The acquisition costs of property, plant, and equipment should include all normal, reasonable and necessary costs to get the asset in place and ready for use. T/F

Land acquired as a speculation is reported under Investments on the balance sheet. T/F

The cost of new equipment is called a revenue expenditure because it will help generate revenues in the future T/F

The cost of replacing an engine in a truck is an example of ordinary maintenance. T/F

An operating lease is accounted for as if the lessee has purchased the asset. T/F

A building with an appraisal value of $138,948.00 is made available at an offer price of $159,741.00. The purchaser acquires the property for $36,010.00 in cash, a 90-day note payable for $30,999.00, and a mortgage amounting to $59,828.00. What is the cost basis recorded in the buyer's accounting records to recognize this purchase?

Select the correct answer.

$138,948.00

$159,741.00

$123,731.00

$126,837.00

A capital expenditure results in a debit to

a. an asset account.

b. an expense account.

c. a capital account.

d. a liability account.

In a lease contract, the party who legally owns the asset is the

a. lessor.

b. banker.

c. lessee.

d. operator.

A fixed asset's estimated value at the time it is to be retired from service is called

a. market value.

b. carrying value.

c. book value.

d. residual value.

A machine with a cost of $62,226.00 has an estimated residual value of $4,690.00 and an estimated life of 7 years or 15,648 hours. It is to be depreciated by the units-of-production method. What is the amount of depreciation for the second full year, during which the machine was used 4,236 hours?

Select the correct answer.

$16,844.92

$8,219.43

$16,438.86

$15,575.31

Equipment with a cost of $157,043.00 has an estimated residual value of $8,908.00 and an estimated life of 7 years or 12,485 hours. It is to be depreciated by the straight-line method. What is the amount of depreciation for the first full year, during which the equipment was used 3,571 hours?

Select the correct answer.

$41.48

$21,162.14

$7.00

$42,370.05

A machine with a cost of $64,900.00 has an estimated residual value of $4,667.00 and an estimated life of 5 years or 17,638 hours. What is the amount of depreciation for the second full year, using the double declining-balance method?

Select the correct answer.

$12,980.00

$25,960.00

$15,576.00

$24,093.20

The Weber Company purchased a mining site for $640,890.00 on July 1, 2014. The company expects to mine ore for the next 10 years and anticipates that a total of 94,632 tons will be recovered. The estimated residual value of the property is $45,450.00. During 2014 the company extracted 4,513 tons of ore. What is the depletion expense for 2014?

Select the correct answer.

$59,544.00

$45,450.00

$30,564.04

$28,396.53

Expenditures for research and development are generally recorded as

a. assets and amortized over their estimated useful life.

b. current operating expenses.

c. assets and amortized over 40 years.

d. current assets

Xtra Company purchased goodwill from Argus for $96,000. Argus had developed the goodwill over 12 years. How much would Xtra amortize the goodwill for its first year?

a. $ 8,000

b. $7,000

c. Goodwill is not amortized.

d. Not enough information.

Fixed assets are ordinarily presented in the balance sheet

a. in a separate section along with intangible assets.

b. at cost less accumulated depreciation.

c. at current market values.

d. at replacement costs.

An asset was purchased for $148,000.00 on January 1, 2010 and originally estimated to have a useful life of 12 years with a residual value of $8,500.00. At the beginning of 2012, it was determined that the remaining useful life of the asset was only 4 years with a residual value of $1,800.00. Calculate the 2012 depreciation expense using the revised amounts and straight line method.

Select the correct answer.

$31,237.50

$30,737.50

$29,737.50

$31,737.50