400,000 × 10% = $40,000

Which of the following is an intangible asset?

All of the answers are names of intangible assets.

On January 1, Year 1, Marino Moving Company paid $48,000 cash to purchase a truck. The truck was expected to have a four-year useful life and an $8,000 salvage value. If Marino uses the straight-line method, which of the following shows how the adjusting entry to recognize depreciation expense at the end of Year 3 will affect the Company's financial statements?

NA+(10,000)=NA+(10,000)NA−10,000=(10,000)NA

When double-declining balance depreciation is used for the recognition of depreciation expense, the statement of cash flows will show an outflow from

None of the answers is correct.

Capitalizing the cash cost of a piece of equipment is

an asset exchange event

Gains and losses are reported

as nonoperating items on the income statement.

Which of the following is not a tangible asset?

copyright

When the total estimated market value of assets acquired in a basket purchase is greater than the cost of the purchase, the company making the purchase must recognize a gain.

false

All training costs associated with the purchase and continuing use of an asset should be capitalized in the asset account. This statement is

false

Guac Co. paid $350,000 for a purchase that included land, a building, and equipment. An appraiser estimated the market value of the land to be $80,000, the building to be $300,000, and the equipment to be $20,000. Based on this information recording the basket purchase in the accounting records would cause

no effect on total assets or total equity

Tangier Company paid cash to purchase a long-term operational asset. The cost of the asset will be expensed (depreciated)

over the useful life of the asset.

Land is different from other tangible assets in that its utility is not diminished by its use. This statement is

true