1. A company purchased land for $70,000 cash-$7,000 was spent demolishing an old building on the land before construction of a new building could start. The cost of land would be recorded at: a) $77,000 b) $70,000 c) $63,000 d) $7,000 2. A company purchased property for $300,000. The property included an acre of land valued at $50,000, a building valued at $150,000, and equipment valued at $125,000. The equipment will be recorded at a cost of: a) $125,000 b) $120,000 c) $118,723 d) $115,384 3. Yani Company purchased land for $115,000 with the intentions of constructing a new operating facility. The land purchase included a dilapidated building that was removed at a cost of $16,000. The only salvage value from this old building was some materials which were sold for proceeds of $4,000. Yani had paid surveying costs of $1,800 and legal fees related to land transfer of $6,700. The new building was quickly constructed at a total cost of $422,000. Permits on the construction of this new facility totaled $18,000. Insurance premiums of $9,200 are paid annually. The production manager is currently on-site facilitating the production startup. This manager is an annual salary of $85,000. What capital cost is assigned to the land? a) $135,500 b) $123,500 c) $115,000 d) $127,000 4. Newman Hospital installs a new parking lot. The paving cost $30,000 and the lights to illuminate the new parking area cost $12,000. Which of the following statements is true with respect to these additions? a) $30,000 should be debited to the Land account b) $12,000 should be debited to Land Improvements c) $42,000 should be debited to the Land account d) $42,000 should be debited to Land Improvements 5. General Paint Company is building a new plant that will take three years to construct The construction will be financed in part by funds borrowed during the construction period. There are significant architect fees, excavation fees, and building permit fees. Which of the following statements is true? a) Excavation fees are capitalized but building permit fees are not. b) Architect fees are capitalized but building permit fees are not. c) Interest during the construction is capitalized as part of the cost of the building d) The capitalized cost is equal to the contract price to build the plant less any interest on borrowed funds 6. Rockport Company purchased equipment for $30,000 on January 1, 2015, and will use the diminishing-balance method of depreciation. It is estimated that the equipment will have a 3-year life and a $3,000 residual value at the end of its useful life. The amount of depreciation expense recognized in the year 2017 will be: a) $6,000 b) $4,444 c) $4,800 d) $2,400 7. The units-of-production method is ideal for equipment whose activity: a) can be measured in units of output b) can be measured in units of input. c) is consistent from year to year. d) is based on time 8. Yani Company purchased a specialized machine on April 1, 2017 for a total cost of $254,000 from Scissor Manufactory. This machine is expected to become outdated and be replaced in 16 years at which time it will have a residual value of $25,000. What amount would be reported as depreciation expense for this machine on Yani's December 31, 20127 income statement if Yani used the straight-line method of depreciation? Round answer to the nearest whole dollar a) $15,875 b) $11,906 c) $10,734 d) $14,312 9. Champion Company reviews its assets every fiscal year for potential asset impairments. In the current year Champion realized through its impairment assessment that a specialized machine has a recoverable amount of $360,500. This asset carries a cost of $890,000 and up-to-date accumulated depreciation of $549,200. What amount would be reported as an impairment loss on Champion's current income statement at year end? a) $0 b) $340,800 c) $360,500 d) $19,700 10. A company sells a long-lived asset which originally cost $150,000 for $50,000 orn December 31, 2017. The accumulated depreciation account had a balance of $60,000 after the current year's depreciation of $15,000 had been recorded. The company should recognize a: a) $100,000 loss on disposal b) $40,000 gain on disposal c) $40,000 loss on disposal d) $25,000 loss on disposal 11. Maverick Inc. exchanged an old vehicle for a new vehicle on August 31, 2017. The original cost of the vehicle was $45,000 on January 1, 2013. Depreciation was calculated using the straight-line method over a ten-year useful life, with an estimated residual value of $3,000. The fair value of the old vehicle on August 31, 2017 was $21,500. The list price of the new vehicle was $30,000. Maverick received a $24,000 trade in allowance from the dealership and paid $6,000 cash for the new vehicle. The new machinery should be recorded on Maverick's books at: a) $30,000 b) $27,500 c) $24,000 d) $23,500 12. Maverick Inc. exchanged an old vehicle for a new vehicle on August 31, 2017. The original cost of the vehicle was $45,000 on January 1, 2013. Depreciation was calculated using the straight-line method over a ten-year useful life, with an estimated residual value of $3,000. The fair value of the old vehicle on August 31, 2017 was $21,500. The list price of the new vehicle was $30,000. Maverick received a $24,000 trade in allowance from the dealership and paid $6,000 cash for the new vehicle. Because of this transaction, the company would record which of the following? a) Dr. Loss on Disposal $3,900 b) Cr. Vehicle $23,500 c) Cr. Gain on Disposal $3,900 d) Cr. Cash $24,000 13. Rudolf Snow Systems purchased land and building on January 1, 2003 for a combined price of $285,000. Rudolf allocated 75% of the purchase price to the building and 25% to the land to approximate their individual fair values. The building was depreciated using the double diminishing-balance and accumulated depreciation to date was correctly computed as $190,000. The land and building was subsequently sold on June 18, 2017 for a combined price of $650,000. What gain or loss on disposal of these assets would be reported in 2017? a) gain of $95,000 b) gain of $555,000 c) gain of $578,750 d) gain of $626,250 14. Natural resource depletion is: a) a decrease in fair value of natural resources b) the amount of spoilage that occurs when natural resources are extracted c) the process of allocating the cost of natural resources extracted and sold to expense d) the method used to record unsuccessful oil well explorations 15. A coal company invests $12 million in a mine estimated to have 20 million tonnes of coal and no residual value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tonnes of coal are extracted and sold. What is the depreciation included in cost of goods sold for the first year? a) $600,000 b) $240,000 c) $60,000 d) cannot be determined from the information provided