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1. Richard Company bought building on tract of land and assigned entire cost of purchase to building. Generally it depreciates buildings over 20 years using straight-line method with zero residual value and doesn't depreciate land. As of its accounting treatment of purchase, Richard's income before taxes for the next 20 years will be x

A. Overstated
B. Understated
C. Unaffected
D. In conformance with GAAP

 

2. Which of the given accounts would not be reported in Property, Plant, and Equipment section of balance sheet?

A. Land
B. Buildings
C. Accumulated Depreciation, Buildings
D. Depreciation Expense, Buildings

 

3. On January 2, 2000, Carlyn Company sold machine for $15,000 that it had used for numerous years. Machine cost $43,000, and had accumulated depreciation of $18,000 at time of sale. What gain or loss will be reported on income statement for the sale of machine?

A. Gain of $10,000
B. Loss of $3,000
C. Loss of $10,000
D. Gain of $3,000

 

4. Roberto Corp. bought land and building for a combined cost of $900,000. Roberto should

A. Record $900,000 acquisition cost in account called Land and Buildings
B. Depreciate $900,000 acquisition cost, less any residual value, over expected useful life of the building
C. Allocate $900,000 acquisition cost to separate Land and Buildings accounts based on fair market values
D. Record $900,000 acquisition cost as expense if separate acquisition costs can't be determined

 

5. DMR bought equipment at the starting of 2000 for $7,000. DMR decided to depreciate equipment over a 4-year period using straight-line method. DMR estimated its salvage value at $1,000. Which of the given statements is right concerning DMR's financial statements at December 31, 2000?

 

A. Book value of the equipment is $6,000
B. Book value of the equipment is $5,500
C. Total accumulated depreciation is $2,500
D. Depreciation expense for 2000 is $1,400

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M917452

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