DeVry ACCT 305 Week 1 QUIZ

1.

Question :

(TCO 1) The capitalized cost of equipment excludes:

Student Answer:

[removed] Maintenance.

[removed] Sales tax.

[removed] Shipping.

[removed] Installation.

 2.

Question :

(TCO 1) Simpson and Homer Corporation acquired an office building on three acres of land for a lump-sum price of $2,400,000. The building was completely furnished. According to independent appraisals, the fair values were $1,300,000, $780,000, and $520,000 for the building, land, and furniture and fixtures, respectively. The initial values of the building, land, and furniture and fixtures would be:
   

Student Answer:

[removed] Option a

[removed] Option b

[removed] Option c

[removed] Option d

 3.

Question :

(TCO 3) In a nonmonetary exchange of equipment, if the exchange has commercial substance, a gain is recognized if:

Student Answer:

[removed] The fair value of the equipment received exceeds the book value of the equipment received.

[removed] The book value of the equipment received exceeds the fair value of the equipment given up.

[removed] The fair value of the equipment surrendered exceeds the book value of the equipment given up.

[removed] None of the above is correct.

 4.

Question :

 (TCO 1) Interest is eligible to be capitalized as part of an asset's cost, rather than being expensed immediately, when:

Student Answer:

[removed] The interest is incurred during the construction period of the asset.

[removed] The asset is a discrete construction project for sale or lease.

[removed] The asset is self-constructed, rather than acquired.

[removed] All of the above are correct.

 5.

Question :

(TCO 3) Alamos Co. exchanged equipment and $18,000 cash for similar equipment. The book value and the fair value of the old equipment were $82,000 and $90,000, respectively.
  
 Assuming that the exchange has commercial substance, Alamos would record a gain/(loss) of:

Student Answer:

[removed] $26,000.

[removed] $8,000.

[removed] $(8,000).

[removed] $0.