18. The cost of machinery and equipment includes the following: Purchase price (less any discounts) Transportation charges Insurance while in transit Sales tax and other taxes Purchase commission Installation costs Testing costs (prior to use of the asset) 19. When land is purchased with an existing structure, the cost of clearing the land and removing the unwanted building becomes part of the land. 20. The cost of land includes the following amounts paid by the purchaser: Purchase price Brokerage commission Survey and legal fees Delinquent property taxes Taxes assessed to transfer the ownership (title) on the land . Cost of clearing the land and removing unwanted buildings Market Value $ 144,000 x Total Purchase Price * $355,000 = Assigned Cost of Each Asset = $ 106,500 Asset Lot 1 Percentage of Total Value $144,000 / $480,000 = 30% Lot 2 96,000 $96,000 / S480,000 - 20% * $355,000 = 71,000 Lot 3 240,000 $240,000 / $480,000 = 50% *$355,000 = 177.500 Total $ 480,000 100% $ 355,000 22. Modifying a truck for a new use would be capitalized and depreciated 23. The matching principle requires businesses to depreciate assets. 24. The units-of-production method allocates a varying amount of depreciation each year based on an asset's usage. 25. An accelerated depreciation method expenses more of the asset's cost near the start of an asset's life and less at the end of its useful life. 26. A fully depreciated plant asset can be: Discard the plant asset. Sell the plant asset Exchange the plant asset for another plant asset. 9 is only and to follow the direct write- o that have veryw thed h ere ates the match i ng for uncle receivables S onds bad requires the the period the of a contra Tibility account r e A) increases with a debat 1) is added to accounts receivable C) is a blity account holds the pool of unknown uncollectible account 9) Which of the following is TRUE of the balance sheet prestation of the Allowance for Debt? A) It is shown as a contra account related to accounts receivable B) It is reported as a separate, independent line item under currentes C) It is reported as an operating expense. D) It is reported as a current liability 10) Accounts Receivable has a balance of 533000, and the Allowance for Bad Debts has acredit balance of $3.300. The allowance method is used. What is the net realizable value of Accounts Receivable before and after a $2300 account receivable is written of A) $27.400, $32,000 B) 529,700, 527,400 C) $29,700: $29,700 D) 527 400, 527 400 10) 11) After the December 31, 2019 adjusting journal entries have been posted, Sinclair Enterprises has the following account balances (all accounts have normal balances): 11) Account Title Accounts Receivable Allowance for Bad Debts Bad Debts Expense Account Balance $154,000 $4700 $8000 What is the net realizable as of December 21, 2019? A) $158,700 B) $141,300 C) $146,000 D) $149,300 12) The entry to write off an account receivable under the allowance method will A) increase net income B) reduce net income C) have no effect on net income D) increase total assets
