ACCT 241 AFI Exam 3 (Chapters 16&17), Version A Select the ONE BEST answer to ea
ID: 2512452 • Letter: A
Question
ACCT 241 AFI Exam 3 (Chapters 16&17), Version A Select the ONE BEST answer to each of the following multiple choice questions (3 points each) 1) Which of the following would be considered a capital expenditure? Name a) Oil change on a truck b) The cost to repair fender damage during shipping of the truck c) Cost of custom paint job (company name & logo) at the time of purchase d) The cost to repair a radiator 2) Which of the following would be considered Repairs& Maintenance expense? a) Cost to install a new machine b) Sales tax on the cost of a new machine c) Closing costs on the sale of land d) Replacing tries on a truck 3) Comptel Corporation purchased land, a building, and equipment for a total cost of $525,000. The appraised values of the land, building, and equipment were $150,000, 5375,000, and $75,000, respectively. The purchase price allocated to the land should be: a) $525,000 b) $150,000 c) $131,250 d) $65,625 ABC Co. acquired a piece of equipment on January 1, 2017. The total cost of the equipment was $77,500. ABC estimated that the equipment would be used for 9 years before being sold for an estimated $5,500. Assuming the straight -line method of depreciation, what is the amount of annual depreciation expense? a) $8,611 b) $8,000 c) $7,200 d) The amount cannot be determined without additional information. 4) Refer to the information above. Assuming the straight-line method of depreciation, what would be the balance in the accumulated depreciation account on January 1, 2021? a) $32,000 b) $34,444 c) $36,889 d) $45,500 5) Refer to the information in the question above. Assume instead that the equipment was purchased on March 20 and that the company uses a mid-year convention. What would be the amount of depreciation expense for the year ended December 31, 2017? 6) 8000 c) -$48,000 400O d) $96,000 o 1IPageExplanation / Answer
Answer for 1)
My answer would be option(c).
Any replacement or repair which is done must increase the life of the asset to get capitalized.Otherwise,we cannot call it as Capital expenditure.But painting the company logo on the vehicle maybe compulsory like MC Donald door delivery vehicles and hence,it can be considered as Capital Expenditure.
Answer for 2)
My answer is option(d).
As cost of installation of new machinery and sales tax paid will be capitalized and balance on sale of land is not repair or maintainance.
Answer for 3)
My answer is option (c).
Here,no value is given and hence it must be done proportionately.
Cost of land to be allocated:
$150000×$525000/($150000+$375000+$75000)
$131250.
Answer for 4)
My answer is option(b)
Depreciation for the year:
(purchase price-salvage value)/estimated life of asset
($77500-$5500)/9year=$8000
Answer for 5)
My answer is option(a)
Accumulated depreciation till January 1st 2021:
No. Of years completed×annual depreciation
=4year(year1:2017,year2:2018,year3:2019,year4:2020)×$8000
=$32000
Answer for 6)
My answer is option(c)
This how it is calculated:[($77500-$5500)/9 years]×1/2
=$4000
As per mid year convention depreciation will be recognises only from the half year and another half will be cosidered till 30-06-2026 instead of 20-03-2026.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.