Use the following to answer questions 26-27:

On October 12, 2006, Livingston Corporation invested $500,000 in short-term available-for-sale marketable securities. The market value of this investment was $530,000 at December 31, 2006, but had slipped to $525,000 by December 31, 2007.

26. Refer to the above data. In financial statements prepared on December 31, 2006, Livingston Corporation reports:

A) The asset Investments in Marketable Securities at $500,000 with footnote disclosure of the market value of $530,000.

B) The asset Investments in Marketable Securities at $530,000, and a $30,000 Unrealized Holding Gain included in total stockholders' equity.

C) The asset Investments in Marketable Securities at $530,000, and a $30,000 gain recognized in the income statement.

D) The asset Investments in Marketable Securities at $500,000, and a $30,000 Unrealized Holding Gain included in total stockholders' equity.

27. Refer to the above data. Assuming Livingston does not sell this investment; financial statements prepared at December 31, 2007, report:

A) Investments in Marketable Securities of $500,000, reduced by a $30,000 Unrealized Holding Gain on Investments, in the asset section of the balance sheet.

B) The asset Investments in Marketable Securities of $500,000 in the balance sheet, and a $25,000 Unrealized Holding Loss on Investments in the income statement.

C) The asset Investments in Marketable Securities of $525,000, and a $5,000 Unrealized Holding Loss deducted from total stockholders' equity.

D) Investment in Marketable Securities of $525,000 in the asset section of the balance sheet, with a $25,000 Unrealized Holding Gain on Investments included in the stockholders' equity section.

28. An asset which costs $7,200 and has accumulated depreciation of $1,800 is sold for $4,500. What amount will be recognized when the asset is sold?

A) A gain of $900

B) A loss of $900

C) A loss of $2,700

D) A gain of $2,700

29. Coca-Cola's famous name printed in distinctive typeface is an example of:

A) A trademark.

B) A patent.

C) A copyright.

D) Goodwill.

30. Carlson Imports sold a depreciable plant asset for cash of $35,000. The accumulated depreciation amounted to $70,000, and a loss of $5,000 was recognized on the sale. Under these circumstances, the original cost of the asset must have been:

A) $65,000.

B) $75,000.

C) $100,000.

D) $110,000.

31. Tivoli Instrumentation sold a depreciable asset for cash of $100,000. The original cost of the asset was $400,000. Tivoli recognized a gain of $15,000 on the sale. What was the amount of accumulated depreciation on the asset at the time of its sale?

A) $315,000.

B) $85,000.

C) $385,000.

D) $300,000.

32. Machinery acquired new on January 1 at a cost of $50,000 was estimated to have a useful life of 10 years and a residual salvage value of $20,000. Straight-line depreciation was used. On January 1, following six full years of use of the machinery, management decided that the estimate of useful life had been too long and that the machinery would have to be retired after two more years, that is, at the end of the eighth year of service. Under this revised estimate, the depreciation expense for the seventh year of use would be:

A) $6,000.

B) $8,000.

C) $11,000.

D) $12,000.

33. The ability of a partner to enter into a contract on behalf of all partners is called

a. voluntary agency.

b. mutual agency.

c. unlimited liability.

d. voluntary association.

34. Which of the following does not result in dissolution of a partnership?

a. Admission of a new partner

b. Sale of partnership assets

c. Death of a partner

e. Bankruptcy of a partner

35. Jerry and Rose have agreed to form a partnership. Accordingly Rose will invest $40,000 worth of equipment which has a note payable of $15, 000 which the partnership assumes, and Jerry will invest $40,000 in cash. The Roses capital account balance will be.

A. $40,000

B. $25,000

C. $15,000

D. $80,000

36. One method of distributing income and losses is to give each partner a stated

ratio of the total income or loss. There are two partners Jerry & Rose, each making an equal contribution to the firm (50/50). However the partnership agreement states that distributions would be made 60% and 40% respectively. Jerry and Rose are partners of the firm which had a net income $100,000. Therefore Jerrys share of income is:

A. $50,000

B. $40,000

C. $100,000

D. $60,000

37. After March, 2004 international standards required that goodwill

A) Be capitalized and amortized over 20 years or less.

B) Be capitalized and amortized over 40 years or less.

C) Be capitalized and reviewed annually and its value should be adjusted if impaired.

D) Be expensed immediately.

38. Manufacturing overhead is best described as:

A) All manufacturing costs other than direct materials and direct labor.

B) All period costs associated with manufacturing operations.

C) Indirect materials and indirect labor.

D) All operating expenses other than selling expenses and general and administrative expenses.

39. Which of the following costs would not be considered part of the manufacturing overhead of a furniture manufacturer?

A) The cost of compliance with federal factory safety regulations.

B) Depreciation expense on factory equipment.

C) The cost of grease used to lubricate factory equipment.

D) The cost of wood used in furniture construction.