(Multiple Choice)
1. Which of the following costs are reported on a company’s income statement and balance sheet?
Income Statement Balance Sheet
a. Accumulated depreciation .... Land
b. Cost of goods sold ....... Accumulated deprecation
c. Gain on sale of land ....... Cost of goods sold
d. Goodwill ............ Accounts payable

Use the following information to answer questions 2 through 3.
Ringle Company purchased a machine for $9,200 on January 1, 2012. The machine has been depreciated using the straight-line method over an 8-year life and $800 residual value. Ringle sold the machine on January 1, 2014, for $7,900.

2. What is straight-line depreciation for the year ended December 31, 2012, and what is the book value on December 31, 2013?

3. What gain or loss should Ringle record on the sale?
a. Gain, $1,000
b. Loss, $1,300
c. Gain, $800
d. Gain, $1,600

4. A company purchased mineral assets costing $832,000, with estimated residual value of $68,800, and holding approximately 240,000 tons of ore. During the first year, 54,000 tons are extracted and sold. What is the amount of depletion for the first year?
a. $187,200
b. $156,620
c. $171,720
d. Cannot be determined from the data given

5. Suppose George’s Delivery pays $66 million to buy Lone Star Overnight. Lone Star’s assets are valued at $72 million, and its liabilities total $23 million. How much goodwill did George’s Delivery purchase in its acquisition of Lone Star Overnight?
a. $17 million
b. $29 million
c. $23 million
d $43 million

6. Hydra, Inc., was reviewing its assets for impairment at the end of the current year.
Information about one of its assets is as follows:
Net book value......................... $1,000,000
Estimated future cash flows...... $ 850,000
Fair (market) value................... $ 820,000
Hydra should report an impairment loss for the current year of
a. $0.
b. $150,000.
c. $180,000.
d. $30,000.

7. TextDat, Inc., reported sales revenue of $600,000, net income of $45,000, and average total assets of $500,000. TextDat’s return on assets is
a. 7.5%.
b. 9.0%.
c. 1.1%.
d. 83.3%.