WGU D104 OBJECTIVE ASSESSMENT V1
AND V2 NEWEST 2026 TEST BANK| D104
INTERMEDIATE ACCOUNTING II OA
EXAM WITH COMPLETE 300 REAL EXAM
QUESTIONS AND CORRECT VERIFIED
ANSWERS/ ALREADY GRADED A+
(MOST RECENT!!)
1. When can interest costs for an asset be capitalized?
When assets are being prepared for its intended use.
2. Which method should be used to handle indirect costs of self-
constructed assets?
Assigning a pro rata portion of all overhead to the asset.
3. A company purchases land for development into a subdivision. The
land has a factory building on it that will need to be demolished.
Where should the interest costs be allocated?
Cost of the land.
4. In which situation can capitalization of interest be included in the
cost of land?
When purchasing land with the intention of developing it for lot sales.
5. Which item is an asset's involuntary conversion?
,Condemnation of property.
6. Which description accurately characterizes intangible assets?
They lack physical substance.
7. Company X replaced its packaging machine with a more efficient
one. The old packaging machine was sold for $5,000. The following
information was available on the date of the replacement: Purchase
price of new packaging machine: $145,000; Carrying amount of old
packaging machine: $15,000; Fair value of old packaging machine:
$4,000; Installation cost of new packaging machine: $25,000. Which
amount should Company X capitalize as the cost of the new packaging
machine?
$170,000 ($145,000 + $25,000).
8. A company purchases land and a building for $400,000 in a lump
sum transaction. How should these assets be valued?
Use the relative fair market values of each asset.
9. Which annual test is performed for indefinite life intangible assets?
Impairment.
10. Which value should be used to record machinery that was
purchased with a long-term note?
Present value of the future payments.
11. A company's accountant makes a year-end adjusting entry to
account for the amortization of a patent. Which account is credited to
recognize this journal entry?
Patent.
12. Which cost should be capitalized in the year incurred?
,Acquiring a trademark.
13. On July 1 of Year 1, Company A purchased a trademark from
Company B for $2,750,000. An independent research company
estimated that the remaining useful life of the trademark was 10 years.
Its unamortized cost on Company B's books was $1,600,000. What is
Company A's book value for the trademark at the end of Year 1?
$2,612,500 (Purchase Cost - Amortization).
14. A company issues bonds at par with a 10-year term for $1,000,000
on January 1 of Year 1. The bonds bear interest at an annual rate of 7%
payable semiannually on January 1 and July 1. Which journal entry
should be recorded on July 1 of Year 1?
Debit Interest Expense for $35,000; Credit Cash for $35,000.
15. On July 22, a company issues bonds at 105, bonds with a par value
of $1,000,000, due in 20 years. Five years after the issue date, the
company calls the entire issue at 101 and redeems it. At that time, the
unamortized premium balance is $37,500. What is the effect of this
transaction?
$27,500 gain (or $27,500 loss depending on calculation).
16. A company had both outstanding convertible bonds and stock
warrants during the current year. The company determined that if the
bonds had been converted during the year, calculated basic earnings
per share (EPS) would have decreased, and if the warrants had been
exercised during the year, calculated basic EPS would have increased.
How should the company consider these securities when calculating
and presenting diluted earnings per share on the income statement?
The company should include the effect of the bonds, but exclude the effect
of the warrants.
, 17. A company has 10,000 shares of $6 par value common stock
outstanding. The market value of the stock is $10. What is the impact
of a 2-for-1 stock split?
Par value of the stock is reduced to $3 per share ($6/2).
18. A company has a $1,000 bond that is convertible into 100 shares of
common stock (par value $10). How will this conversion impact
earnings per share if the company chooses to convert the debt?
Decreases immediately.
19. A company has acquired 15,000 shares of its treasury stock at $10
per share using the cost method. The company now decides to sell
2,000 of its treasury stock for $12 per share. The journal entry to
record the sale of treasury stock includes a debit to Cash for $24,000.
What is the correct credit entry?
Treasury Stock for $20,000 and Paid-in Capital Treasury Stock for $4,000.
20. What is the formula for Asset Turnover Ratio?
Net sales / average total assets.
21. What is the formula for Profit Margin Ratio?
Net income / total sales.
22. What is the formula for Rate of Return on Assets?
Net income / average total assets.
23. What is the formula for Current Ratio?
Current assets / current liabilities.
24. What is the formula for Acid-test Ratio?
AND V2 NEWEST 2026 TEST BANK| D104
INTERMEDIATE ACCOUNTING II OA
EXAM WITH COMPLETE 300 REAL EXAM
QUESTIONS AND CORRECT VERIFIED
ANSWERS/ ALREADY GRADED A+
(MOST RECENT!!)
1. When can interest costs for an asset be capitalized?
When assets are being prepared for its intended use.
2. Which method should be used to handle indirect costs of self-
constructed assets?
Assigning a pro rata portion of all overhead to the asset.
3. A company purchases land for development into a subdivision. The
land has a factory building on it that will need to be demolished.
Where should the interest costs be allocated?
Cost of the land.
4. In which situation can capitalization of interest be included in the
cost of land?
When purchasing land with the intention of developing it for lot sales.
5. Which item is an asset's involuntary conversion?
,Condemnation of property.
6. Which description accurately characterizes intangible assets?
They lack physical substance.
7. Company X replaced its packaging machine with a more efficient
one. The old packaging machine was sold for $5,000. The following
information was available on the date of the replacement: Purchase
price of new packaging machine: $145,000; Carrying amount of old
packaging machine: $15,000; Fair value of old packaging machine:
$4,000; Installation cost of new packaging machine: $25,000. Which
amount should Company X capitalize as the cost of the new packaging
machine?
$170,000 ($145,000 + $25,000).
8. A company purchases land and a building for $400,000 in a lump
sum transaction. How should these assets be valued?
Use the relative fair market values of each asset.
9. Which annual test is performed for indefinite life intangible assets?
Impairment.
10. Which value should be used to record machinery that was
purchased with a long-term note?
Present value of the future payments.
11. A company's accountant makes a year-end adjusting entry to
account for the amortization of a patent. Which account is credited to
recognize this journal entry?
Patent.
12. Which cost should be capitalized in the year incurred?
,Acquiring a trademark.
13. On July 1 of Year 1, Company A purchased a trademark from
Company B for $2,750,000. An independent research company
estimated that the remaining useful life of the trademark was 10 years.
Its unamortized cost on Company B's books was $1,600,000. What is
Company A's book value for the trademark at the end of Year 1?
$2,612,500 (Purchase Cost - Amortization).
14. A company issues bonds at par with a 10-year term for $1,000,000
on January 1 of Year 1. The bonds bear interest at an annual rate of 7%
payable semiannually on January 1 and July 1. Which journal entry
should be recorded on July 1 of Year 1?
Debit Interest Expense for $35,000; Credit Cash for $35,000.
15. On July 22, a company issues bonds at 105, bonds with a par value
of $1,000,000, due in 20 years. Five years after the issue date, the
company calls the entire issue at 101 and redeems it. At that time, the
unamortized premium balance is $37,500. What is the effect of this
transaction?
$27,500 gain (or $27,500 loss depending on calculation).
16. A company had both outstanding convertible bonds and stock
warrants during the current year. The company determined that if the
bonds had been converted during the year, calculated basic earnings
per share (EPS) would have decreased, and if the warrants had been
exercised during the year, calculated basic EPS would have increased.
How should the company consider these securities when calculating
and presenting diluted earnings per share on the income statement?
The company should include the effect of the bonds, but exclude the effect
of the warrants.
, 17. A company has 10,000 shares of $6 par value common stock
outstanding. The market value of the stock is $10. What is the impact
of a 2-for-1 stock split?
Par value of the stock is reduced to $3 per share ($6/2).
18. A company has a $1,000 bond that is convertible into 100 shares of
common stock (par value $10). How will this conversion impact
earnings per share if the company chooses to convert the debt?
Decreases immediately.
19. A company has acquired 15,000 shares of its treasury stock at $10
per share using the cost method. The company now decides to sell
2,000 of its treasury stock for $12 per share. The journal entry to
record the sale of treasury stock includes a debit to Cash for $24,000.
What is the correct credit entry?
Treasury Stock for $20,000 and Paid-in Capital Treasury Stock for $4,000.
20. What is the formula for Asset Turnover Ratio?
Net sales / average total assets.
21. What is the formula for Profit Margin Ratio?
Net income / total sales.
22. What is the formula for Rate of Return on Assets?
Net income / average total assets.
23. What is the formula for Current Ratio?
Current assets / current liabilities.
24. What is the formula for Acid-test Ratio?
