Accounting Chapter 16 Test

CS Enterprises acquired a forklift on January 1, 2010. The total cost of the truck was $47,000. CS estimated that the truck would be used for 5 years before being sold for an estimated $5,500. CS uses the double-declining balance method of depreciation. The total depreciation expense for the year ended December 31, 2011 was: A) $11,280 B) $7,520 C) $18,800 D) $ 9,960

A) $11,280

Montana Industries acquired a piece of equipment on January 1, 2010. The total cost of the equipment was $63,000. Montana estimated that the equipment would be used for 7 years before being sold for an estimated $7,000. Assuming the use of straight-line depreciation, the carrying value of the equipment on January 1, 2014 will be: A) $31,000 B) $27,000 C) $24,000 D) $27,500

A) $31,000

Nevens Corporation purchased equipment from a commercial laundry that was going out of business. They bought three different used ironing machines at a total cost for all three of $120,000. The appraised values of the machines were $10,000, $65,400 and $54,600. The purchase price allocated to the ironer valued at $54,600 should be: A) $50,400 B) $45,000 C) $54,600 D) $50,000

A) $50,400

Spitz Corporation acquired a truck on January 1, 2010. The total cost of the truck was $70,000. Spitz estimated that the truck would be used for 10 years before being sold for an estimated $7,000. Assuming the use of straight-line depreciation, the total depreciation expense for the year ended December 31, 2010 was: A) $6,300 B) $7,000 C) $3,500 D) $3,150

A) $6,300

Zeandale Inc. purchased a machine 3 years ago at a price of $102,500. At that time, useful life was estimated at 10 years with a $7,500 salvage value, and straight-line depreciation was used. After recording depreciation for the 3rd year, Zeandale decided that for future years it would revise its original estimated life from 10 to 8 years and estimated salvage value from $7,500 to $5,500. The depreciation expense to be recorded in year 4 of the machine's life is: A) $14,800 B) $13,700 C) $8,563 D) $9,250

B) $13,700

Idaho Inc. acquired a piece of machinery on January 1, 2010. The total cost of the machinery was $108,400. Idaho estimated that the machinery would be used to produce 100,000 units of product before being sold for an estimated $18,600 at the end of 10 years. Idaho uses the units-of-production method of depreciation. Assuming the machine produced 28,500 units during the year ended December 31, 2003, the 2010 depreciation expense was: A) $30,894 B) $25,593 C) $8,980 D) $10,840

B) $25,593

Fasttransit Inc. owns a jet airplane with an original cost of $5,000,000 and accumulated depreciation of $3,500,000 and a salvage value of $1,000,000. The company exchanged the airplane for 100,000 shares of stock held by another company as an investment. The stock is valued at $18 per share. What is the gain or loss recognized on the exchange? A) $800,000 gain B) $300,000 gain C) $1,300,000 loss D) no gain or loss should be recognized

B) $300,000 gain

Which of the following is not amortized? A) Patent B) Natural resources C) Franchise D) Trademark

B) Natural resources

Fulton Corporation purchased a piece of equipment for $10,500. Sales taxes were $735. Installation costs were $485. During installation, the equipment was damaged requiring $195 in repair costs. The total cost capitalized to the equipment account should be: A) $12,765 B) $12,030 C) $11,720 D) $11,235

C) $11,720

Nova Corporation purchased land and a building for $600,000. The appraised values of the land and building were $100,000 and $800,000, respectively. The purchase price allocated to the land should be: A) $100,000 B) $80,000 C) $75,000 D) $175,000

C) $75,000

Which of the following would be considered a capital expenditure? A) One year insurance on equipment after installation B) Property tax on equipment C) Major expenditure of a machine that will extend its useful life 5 years D) Annual maintenance of a machine

C) Major expenditure of a machine that will extend its useful life 5 years

Of the following items associated with determining annual depreciation expense, which is not an estimate? A) useful life B) salvage value C) acquisition cost D) miles in the life of a truck

C) acquisition cost

Julia Enterprises owns some equipment with an original cost of $120,800 and accumulated depreciation of $50,800. If the equipment is sold for $78,500 in cash, the entry to record this event is:

Cash $78500 (D) Accumulated Depreciation $50,800 (D) Equipment $120,800 (C) Gain on Sale $8,500 (C)

Kwami Corporation acquired a tract of land on June 30, 2010. The total cost of the land was $180,000. Carlton estimated that the land would be used for 10 years and then sold. Assuming the company uses straight-line depreciation, the total depreciation taken on the land for the year ended December 31, 2010 should be: A) amount cannot be determined without additional information B) $18,000 C) $9,000 D) $0

D) $0

Which of the following would not be considered a capital expenditure? A) Sales tax on the purchase of a new piece of equipment B) Freight to get the equipment to the factory C) Cost of installation D) Repair of damage incurred while the equipment was installed.

D) Repair of damage incurred while the equipment was installed.