1. Which of the following costs related to the purchase of a piece of equipment would not be capitalized? A. Purchase price of equipment B. Transportation (shipping) costs paid by the buyer C. Cost of installing the equipment D. Cost of financing the purchase with a bank loan (i.e., interest) E. None of the above (i.e., all of the above would be capitalized)

2. When a capital lease for equipment is signed, the lessee records a liability called..

	A.	equipment
	B.	present value of capital lease payments
	C.	future value of capital lease payments
	D.	equipment leasehold
	E.	(capital) lease liability

3. Which type of bonds may be "cashed in" at the option of the creditor/investor/lender for a predetermined price after a predetermined period of time has elapsed?

	A.	Callable
	B.	Convertible
	C.	Redeemable (put option)
	D.	Exchangeable
	E.	None of the above

4. Acme Drug Company purchases a patent from its creator. Which of the following is true?

	A.	Acme should amortize the acquisition cost of the patent over its economic life.
	B.	A patent has a legal life of at least 50 years.
	C.	Acme should amortize the acquisition cost of the patent over its expected useful life, equal to the shorter of the economic life and the legal life.
	D.	Acme should amortize the acquisition cost of the patent over its legal life.
	E.	Managements expectations of technological change may lead to a higher economic life than the legal life.