Kaplan University AC 300 Unit 4 Quiz

 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

  Student Answer:   $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

  Student Answer:   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

  Student Answer:   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

  Student Answer:   $ 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

  Student Answer:    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

  Student Answer:    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?

  Student Answer:    $23,000
     $24,000
     $20,000
     $25,000

   
   
 9. Question : The costs of drilling an unsuccessful well are expensed under

  Student Answer:    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

  Student Answer:   office buildings
     machinery owned for standby purposes
      equipment held for resale
     equipment used in the operation of the business