ACC 556 Week 6 Quiz

ACC 556 Week 6 Quiz | Assignment Help | Strayer University 

ACC 556 Week 6 Quiz

 

Question 1

 A company purchased land for $350000 cash. The real estate brokers' commission was $19000 and $43000 was spent for demolishing an old building on the land before construction of a new building could start. Under the historical cost principle, the cost of land is

 

 

o   $393000.

o   $369000.

o   $350000.

o   $412000.

 

Question 2

 A company purchased land for $85200 cash. The real estate brokers' commission was $4400 and $9900 was spent for demolishing an old building on the land before construction of a new building could start. Proceeds from salvage of the demolished building were $1100. Under the historical cost principle, the cost of land is

 

 

o   $94000.

o   $99500.

o   $98400.

o   $85200.

 

Question 3

 Which of the following assets is not properly classified as property, plant, and equipment?

 

o   A truck held for resale by an automobile dealership

o   Land used in ordinary business operations

o   A building used as a factory

o   Land improvements, such as parking lots and fences

Question 4

One characteristic of a plant asset is that it is

 

o   Intangible.

o   Used in the operations of a business.

o   Held for sale in the ordinary course of the business.

o   Not currently used in the business but held for future use.

 

 

Question 5

Which one of the following items is not considered a part of the cost of a truck purchased for business use?

 

o   Freight charges

o   Cost of lettering on side of truck

o   Sales tax

o   Truck license

 

 

Question 6

 Which of the following would not be charged to the Equipment account?

 

o   Cost of trial runs

o   Electricity used by the machine

o   Installation costs

o   Freight costs

 

 

 

 

 

Question 7

 Which of the following assets does not decline in service potential over the course of its useful life?

 

o   Furnishings

o   Land

o   Fixtures

o   Equipment

 

 

Question 8

 The four subdivisions of plant assets are

 

o   Furnishings and fixtures, land, buildings, and equipment.

o   Property, plant, equipment, and land.

o   Intangibles, land, buildings, and equipment.

o   Land, land improvements, buildings, and equipment.

 

 

Question 9

The cost of land does not include

 

o   Real estate brokers' commission.

o   Annual property taxes.

o   Accrued property taxes assumed by the purchaser.

o   Title fees.

 

 

 

 

 

 

Question 10

The Land account would include all of the following costs except

 

o   The cost of tearing down a building.

o   Drainage costs.

o   Commissions paid to real estate agents.

o   The cost of building a fence.

 

 

Question 11

Ivanhoe Clinic purchases land for $540000 cash. The clinic assumes $4200 in property taxes due on the land. The title and attorney fees totaled $2800. The clinic had the land graded for $7100. What amount does Ivanhoe Clinic record as the cost for the land?

 

o   $554100.

o   $547000.

o   $547100.

o   $540000.

 

 

Question 12

 Carla Vista Co. purchases land for $140000 cash. Carla Vista assumes $5200 in property taxes due on the land. The title and attorney fees totaled $2900. Carla Vista has the land graded for $3500. They paid $21000 for paving of a parking lot. What amount does Carla Vista record as the cost for the land?

 

 

o   $146400.

o   $151600.

o   $140000.

o   $172600.

 

 

Question 13

 Oriole Company buys land for $158000 in 2021. As of 3/31/22, the land has appreciated in value to $166200. On 12/31/22, the land has an appraised value of $169600. By what amount should the Land account be increased in 2022?

 

 

o   $11600.

o   $8200.

o   $0.

o   $3400.

 

 

Question 14

 Whispering Winds Corp. purchased land for a new parking lot for $150000. The paving cost $183000 and the lights to illuminate the new parking area cost $64000. Which of the following statements is true with respect to these additions?

 

o   $397000 should be debited to the Land account.

o   $247000 should be debited to Land Improvements.

o   $397000 should be debited to Land Improvements.

o   $333000 should be debited to the Land account.

 

 

Question 15

 Sheridan Company acquires land for $71000 cash. Additional costs are as follows.

Removal of shed      $400

Filling and grading   1800

Salvage value of lumber of shed   170

Broker commission  1330

Paving of parking lot           12000

Closing costs 580

Sheridan will record the acquisition cost of the land as

 

o   $75280.

o   $74940.

o   $72910.

o   $71000.

 

 

Question 16

 Cullumber Company acquires land for $300000 cash. Additional costs are as follow.

Removal of shed      $3000

Filling and grading   6400

Salvage value of lumber of shed   1260

Broker commission  4580

Paving of parking lot           38000

Closing costs 4800

 

Cullumber will record the acquisition cost of the land as

 

o   $317520.

o   $300000.

o   $320040.

o   $318780.

 

 

Question 17

 Sunland Company installs a new parking lot. The paving cost $59000 and the lights to illuminate the new parking area cost $19000. Which of the following statements is true with respect to these additions?

 

 

 

o   $78000 should be debited to Land Improvements.

o   $78000 should be debited to the Land account.

o   $19000 should be debited to Land Improvements.

o   $59000 should be debited to the Land account.

 

 

Question 18

Land improvements should be depreciated over the useful life of the

 

o   Land or land improvements, whichever is longer.

o   Land.

o   Land improvements.

o   Buildings on the land.

 

 

Question 19

 National Molding is building a new plant that will take three years to construct. The construction will be financed in part by funds borrowed during the construction period. There are significant architect fees, excavation fees, and building permit fees. Which of the following statements is true?

 

o   The capitalized cost is equal to the contract price to build the plant less any interest on borrowed funds.

o   Interest is capitalized during the construction as part of the cost of the building.

o   Architect fees are capitalized but building permit fees are not.

o   Excavation fees are capitalized but building permit fees are not.

 

 

 

 

 

 

Question 20

 A company purchases a remote building site for computer operations. The building will be suitable for operations after some expenditures. The wiring must be replaced to computer specifications. The roof is leaky and must be replaced. All rooms must be repainted and recarpeted and there will also be some plumbing work done. Which of the following statements is true?

 

o   The cost of the building will not include the repainting and recarpeting costs.

o   The wiring is part of the computer costs, not the building cost.

o   The cost of the building will include the cost of replacing the roof.

o   The cost of the building is the purchase price of the building, while the additional expenditures are all capitalized as Building Improvements.

 

Question 21

 Cullumber Company purchases a new delivery truck for $78000. The sales taxes are $2900. The logo of the company is painted on the side of the truck for $1600. The truck’s annual license is $120. The truck undergoes safety testing for $240. What does Cullumber record as the cost of the new truck?

 

 

o   $82740.

o   $82860.

o   $80900.

o   $80740.

 

Question 22

Crane Company purchased equipment and these costs were incurred:

Cash price     $65000

Sales taxes     4100

Insurance during transit      700

Installation and testing        950

Total costs     $70750

 

Crane will record the acquisition cost of the equipment as

 

 

 

o   $65000.

o   $69100.

o   $69800.

o   $70750.

 

Question 23

Blue Spruce Corp. purchased a delivery van with a $68000 list price. The company was given a $4200 cash discount by the dealer and paid $2700 sales tax. Annual insurance on the van is $1500. As a result of the purchase, by how much will Blue Spruce Corp. increase its van account?

 

o   $66500.

o   $66500.

o   $68000.

o   $63800.

 

 

Question 24

 Pharoah Company purchased equipment on January 1 at a list price of $165000, with credit terms 3/10, n/30. Payment was made within the discount period. Pharoah paid $5250 sales tax on the equipment and paid installation charges of $1800. Prior to installation, Pharoah paid $5100 to pour a concrete slab on which to place the equipment. What is the total cost of the new equipment?

 

 

o   $177150.

o   $172200.

o   $165150.

o   $170250.

 

 

 

Question 25

 Sheridan Company purchased equipment and these costs were incurred:

Cash price     $59000

Sales taxes     4900

Insurance during transit      780

Installation and testing        1950

Total costs     $66630

 

What amount should be recorded as the cost of the equipment?

 

o   $64680.

o   $59000.

o   $63900.

o   $66630.