Accounting Exam 3 With Complete
And Detailed Answers
ABC vAdvisors vis vbeing vsued vby va vformer vcustomer. vABC's vlawyers vsay vthat vit vis
vpossible, vbut vnot vprobable, vthat vthe vcompany vwill vlose vthe vlawsuit vand vthe vtrial
vshould vlast vapproximately v18 vmore vmonths. vShould vABC vlose, vthey vwill vmost
vlikely vhave vto vpay vapproximately v$750,000. vHow vshould vthis vlawsuit vbe vreported
vin vthe vfinancial vstatements?
A.) vCurrent vliability vof v$750,000 vand vExpense vof v$750,000
B.) vLong-term vliability vof v$750,000 vand vExpense vof v$750,000
C.) vNo vdisclosure vis vrequired.
D.) vNo veffect von vthe vbalance vsheet vor vincome vstatement, vbut vdescribed vin vthe
vfootnotes. v- vCORRECT✅✅D
Anniston vCompany vpurchased vequipment vand vincurred vthe vfollowing vcosts:
Purchase vprice
$68,500
Cost vof vtrial vruns
400
Installation vcosts
325
Sales vtax
3,425
What vis vthe vcost vof vthe vequipment?
A.) v$68,500
B.) v$71,925
C.) v$72,250
D.) v$72,650 v- vCORRECT✅✅D
The vcost vprinciple vrequires vthat vcompanies vrecord vfixed vassets vat:
A.) vfair vvalue.
B.) vbook vvalue.
C.) vhistorical vcost.
D.) vmarket vvalue. v- vCORRECT✅✅C
, When vdepreciation vis vrecorded veach vperiod, vwhat vaccount vis vdebited?
A.) vDepreciation vExpense
B.) vCash
C.) vAccumulated vDepreciation
D.) vThe vfixed vasset vaccount vinvolved v- vCORRECT✅✅A
Cox vInc. vacquired va vmachine vfor v$800,000 von vJanuary v1, v2019. vThe vmachine vhas
va vsalvage vvalue vof v$20,000 vand va v5-year vuseful vlife. vCox vexpects vthe vmachine vto
vrun vfor v15,000 vmachine vhours. vThe vmachine vwas vactually vused vfor v4,200 vhours
vin v2019 vand v3,450 vhours vin v2020.
Refer vto vthe vinformation vfor vCox vInc. vabove. vWhat vwould vbe vthe vbalance vin vthe
vaccumulated vdepreciation vaccount vat vDecember v31, v2020, vif vthe vstraight-line
vmethod vwere vused?
A.) v$156,000
B.) v$160,000
C.) v$312,000
D.) v$328,000 v- vCORRECT✅✅C
Cox vInc. vacquired va vmachine vfor v$800,000 von vJanuary v1, v2019. vThe vmachine vhas
va vsalvage vvalue vof v$20,000 vand va v5-year vuseful vlife. vCox vexpects vthe vmachine vto
vrun vfor v15,000 vmachine vhours. vThe vmachine vwas vactually vused vfor v4,200 vhours
vin v2019 vand v3,450 vhours vin v2020.
Refer vto vthe vinformation vfor vCox vInc. vabove. vWhat vamount vwould vCox vrecord vas
vdepreciation vexpense vat vDecember v31, v2020, vif vthe vdouble-declining-balance
vmethod vwere vused?
A.) v$187,200
B.) v$192,000
C.) v$195,200
D.) v$312,000 v- vCORRECT✅✅B
Cox vInc. vacquired va vmachine vfor v$800,000 von vJanuary v1, v2019. vThe vmachine vhas
va vsalvage vvalue vof v$20,000 vand va v5-year vuseful vlife. vCox vexpects vthe vmachine vto
vrun vfor v15,000 vmachine vhours. vThe vmachine vwas vactually vused vfor v4,200 vhours
vin v2019 vand v3,450 vhours vin v2020.
Refer vto vthe vinformation vfor vCox vInc. vabove. vWhat vamount vwould vCox vrecord vas
vdepreciation vexpense vfor v2019 vif vthe vunits-of-production vmethod vwere vused v(Note:
vRound vyour vanswer vto vthe vnearest vdollar)?
A.) v$179,400
B.) v$184,000
And Detailed Answers
ABC vAdvisors vis vbeing vsued vby va vformer vcustomer. vABC's vlawyers vsay vthat vit vis
vpossible, vbut vnot vprobable, vthat vthe vcompany vwill vlose vthe vlawsuit vand vthe vtrial
vshould vlast vapproximately v18 vmore vmonths. vShould vABC vlose, vthey vwill vmost
vlikely vhave vto vpay vapproximately v$750,000. vHow vshould vthis vlawsuit vbe vreported
vin vthe vfinancial vstatements?
A.) vCurrent vliability vof v$750,000 vand vExpense vof v$750,000
B.) vLong-term vliability vof v$750,000 vand vExpense vof v$750,000
C.) vNo vdisclosure vis vrequired.
D.) vNo veffect von vthe vbalance vsheet vor vincome vstatement, vbut vdescribed vin vthe
vfootnotes. v- vCORRECT✅✅D
Anniston vCompany vpurchased vequipment vand vincurred vthe vfollowing vcosts:
Purchase vprice
$68,500
Cost vof vtrial vruns
400
Installation vcosts
325
Sales vtax
3,425
What vis vthe vcost vof vthe vequipment?
A.) v$68,500
B.) v$71,925
C.) v$72,250
D.) v$72,650 v- vCORRECT✅✅D
The vcost vprinciple vrequires vthat vcompanies vrecord vfixed vassets vat:
A.) vfair vvalue.
B.) vbook vvalue.
C.) vhistorical vcost.
D.) vmarket vvalue. v- vCORRECT✅✅C
, When vdepreciation vis vrecorded veach vperiod, vwhat vaccount vis vdebited?
A.) vDepreciation vExpense
B.) vCash
C.) vAccumulated vDepreciation
D.) vThe vfixed vasset vaccount vinvolved v- vCORRECT✅✅A
Cox vInc. vacquired va vmachine vfor v$800,000 von vJanuary v1, v2019. vThe vmachine vhas
va vsalvage vvalue vof v$20,000 vand va v5-year vuseful vlife. vCox vexpects vthe vmachine vto
vrun vfor v15,000 vmachine vhours. vThe vmachine vwas vactually vused vfor v4,200 vhours
vin v2019 vand v3,450 vhours vin v2020.
Refer vto vthe vinformation vfor vCox vInc. vabove. vWhat vwould vbe vthe vbalance vin vthe
vaccumulated vdepreciation vaccount vat vDecember v31, v2020, vif vthe vstraight-line
vmethod vwere vused?
A.) v$156,000
B.) v$160,000
C.) v$312,000
D.) v$328,000 v- vCORRECT✅✅C
Cox vInc. vacquired va vmachine vfor v$800,000 von vJanuary v1, v2019. vThe vmachine vhas
va vsalvage vvalue vof v$20,000 vand va v5-year vuseful vlife. vCox vexpects vthe vmachine vto
vrun vfor v15,000 vmachine vhours. vThe vmachine vwas vactually vused vfor v4,200 vhours
vin v2019 vand v3,450 vhours vin v2020.
Refer vto vthe vinformation vfor vCox vInc. vabove. vWhat vamount vwould vCox vrecord vas
vdepreciation vexpense vat vDecember v31, v2020, vif vthe vdouble-declining-balance
vmethod vwere vused?
A.) v$187,200
B.) v$192,000
C.) v$195,200
D.) v$312,000 v- vCORRECT✅✅B
Cox vInc. vacquired va vmachine vfor v$800,000 von vJanuary v1, v2019. vThe vmachine vhas
va vsalvage vvalue vof v$20,000 vand va v5-year vuseful vlife. vCox vexpects vthe vmachine vto
vrun vfor v15,000 vmachine vhours. vThe vmachine vwas vactually vused vfor v4,200 vhours
vin v2019 vand v3,450 vhours vin v2020.
Refer vto vthe vinformation vfor vCox vInc. vabove. vWhat vamount vwould vCox vrecord vas
vdepreciation vexpense vfor v2019 vif vthe vunits-of-production vmethod vwere vused v(Note:
vRound vyour vanswer vto vthe vnearest vdollar)?
A.) v$179,400
B.) v$184,000
