Chapter 9 review

1. Which one of the following costs will not be included in the cost of equipment? a. Installation b. Freight c. Testing d. Annual insurance 2. Coronado Company purchased land for $80,000. The company also paid $12,000 in accrued taxes on the property, incurred $5,000 to remove an old building, and received $2,000 from the salvage of the old building. At what amount will the land be recorded in the accounting records? a. $95,000 b. $92,000 c. $80,000 d. $83,000 Massey Corporation purchased a piece of land for $50,000. Massey paid attorney's fees of $5,00o and brokers' commissions of $4,000 in connection with the purchase. An old building on the land was torn down at a cost of $2,000, and proceeds from the scrap were $500. How much is the total 3. cost of the land? a. $61,000 b. $50,000 c. $60,500 d. $59,000 4. Which of the following costs should not be included in the cost of a building? a. b. c. d. Parking lot repaving Closing costs Remodeling of office space prior to use Broker's commission 5. What is depreciation? a. b. c. d. A valuation approach A cash accumulation approach A cost allocation method An adjustment to market value over time