Which of the following would NOT be considered as part of the cost of land - 70934

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1.       Which of the following would NOT be considered as part of the cost of land?

a-survey and legal fees

b-realtor commissions

c-paving

d-unpaid taxes on the land

 

2.       Which would NOT be considered part of land improvements?

a-removing unwanted buildings from the land

b-signs

c-in-ground sprinkler systems

d-fencing

 

3.        A company has installed a piece of machinery for a total of $76,000. In its third month of operation, repairs of $1,300 had to be made on the machine. This $1,300 would be:

a-added to the cost of the machinery

b-treated as a machinery repairs expense

c-placed in a separate account to be capitalized

d-a maintenance expense

 

4.        If an asset produces more revenue in its early years, the depreciation method best suited for this asset would be the:

a-expense methods

b-units-of-production method

c-double-declining balance method

d-straight-line method

 

5.       A company replace an engine on a vehicle and debited the amount to repairs expense, rather than debiting the “vehicle” account. Which of the following would occur because of this error?

a-Repairs expense would be understated

b-net income would be overstated

c-the asset “vehicle” would be overstated

d-the asset “vehicle” would be understated

 

6.       Using the straight-line depreciation, what is the annual depreciation amount for a vehicle which cost $42,000, has a salvage value of $4,000, a useful life of 4 years and 100,000 miles, driven 22,000 miles this year?

a. $10,500

b. $10,000

c. $9,500

d. $8,360

 

 

7.       Using units of output, what is the annual depreciation amount for a vehicle which cost $42,000, a useful life of 4 years and 100,000 miles, driven 22,000 miles this year?

a.       $10,500
b.      $10,000
c.       $9,500
d.      $8,360

 

8.       Using double-declining balance, calculate the first two years of depreciation expense for the following piece of equipment:  Cost $435,000, salvage value of $25,000, useful life of 10 years.

a.       Year 1 = $87,000; Year 2 = $69,600
b.      Year 1 = $82,000; year 2 = $65,600
c.       Year 1 = $80,000; Year 2 = $60,000
d.      Not enough information present to answer the question

 

9.       Which depreciation method will result in the same depreciation expense every year?

a.       Straight-Line
b.      Units-of-Production
c.       Double-Declining-Balance
d.      Sum-of-the-Years-Digits
 

10.   Which depreciation method results in depreciation expense that best matches the actual use of the asset each year?

a.       Straight-Line
b.      Units-of-Production
c.       Double-Declining-Balance
d.      Sum-of-the-Years-Digits
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