AC300 Quiz4

 1.

Question :

Renault Marina exchanged a boat with a cost of $80,000 (now 75% depreciated) for another boat with a current fair value of $27,000. No boat was paid for or received. The new boat will perform the exact same function as the old boat. Renault should record the new boat at

$20,000

$27,000

$7,000

$0

 2.

Question :

The sale of a depreciable asset resulting in a gain indicates that the proceeds from the sale were

less than current market value

greater than cost

greater than book value

less than book value

 3.

Question :

Robards Services exchanged an asset with a cost of $24,000 (now 40% depreciated) for a nonmonetary asset worth $12,000. Robards received $2,000 boot. In the entry to record this exchange, Robards should record

a $10,000 loss

a $400 gain

no gain or loss

a $400 loss

 4.

Question :

Remy purchases a new machine by issuing an $18,000 three-year note. The company will pay off the obligation by paying $6,000 at the end of each year. The market rate for obligations of this type is 8%. The present value of an annuity at 8% for three periods is 2.577097. The machine will be recorded at a cost of

$ 6,000.00

$ 9,462.58

$15,462.58

$18,000.00

 5.

Question :

According to GAAP, interest must be capitalized for

Student Answer:

assets that are ready for use

assets constructed for a firm's own use

assets that are not being used in the earning activities of the company

inventories that are produced in large quantities on a repetitive basis

 6.

Question :

Macey Co. exchanged a piece of equipment that had cost $40,000 (now 75% depreciated) for a truck with a current appraised value of $13,000. Macey Co. gave the other company the piece of equipment and $8,000. Macey Co. should record

a $5,000 loss

the truck at $18,000

a gain of $11,000

the truck at $21,000

 7.

Question :

Early in 2010, Roper, Inc. purchased certain plant assets under a deferred payment contract. The agreement was to pay $50,000 at year-end for each of the next three years. The plant assets should be valued at

present value of a $50,000 annuity for three years discounted at the bank prime interest rate

$150,000

present value of a $50,000 annuity for three years discounted at the market interest rate

$150,000 plus imputed interest

 8.

Question :

On May 15, 2010, Retread Company acquired a new forklift in exchange for an old forklift that it had acquired in 2000. The old forklift was purchased for $20,000 and had a book value of $5,000. On the date of the exchange, the old forklift had a market value of $6,000. In addition, Retread paid $18,000 cash for the new forklift, which had a list price of $25,000. At what amount should Retread record the new forklift for financial accounting purposes?

$23,000

$24,000

$20,000

$25,000

 9.

Question :

The costs of drilling an unsuccessful well are expensed under

the successful-efforts method

the full-cost method

both the successful-efforts method and the full-cost method

neither the successful-efforts method nor the full-cost method

 10.

Question :

All of the following would be classified as property, plant, and equipment except

office buildings

machinery owned for standby purposes

equipment held for resale

equipment used in the operation of the business