28. The following items were reported on the balance sheets and income statement for Centerton Inc., a service company:

Accounts payable, December 31, 2015	$64,000
Accounts payable, December 31, 2016	48,000
Operating expenses -- 2016	170,000

What amount would be reported in the operating activities section of the statement of cash flows for payments for operating expenses under the direct method?

a. $180,000

b. $170,000

c. $154,000

d. $186,000

5. Shidan Apartments purchased an apartment building to rent to university students on November 18, 2015. The following costs were incurred during 2015, before the tenants moved in:

Purchase price of the building	$220,000
Purchase price of the land	100,000
Transfer taxes	10,000
Interest incurred on the mortgage loan to purchase	4,000
Attorney and real estate agent's fees	15,000
Repave the parking lot	6,000

How much will Shidan Apartments record as an asset?

a. $351,000

b. $355,000

c. $345,000

d. $320,000

8. Harkin Company purchased a building on a tract of land and allocated the entire cost of the purchase to building. Normally it depreciates buildings over 20 years using the straight-line method with zero residual value and does not depreciate land. Because of its accounting treatment of the purchase, Harkin's income before taxes for the next 20 years will be:

a. in conformance with GAAP.

b. unaffected.

c. understated.

d. overstated.

12.

Depreciation is:

a. the difference between the original cost and salvage value of an asset.

b. the cash allocated each period to maintain a plant asset.

c. an effort to achieve proper matching of the cost of operating assets.

d. an accumulation of funds to replace the related plant asset.