Kaplan University AC 300 Unit 4 Quiz -– 100% Correct Answers

 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