1. Which of the following costs should not be capitalized as an acquisition cost?

Group of answer choices

A) Cost to update wiring to accommodate new factory equipment new factory equipment

B) Cost to ship newly purchased computer equipment to factory

C) Cost to calibrate measuring equipment before initial use

D) Cost to train employees to use new factory equipment

1. Which of the following costs should not be capitalized as an acquisition cost?

Group of answer choices

A) Cost to update wiring to accommodate new factory equipment new factory equipment

B) Cost to ship newly purchased computer equipment to factory

C) Cost to calibrate measuring equipment before initial use

D) Cost to train employees to use new factory equipment

Privett, Inc. purchased land in 2019. An existing structure was demolished, and a new warehouse was constructed on the property in September of 2019. Privett hired construction workers at a rate of $25 per hour to do the work (1,680 hours in total). Privett's operations manager spent 25% of his time in September supervising the construction.

Warehouse Construction Cost Data
Purchase price - Land	$125,000	Cost to remove structure on land	$10,000
Operation manager's monthly salary	5,000	Proceeds from sale of metal from demolished structure	3,000
Paving of parking lot	10,000	Landscaping costs	12,000
Foundation work	15,000	Direct materials - Warehouse	105,000
Parking lot lighting	10,000	Closing costs on land purchase	5,000
Electrical/Plumbing contractors	25,000
Hourly wage rate - Workers	25	Payroll tax rate (all employees)	10%

Privett had an appraisal done in October 2019. The land and land improvements were appraised for $150,000 and $50,000, respectively; the building was appraised for $175,000.

What is the amount in the Land account related to this construction project?

Group of answer choices

A) $122,000

B) $127,000

C) $130,000

D) $125,000

E) $137,000

Privett, Inc. purchased land in 2019. An existing structure was demolished, and a new warehouse was constructed on the property in September of 2019. Privett hired construction workers at a rate of $25 per hour to do the work (1,680 hours in total). Privett's operations manager spent 25% of his time in September supervising the construction.

Warehouse Construction Cost Data
Purchase price - Land	$125,000	Cost to remove structure on land	$10,000
Operation manager's monthly salary	5,000	Proceeds from sale of metal from demolished structure	3,000
Paving of parking lot	10,000	Landscaping costs	12,000
Foundation work	15,000	Direct materials - Warehouse	105,000
Parking lot lighting	10,000	Closing costs on land purchase	5,000
Electrical/Plumbing contractors	25,000
Hourly wage rate - Workers	25	Payroll tax rate (all employees)	10%

Privett had an appraisal done in October 2019. The land and land improvements were appraised for $150,000 and $50,000, respectively; the building was appraised for $175,000

What is the depreciable cost of the warehouse project?

Group of answer choices

A) $220,250

B) $228,700

C) $207,000

D) $192,575

1. Metropolis Products purchased property (land and building) for $1,000,000. The building will be used in operations. The most recent property tax assessment values the land at $600,000 and the building at $200,000.

The journal entry to record the purchase includes a debit of $__________ to Land

Group of answer choices

A) $600,000

B) $500,000

C) $750,000

D) $700,000

The fair value of a 50-year old building to be purchased by a public company cannot be reliably determined. Which of the following statements is(are) true about the purchase?

Group of answer choices

A) If the building is purchased with company stock, the building should be recorded at the fair value of the stock

B) If the building is being purchased with company debt (five-year noninterest-bearing loan), and the prevailing interest rate is known, the building should be recorded at the present value of the payments required under the loan agreement.

C) If the building is being purchased with company debt (five-year noninterest-bearing loan), and the prevailing interest rate is not known, the building should be recorded using the seller's original cost.

D) A and B

E) B and C

1. Annapolis Corporation borrowed $600,000 on December 1, 2018, to finance construction of a new office building. The interest rate on the loan was 8%. Construction began on January 1, 2019, and the building was completed in March 2020. The following payments were made in 2019 related to the building project:

Jan. 1	Purchased the land	$120,000
Mar. 1	Made progress payment to contractor	150,000
Aug. 1	Made progress payment to contractor	180,000
Dec. 1	Made progress payment to contractor	90,000

How much of the interest should be capitalized?

Group of answer choices

A) $16,600

B) $26,200

43,200

D) $24,000

Pepperoni's Pizza incurred the following costs during 2019:

Purchase of warming units for delivery vehicles	$25,000
Cost to install warming units	2,000
Replacement parts for refurbishment of pizza ovens	6,000
Labor related to refurbishment of ovens	2,000

The refurbishment improved the efficiency of the ovens by 20% but did not extend the oven's useful life. This is the first time Pepperoni's had installed warming units in its vehicles.

Of the above costs, $___________ should be capitalized

Group of answer choices

A) $ 8,000

B) $27,000

C) $31,000

D) $25,000

E) $35,000

1. Allegiance, Inc. has a large factory operating in western Washington. In 2020, extensive mold was discovered in the factory. The mold, located in the air duct system, was caused by several roof leaks that had been there for several years. The cost to remove the mold was $200,000. The cost was material to the company.

Which of the following statements is accurate?

Group of answer choices

A) The cost to remove the mold should be expensed in 2020

B) The cost to remove the mold should be capitalized and depreciated over the remaining useful life of the factory building

C) The cost to remove the mold should be capitalized and the service life of the building should be extended.

D) The cost to remove the mold should be capitalized and the service life of the building should be reduced

1. Account balances in Yellowstone, LLC's fixed asset accounts at the beginning and end of the year are as follows:

	Beginning of year	End of year
Property, plant, and equipment	$200,000	$160,000
Accumulated depreciation	85,000	90,000

The company sold some equipment at a loss of $10,000. The company also purchased equipment during the year for $50,000. Depreciation expense was $20,000.

What were the proceeds on the sale of the equipment?

Group of answer choices

A) $80,000

B) $ 5,000

C) $95,000

D) $65,000

1. Delany's Deconstruction purchased a truck on June 15, 2015, for $35,000. A 6% sales tax was added to the cost. In addition, Delany's paid $2,500 to ship the truck to its main office. The truck arrived on July 1, just in time to start work on a major customer project. The truck was estimated to have a 10-year service life.

On January 1, 2018, Delany's purchased and installed a truck-mounted generator for $8,000 (sales tax included). With the generator, Delany's was able to increase the number of services provided to its customers. On July 1, 2019, Delany's replaced two of the tires on the truck for $1,000. On December 31, 2020, Delany's sold the truck for $22,000.

Delany's Deconstruction recognized a ______ of $_______ on the sale. (Delany's uses the straight-line method of depreciation.)

Group of answer choices

A) Gain; $1,450

B) Gain: $650

C) Loss; $1,389

D) Loss; $422

E) Loss; $620