Question 1 (4 points)Mountain Milk Co. acquired land, buildings, and equipment for a lump sum price of $210,000. At the ...
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Question 1 (4 points)
Mountain Milk Co. acquired land, buildings, and equipment for a lump sum price of $210,000. At the time of acquisition, the land was appraised at $80,000, the buildings at $100,000, and the equipment at $60,000. The cost that should be assigned to the equipment is:
Question 2 (4 points)
In constructing a warehouse for its own use, Ridgeway Company incurred material costs of $25,000, direct labor costs of $60,000, and interest on funds borrowed for construction of $7,200. Ridgewayâs fixed overheat rate is 40% of direct labor. Ridgeway was operating at full capacity during the construction. An outside contractor had bid $120,000 to build the warehouse. The capitalized cost of the warehouse should be:
Question 3 (4 points)
A company had the following information for the current year:
Beginning inventory: $50,000
Purchases: $45,000
Purchase returns: $3,000
Freight-in: $2,000
Freight-out: $1,000
Ending inventory: $37,000
The amount of cost of goods sold for the current year is:
Question 4 (4 points)
Which inventory cost flow method more closely matches the current cost of replacing inventory with the cost of goods sold when prices are changing?
Question 5 (4 points)
In a periodic inventory system, to what account are purchases debited?
InventoryCost of Goods SoldPurchasesAccounts PayableTrueFalse
Question 9 (2 points)
The LIFO perpetual and LIFO periodic methods usually resulting different ending inventory values if sales and purchases are made throughout the month.
Question 10 (2 points)
If a company acquires two assets in a lump sum purchase, it should capitalize each asset at its fair value.
Question 11 (2 points)
An asset acquired by a deferred payment plan may be recorded at the present value of the deferred payments, which is determined by discounting the payments at an appropriate rate of interest.
Question 12 (2points)
If an exchange of nonmonetary assets lacks commercial substance, a company must recognize a loss in full on the exchange but gains only to the extent that cash is involved.
TrueFalseA physical inventory count should be made at least once a year.The Merchandise Inventory account in the year-end trial balance represents ending inventory.The inventory account in the year-end trial balance represents beginning inventory.Material freight-in costs should be treated as an inventory cost.Question 14 (2 points)
The Osage Company uses the sum-of-the-yearsâ digits method of depreciation and computes depreciation to the nearest whole year. What amount should Osage record for second-year depreciation of a chain saw (purchased in April) costing $500, with an expected life of 5 years and an expected residual value of $50.
Question 15 (2 points)
Company A and Company B each purchased a $50,000 asset with an expected life of 10 years on January 1, 2011. Company A uses the straight-line method, and Company B uses the double-declining balance method. Each company has the same sales and expenses other than the depreciation on this asset in 2011. Which of the following statements is true?
Question 16 (2 points)
The depreciable cost of an asset does not include: