Performance Assessment Part 2 Chapter 10 101-113 Accounting 2

1. Which of the following is included in the cost of constructing a building?

A. interest on money borrowed to finance construction

B. cost of paving parking lot

C. cost of repairing vandalism damage during construction

D. cost of removing the demolished building existing on the land when purchased

2. Which of the following is included in the cost of land?

A. cost of paving a parking lot

B. brokerage commission

C. outdoor parking lot lighting attached to the land

D. fences on the land

3. A machine with a cost of $65,000 has an estimated residual value of $5,000 and an

estimated life of 5 years or 15,000 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 5,000 hours?

A. $8,000 B. $20,000 C. $12,000 D. $21,667

4. Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an

estimated life of 5 years or 12,000 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 3,300 hours?

A. $30,000 B. $32,500 C. $34,000 D. $40,000

5. Equipment with a cost of $160,000, purchased on May 1, 2003, has an estimated residual

value of $10,000 and an estimated life of 4 years. It is to be depreciated by the straight-

line method. What is the amount of depreciation for the year 2003, during which the

equipment was used 2,000 hours.

A. $37,500 B. $25,000 C. $40,000 D. $26,667

6. What are expenditures that add to the utility of fixed assets for more than one accounting

period?

A. committed expenditure B. revenue expenditures

C. current expenditures D. capital expenditures

7. What are expenditures that increase operating efficiency or capacity for the remaining

useful life of fixed assets?

A. current expenditures B. revenue expenditures

C. ordinary maintenance D. betterments

8. What entry would be made to record the transaction when a company discards

machinery that is fully depreciated?

A. debit Accumulated Depreciation; credit Machinery

B. debit Machinery; credit Accumulated Depreciation

C. debit Cash; credit Accumulated Depreciation

D. debit Depreciation Expense; credit Accumulated Depreciation

9. When a company sells machinery at a price equal to its book value, this transaction

would be recorded with an entry that would include the following:

A. debit Cash and Accumulated Depreciation; credit Machinery

B. debit Machinery; credit Cash and Accumulated Depreciation

C. debit Cash and Machinery; credit Accumulated Depreciation

D. debit Cash and Depreciation Expense; credit Accumulated Depreciation

qkd92w-358810-2696062-10papt2-doc.doc Page 1 of 3

Partial preview of the text

Download Accounting 2: Depreciation and Fixed Asset Costing Questions - Prof. Brenda L. Block and more Exams Financial Accounting in PDF only on Docsity!

Performance Assessment Part 2 Chapter 10 101-113 Accounting 2

Which of the following is included in the cost of constructing a building? A. interest on money borrowed to finance construction B. cost of paving parking lot C. cost of repairing vandalism damage during construction D. cost of removing the demolished building existing on the land when purchased
Which of the following is included in the cost of land? A. cost of paving a parking lot B. brokerage commission C. outdoor parking lot lighting attached to the land D. fences on the land
A machine with a cost of $65,000 has an estimated residual value of $5,000 and an estimated life of 5 years or 15,000 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 5,000 hours? A. $8,000 B. $20,000 C. $12,000 D. $21,
Equipment with a cost of $160,000 has an estimated residual value of $10,000 and an estimated life of 5 years or 12,000 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 3,300 hours? A. $30,000 B. $32,500 C. $34,000 D. $40,
Equipment with a cost of $160,000, purchased on May 1, 2003, has an estimated residual value of $10,000 and an estimated life of 4 years. It is to be depreciated by the straight- line method. What is the amount of depreciation for the year 2003, during which the equipment was used 2,000 hours. A. $37,500 B. $25,000 C. $40,000 D. $26,
What are expenditures that add to the utility of fixed assets for more than one accounting period? A. committed expenditure B. revenue expenditures C. current expenditures D. capital expenditures
What are expenditures that increase operating efficiency or capacity for the remaining useful life of fixed assets? A. current expenditures B. revenue expenditures C. ordinary maintenance D. betterments
What entry would be made to record the transaction when a company discards machinery that is fully depreciated? A. debit Accumulated Depreciation; credit Machinery B. debit Machinery; credit Accumulated Depreciation C. debit Cash; credit Accumulated Depreciation D. debit Depreciation Expense; credit Accumulated Depreciation
When a company sells machinery at a price equal to its book value, this transaction would be recorded with an entry that would include the following: A. debit Cash and Accumulated Depreciation; credit Machinery B. debit Machinery; credit Cash and Accumulated Depreciation C. debit Cash and Machinery; credit Accumulated Depreciation D. debit Cash and Depreciation Expense; credit Accumulated Depreciation

What is the process of transferring the cost of metal ores and other minerals removed from the earth to an expense account called? A. depletion B. deferral C. amortization D. depreciation
Expenditures for research and development are generally recorded as: A. current operating expenses B. assets and amortized over their estimated useful life C. assets and amortized over 40 years D. current assets
What is the term applied to the amount of cost to transfer to expense resulting from a decline in the utility of intangible assets? A. amortization B. depletion C. depreciation D. allocation For items 15 -34, identify the account that each expenditure would be chargeable to. Use the following choices: A. Land B. Land Improvements C. Buildings D. Machinery and Equipment E. Other Account
Cost of paving parking area for employees and customers.
Insurance during construction of building.
Interest incurred on loan during construction of building.
Fee paid for installation of equipment.
Special foundation for new equipment acquired.
Insurance on new equipment while in transit.
Freight charges on new equipment.
Cost of repairing vandalism damage to equipment during installation.
Sales tax on new equipment.
Cost incurred in repairing damage resulting from installation of new equipment.
Cost of land fill for building site.
Cost of lubricating oil purchased for periodic oil changes for equipment.
Parking lot lighting.
Installing a fence around the parking lot.
Repainting the trim on a building.
Special assessment paid to city for extension of water main to property.
Cost of razing and removing the old building on property acquired for a building site.
Delinquent real estate taxes assumed by purchaser on property acquired for a building site.
Attorney’s fee for title search.
Architect’s fee for building plans and supervision of construction. For items 35 – 41, identify what type each item belongs to. Use the following choices: A. Fixed Asset B. Intangible Asset C. Neither
computer
patent
account receivable
goodwill
US Treasury not
land used for employee parking
racks used to display inventory

Accounting 2: Depreciation and Fixed Asset Costing Questions - Prof. Brenda L. Block, Exams of Financial Accounting

Often downloaded together

Partial preview of the text

Download Accounting 2: Depreciation and Fixed Asset Costing Questions - Prof. Brenda L. Block and more Exams Financial Accounting in PDF only on Docsity!