Worthington Chandler Company purchased equipment for $$36,000.$ Sales tax on the purchase was $$2,400.$ Other costs incurred were freight charges of $$600,$ repairs of $$350$ for damage during installation, and installation costs of $$675.$ What is the cost of the equipment?

a$.$ $$36,000$

b$.$ $$38,400$

c$.$ $$39,675$

d$.$ $$40,725$

Fogelberg Company purchased equipment for $$25,000.$ Sales tax on the purchase was $$1,500.$ Other costs incurred were freight charges of $$400,$ repairs of $$700$ for damage during installation, and installation costs of $$450.$ What is the cost of the equipment?

a$.$ $$25,000.$

b$.$ $$26,500.$

c$.$ $$27,350.$

d$.$ $$28,050.$

II$.$ True $($T$)$ or False $($F$)-20$ POINTS

Assets classified as Property, Plant, and Equipment can be either acquired for use in operations, or acquired for resale.

Assets classified as Property, Plant, and Equipment must be both long$-$term in nature and possess physical substance.

When land with an old building is purchased as a future building site, the cost of removing the old building is part of the cost of the new building.

Insurance on equipment purchased, while the equipment is in transit, is part of the cost of the equipment.

When an ordinary repair occurs, several periods will usually benefit.

If a company scraps an asset without any cash recovery, it recognizes a loss equal to the asset's book $.$ value.

Depreciation is a means of cost allocation, not a matter of valuation.

Depreciation is based on the decline in the fair market value of the asset.

Depreciation, depletion, and amortization all involve the allocation of the cost of a long$-$lived asset to expense.

The cost of an asset less its salvage value is its depreciation base.

The three factors involved in the depreciation process are the depreciation base, the useful life, and the risk of obsolescence.

The major objection to the straightiline method is that it assumes the asset's economic usefulness and repair expense are the same each year.

The units$-$of$-$production approach to depreciation is appropriate when depreciation is a function of time instead of activity.

An accelerated depreciation methat is appropriate when the asset's economic usefulness is the same each year.

The declining$-$balance method does not deduct the salvage value in computing the depreciation base.

Intangible assets derive their value trom the right $($claim$)$ to recelve cash in the future.

Internally generated intangible assels are initially recorded at fair value.

Limited$-$life intangibles are amortized by systematic charges to expense over their useful life.

Amortization of limited$-$life intangilde assets should not be affected by expected residual values.