ACCT 2300; Exam 4 questions with
correct answers
Crater Corporation purchased land for a new building. Which of the following costs would not
be included in the cost of the land? - ANS ✔✔Cost of new parking lot constructed on the land
Copper Company purchased a building and land for
$600,000 in total.Individually, the land appraised for
$96,000 and the building appraised for $544,000.
How much of the purchase price should be allocated to the cost of theland? - ANS ✔✔$90,000
Thomastown Corporation purchased a new delivery van on the last day of its fiscal year. The
cost of the delivery van will appear on Thomastown's _______________ in the year of
purchase. - ANS ✔✔balance sheet
When a company expenses the cost of maintenance for its fleet of delivery vehicles, that cost
will appear on its - ANS ✔✔income statement.
Capitalizing a cost involves increasing what type of account? - ANS ✔✔Asset
Cropper Company purchased a delivery van for $65,000 on January 1. The van has an estimated
4-year life with a residual value of $6,000.
What would the depreciation expense for this van be in the first year if Cropper uses the
straight-line method? - ANS ✔✔$14,750
Kipple Corporation purchased a forklift for $45,000
on July 1. The forklift has an estimated useful life of
, 25,000 usage hours with a residual value of $4,000.
Kipple uses theunits-of-production method for depreciation. If
Kipple uses the forklift for 6,500 hours during the firstyear, the depreciation expense on the
forklift would be (Round intermediary calculations to two decimal places and your final answers
to the nearest wholedollar.) - ANS ✔✔$10,660
On the first day of its fiscal year, True Test Company purchased a new computer system for a
total cost of $30,000. The computer system is expected to have a life of 5 years with a residual
value of $6,500.
If the company uses the double-declining-balance method, its depreciation expense for this
computer system in the first year will be - ANS ✔✔$12,000
The depreciation method that does not initially use the residual value in depreciation
calculations is the - ANS ✔✔double-declining balance method.
Garcia Excavating purchased a used dump truck for $120,000 on January 1, 2021. The company
has depreciated the dump truck using the straight-line method over its estimated 10-year life
with a $7,000 residual value. Garcia sold the dump truck on January 1, 2024, for $100,000. Total
accumulated depreciation on the dump truck on the date of sale was $33,900. What gain or loss
should be recorded on the sale? - ANS ✔✔A gain of $13,900
Bosley Fuel purchased an oil well for $400,000. The well is estimated to contain 80,000 barrels,
have a ten-year life, and have no residual value. If the company extracts and sells 4,000 barrels
of oil in the first year, how much in cost of sales should be recorded? - ANS ✔✔$20,000
Which of the following is an intangible asset? - ANS ✔✔Patent
A capital expenditure - ANS ✔✔adds to an asset.
correct answers
Crater Corporation purchased land for a new building. Which of the following costs would not
be included in the cost of the land? - ANS ✔✔Cost of new parking lot constructed on the land
Copper Company purchased a building and land for
$600,000 in total.Individually, the land appraised for
$96,000 and the building appraised for $544,000.
How much of the purchase price should be allocated to the cost of theland? - ANS ✔✔$90,000
Thomastown Corporation purchased a new delivery van on the last day of its fiscal year. The
cost of the delivery van will appear on Thomastown's _______________ in the year of
purchase. - ANS ✔✔balance sheet
When a company expenses the cost of maintenance for its fleet of delivery vehicles, that cost
will appear on its - ANS ✔✔income statement.
Capitalizing a cost involves increasing what type of account? - ANS ✔✔Asset
Cropper Company purchased a delivery van for $65,000 on January 1. The van has an estimated
4-year life with a residual value of $6,000.
What would the depreciation expense for this van be in the first year if Cropper uses the
straight-line method? - ANS ✔✔$14,750
Kipple Corporation purchased a forklift for $45,000
on July 1. The forklift has an estimated useful life of
, 25,000 usage hours with a residual value of $4,000.
Kipple uses theunits-of-production method for depreciation. If
Kipple uses the forklift for 6,500 hours during the firstyear, the depreciation expense on the
forklift would be (Round intermediary calculations to two decimal places and your final answers
to the nearest wholedollar.) - ANS ✔✔$10,660
On the first day of its fiscal year, True Test Company purchased a new computer system for a
total cost of $30,000. The computer system is expected to have a life of 5 years with a residual
value of $6,500.
If the company uses the double-declining-balance method, its depreciation expense for this
computer system in the first year will be - ANS ✔✔$12,000
The depreciation method that does not initially use the residual value in depreciation
calculations is the - ANS ✔✔double-declining balance method.
Garcia Excavating purchased a used dump truck for $120,000 on January 1, 2021. The company
has depreciated the dump truck using the straight-line method over its estimated 10-year life
with a $7,000 residual value. Garcia sold the dump truck on January 1, 2024, for $100,000. Total
accumulated depreciation on the dump truck on the date of sale was $33,900. What gain or loss
should be recorded on the sale? - ANS ✔✔A gain of $13,900
Bosley Fuel purchased an oil well for $400,000. The well is estimated to contain 80,000 barrels,
have a ten-year life, and have no residual value. If the company extracts and sells 4,000 barrels
of oil in the first year, how much in cost of sales should be recorded? - ANS ✔✔$20,000
Which of the following is an intangible asset? - ANS ✔✔Patent
A capital expenditure - ANS ✔✔adds to an asset.
