Which of the following would not be considered a remediation cost?
permit costs to acquire landfill site
controlling methane gas migration
removing soil contamination
cleaning up groundwater
If a company scraps an asset without any cash recovery, it recognizes a loss equal to the asset’s book value.
True
False
Insurance on equipment purchased, while the equipment is in transit, is part of the cost of the equipment.
True
False
The depletion base includes restoration costs and excludes the salvage value.
True Use of the double-declining balance method
False
results in a decreasing charge to depreciation expense each year.
lhe cost of an asset less its salvage value is its depreciation base. requires that salvage value is not deducted in computing the depreciation base.
requires that the book value not be reduced below salvage value.
True all of the choices are correct.
False L
, Changes in estimates are handled prospectively by dividing the asset's book value less any salvage value by the remaining estimated
life.
True
False
Waterway Industries purchased land as a factory site for $1315000. Waterway paid $117000 to tear down two buildings on the land.
Salvage was sold for $8400. Legal fees of $5480 were paid for title investigation and making the purchase. Architect's fees were
$47000. Title insurance cost $3700, and liability insurance during construction cost $4000. Excavation cost $15800. The contractor
was paid $4200000. An assessment made by the city for pavement was $9800. Interest costs during construction were $252000.
The cost of the building that should be recorded by Waterway Industries is
$4518800.
$4207100.
$4220500.
$4205800.
Which of the following statements is true regarding capitalization of interest?
The amount of interest cost capitalized during the period should not exceed the actual interest cost incurred.
Interest cost capitalized in connection with the purchase of land to be used as a building site should be debited to the land
account and not to the building account.
The minimum amount of interest to be capitalized is determined by multiplying a weighted-average interest rate by the
amount of average accumulated expenditures on qualifying assets during the period.
When excess borrowed funds not immediately needed for construction are temporarily invested, any interest earned
should be offset against interest cost incurred when determining the amount of interest cost to be capitalized.
permit costs to acquire landfill site
controlling methane gas migration
removing soil contamination
cleaning up groundwater
If a company scraps an asset without any cash recovery, it recognizes a loss equal to the asset’s book value.
True
False
Insurance on equipment purchased, while the equipment is in transit, is part of the cost of the equipment.
True
False
The depletion base includes restoration costs and excludes the salvage value.
True Use of the double-declining balance method
False
results in a decreasing charge to depreciation expense each year.
lhe cost of an asset less its salvage value is its depreciation base. requires that salvage value is not deducted in computing the depreciation base.
requires that the book value not be reduced below salvage value.
True all of the choices are correct.
False L
, Changes in estimates are handled prospectively by dividing the asset's book value less any salvage value by the remaining estimated
life.
True
False
Waterway Industries purchased land as a factory site for $1315000. Waterway paid $117000 to tear down two buildings on the land.
Salvage was sold for $8400. Legal fees of $5480 were paid for title investigation and making the purchase. Architect's fees were
$47000. Title insurance cost $3700, and liability insurance during construction cost $4000. Excavation cost $15800. The contractor
was paid $4200000. An assessment made by the city for pavement was $9800. Interest costs during construction were $252000.
The cost of the building that should be recorded by Waterway Industries is
$4518800.
$4207100.
$4220500.
$4205800.
Which of the following statements is true regarding capitalization of interest?
The amount of interest cost capitalized during the period should not exceed the actual interest cost incurred.
Interest cost capitalized in connection with the purchase of land to be used as a building site should be debited to the land
account and not to the building account.
The minimum amount of interest to be capitalized is determined by multiplying a weighted-average interest rate by the
amount of average accumulated expenditures on qualifying assets during the period.
When excess borrowed funds not immediately needed for construction are temporarily invested, any interest earned
should be offset against interest cost incurred when determining the amount of interest cost to be capitalized.
