1 zabinski co paid 150 000 for a purchase that included land building and office fur 3623831
1- Zabinski Co. paid $150,000 for a purchase that included land, building, and office furniture. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Land, $20,000, Building, $150,000, and Office furniture, $30,000. Based on this information the cost that would be allocated to the land is:
$25,000
$17,500
$15,000
$20,000
2- Mobley Company purchased an asset with a list price of $35,000. Mobley received a 2% cash discount. The asset was delivered under terms FOB shipping point, and freight costs amounted to $700. Mobley paid $1,500 to have the asset installed. Insurance costs to protect the asset from fire and theft amounted to $400 for the first year of operations. Based on this information, the cost recorded in the asset account would be:
$35,800
$35,000
$36,500
$36,900
3- Which of the following statements is true with regard to depreciation expense?
A company using straight line will show a smaller book value for assets than if the same company uses double declining balance.
Different companies in the same industry will always depreciate similar assets by the same methods.
Choosing double declining balance over straight line will produce a greater total depreciation expense over the asset's life.
A company should use the depreciation method that best matches expense recognition with the use of the asset.
4- On January 1, 2010, Desmet Company purchased office equipment that cost $15,000 cash. The equipment was delivered under terms FOB shipping point, and transportation cost was $1,000. The equipment had a five year useful life and a $1,200 expected salvage value.
Using straight line depreciation, determine the amount of depreciation expense and the amount of accumulated depreciation that would appear on the December 31, 2012 financial statements.
$2,608/$7,824
$2,960/$8,880
$2,600/$7,800
$2,960/$2,960
5- Assume that Desmet Company sold the office equipment on December 31, 2012 for $6,000, the amount of net income or (net loss) appearing on the December 31, 2012 income statement would be:
$3,880
($1,120)
$2,960
($2,040)
6- If Desmet Company had used the double-declining balance depreciation method, the depreciation expense appearing on the 2012 income statement would be:
$6,420
$5,920
$2,304
$2,131
7- Using straight line depreciation, determine the amount of depreciation expense and the amount of accumulated depreciation that would appear on the December 31, 2012 financial statements.
$2,960/$2,960
$2,608/$7,824
$2,600/$7,800
$2,960/$8,880
8- Assume that Desmet Company sold the office equipment on December 31, 2012 for $6,000, the amount of net income or (net loss) appearing on the December 31, 2012 income statement would be:
($2,040)
$3,880
$2,960
($1,120)
9- An asset with a book value of $19,000 is sold for $16,000. Which of the following answers would accurately represent the effects of the sale on the financial statements? (Note: The answers show the net effect on the total amount under each category. For example, if cash increased by $100 and Accounts Receivable decreased by $70, a net $30 increase would be shown in the assets column.)
Choice A
Choice B
Choice C
Choice D
10- The Harlow Company purchased the Hampton Company for $600,000 cash. The fair market value of Hampton's assets was $520,000 and the company had liabilities of $30,000. What amount of goodwill should Harlow record related to the purchase of Hampton Company?
$80,000
$0
$110,000
$50,000