1. A company acquired some land for $80,000 to construct a new office complex. Legal fees paid were $2,300, delinquent taxes assumed were $3,400 and $5,850 was paid to remove an old building. What is the cost basis for the land?
a. $90,600
b. $91,550
c. $88,150
d. $87,200
2. Which of the following would NOT qualify as a capital expenditure?
a. Overhauled an engine
b. Installed new parking lot
c. Replaced tires on company trucks
d. Replaced the warehouse roof
3. Equipment was purchased for $32,000. It has a useful life of 5 years and a residual value of $4,000. What is depreciation expense for year two under the double declining balance method?
a. $5,600
b. $6,720
c. $7,680
d. $12,800
4. A machine with a useful life of 10 years and a salvage value of $4,000 was purchased for $27,000. What is annual depreciation under the straight-line method?
a. $2,300
b. $2,700
c. $4,600
d. $5,400
5. If a fixed asset is sold and the book value is less than cash received, the company must __________.
a. Recognize a loss on the income statement under other expenses
b. Recognize a loss on the income statement under operating expenses
c. Recognize a gain on the income statement under other revenues
d. Gains and losses are not to be recognized upon the sale of fixed assets
6. Which of the following is NOT an intangible asset?
a. Goodwill
b. Trademark
c. Copyrights
d. Long-term receivable
7. A gain is recorded on the sale of fixed assets when __________.
a. The asset is sold for a price less than its book value
b. The assets book value is less than the cash received
c. A gain on sale is not permitted to be recognized
d. Accumulated depreciation is less than the cash received
8. A capital expenditure would appear on the __________.
a. Income statement under operating expenses
b. Balance sheet under fixed assets
c. Balance sheet under current assets
d. Income statement under other expenses
Thanks so much in advance, I really just need the answers, it's for homework... I can get the info behind them in class, I missed a whole week of class due to the flu!! ugh, thanks so so so much for anyone who answers this, any of them would be greatly appreciated!!!!!!!!
1. To calculate the cost basis for the land, you add the purchase price of the land ($80,000) to the legal fees paid ($2,300), the delinquent taxes assumed ($3,400), and the cost to remove the old building ($5,850).
The cost basis for the land is calculated as: $80,000 + $2,300 + $3,400 + $5,850 = $91,550
Therefore, the answer is b. $91,550.
2. A capital expenditure refers to expenses incurred to acquire or improve a long-term asset, such as buildings or equipment, that will provide benefits over multiple accounting periods.
Among the given options, replacing tires on company trucks would not qualify as a capital expenditure as it is a routine maintenance expense.
Therefore, the answer is c. Replaced tires on company trucks.
3. The double declining balance method is a depreciation method that calculates depreciation at an accelerated rate. To calculate the depreciation expense for year two, you first need to determine the straight-line depreciation rate. It is calculated as 1 / useful life.
Straight-line depreciation rate = 1 / 5 years = 0.2
The double declining balance rate is double the straight-line rate, so it is 0.2 * 2 = 0.4.
To calculate the depreciation expense for year two, you multiply the book value at the beginning of the year (cost - accumulated depreciation) by the double declining balance rate.
Book value at the beginning of year two = cost - accumulated depreciation for year one
Accumulated depreciation for year one = (cost - residual value) * double declining balance rate
Accumulated depreciation for year one = ($32,000 - $4,000) * 0.4 = $11,200
Book value at the beginning of year two = $32,000 - $11,200 = $20,800
Depreciation expense for year two = $20,800 * 0.4 = $8,320
Therefore, the answer is not provided in the options.
4. The straight-line method of depreciation evenly allocates the cost of an asset over its useful life. To calculate the annual depreciation under the straight-line method, you subtract the salvage value from the cost and divide it by the useful life in years.
Annual Depreciation = (Cost - Salvage Value) / Useful Life
Annual Depreciation = ($27,000 - $4,000) / 10 years = $23,000 / 10 years = $2,300
Therefore, the answer is a. $2,300.
5. If a fixed asset is sold and the book value is less than the cash received, a loss is recognized on the income statement under other expenses.
Therefore, the answer is a. Recognize a loss on the income statement under other expenses.
6. Long-term receivable is not an intangible asset. It represents a monetary claim that is not expected to be collected within one year.
Therefore, the answer is d. Long-term receivable.
7. A gain is recorded on the sale of fixed assets when the asset's book value is less than the cash received from the sale.
Therefore, the answer is b. The asset's book value is less than the cash received.
8. A capital expenditure is a long-term investment in an asset. It would appear on the balance sheet under fixed assets.
Therefore, the answer is b. Balance sheet under fixed assets.
Please note that it's always important to review the class materials and consult with your teacher for a comprehensive understanding of the concepts.