Intermediate Accounting
1. On February 1, 2010, ABC Corporation purchased a parcel of land as a factory site for $200,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2010. Costs incurred during this period are listed below:
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Demolition of old building
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$20,000
|
|
Architect's fees
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35,000
|
|
Legal fees for title investigation and purchase contract
|
5,000
|
|
Construction costs
|
1,090,000
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(Salvaged materials resulting from demolition were sold for $10,000.)
ABC should record the cost of the land and new building, respectively, as
a. $225,000 and $1,115,000.
b. $210,000 and $1,130,000.
c. $210,000 and $1,125,000.
d. $215,000 and $1,125,000.
2. On January 1, 2004, UMUC Company purchased equipment at a cost of $50,000. The equipment was estimated to have a salvage value of $5,000 and it is being depreciated over eight years under the sum-of-the-years'-digits method. What should be the charge for depreciation of this equipment for the year ended December 31, 2011?
a. $1,250
b. $1,389
c. $2,500
d. $5,625
3. XYZ Company reported the following data:
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2010
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2011
|
|
Sales
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$2,000,000
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$2,600,000
|
|
Net Income
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300,000
|
400,000
|
|
Assets at year end
|
1,800,000
|
2,500,000
|
|
Liabilities at year end
|
1,100,000
|
1,500,000
|
What is XYZ's asset turnover for 2011?
a. 1.04
b. 1.07
c. 1.21
d. 1.44
4. Golden Inc. purchased a computer for $13,000 on July 1, 2010. The company intends to depreciate it over 4 years using the double-declining balance method. Salvage value is $1,000. Depreciation for 2011 is
a. $6,500
b. $3,250
c. $4,875
d. $3,000
The office was completed and ready for occupancy on July 1. To help pay for construction, $720,000 was borrowed on March 1, 2010 on a 9%, 3-year note payable. Other than the construction note, the only debt outstanding during 2010 was a $300,000, 12%, 6-year note payable dated January 1, 2010.
5. The weighted-average accumulated expenditures on the construction project during 2010 were
a. $384,000.
b. $2,934,000.
c. $312,000.
d. $696,000.
6. The actual interest cost incurred during 2010 was
a. $90,000.
b. $100,800.
c. $50,400.
d. $84,000.
7. Assume the weighted-average accumulated expenditures for the construction project are $870,000. The amount of interest cost to be capitalized during 2010 is
a. $78,300.
b. $82,800.
c. $90,000.
d. $100,800.