Question 1 Blue Horizon has acquired equipment and incurred these expenses in doing so. $ Gross invoice price, net of GST, subject to terms of 2/10, n/30) 14 500 Transportation costs to get equipment to factory 1 200 Speeding ticket incurred by company driver while delivering equipment to the factory 120 Cost to repair wall damaged during installation 500 Special permit to allow wide load on freeway 300 The equipment should be recorded in Blue Horizons records at: a. $14 500. b. $15 700. c. $16 000. d. $16 500.

Question 2 Milligan & Miles purchased a small clothing company for $250 000 (net of GST). The fair values of the individual assets acquired (net of GST) were as follows. $ $ Building 100 000 Shop fittings 80 000 Land 60 000 Equipment 30 000 At what amount should shop fittings be recorded by Milligan & Miles? a. $80 000 b. $63 491 c. $74 074 d. $86 400 Question 3 Kamp Gravel Co purchased three trucks for $50 000 each plus GST by making a $20 000 down payment and agreeing to pay the balance at the end six months. The journal entry to record the acquisition is which of the following? $ $ a. Trucks 150 000 GST outlays 15 000 Sundry creditor 165 000 b. Trucks 150 000 GST outlays 15 000 Cash 20 000 Sundry creditor 145 000 c. Cash 20 000 Sundry creditor 130 000 Trucks 150 000 d. Trucks 20 000 Cash 20 000

Question 4 How many of these factors will have an effect on the amount of depreciation charged on an asset in a particular accounting period? Cost or revalued amount of asset The size of the asset Method of depreciation used Estimated residual value of asset a. 1 b. 2 c. 3 d. 4 Question 5 The Delivery Equipment account in the ledger of A Co has a balance of $17 600 which is the cost of two 2nd hand trucks purchased on 1 January 2015. The Accumulated Depreciation Delivery Equipment account has a balance on 31 December 2016 of $8000, before adjusting entries. No additional delivery trucks have been acquired or sold. The residual value of each truck is estimated to be $800 and the straight-line depreciation method is used. What is the necessary adjusting entry to record annual depreciation on 31 December 2017? Debit Credit a. Depreciation exp. $8000 Delivery equipment $8000 b. Accumulated depr. $4000 Delivery equipment $4000 c. Depreciation exp. $8000 Cash at bank $8000 d. Depreciation exp. $4000 Accumulated depr. $4000 Question 6 On 31 December 2014 a new motor vehicle with a life of five years and no estimated residual value was purchased by a business at a cost of $23 000, net of GST. The diminishing-balance depreciation method is employed. At a rate of 25% p.a. what is the carrying value of the motor vehicle at 31 December 2016 after charging depreciation for that year? a. $9703 b. $15 000 c. $17 250 d. $12 937