Question :
39.Chesapeake Company paid $475,000 for a basket purchase that included : 1254519
39.Chesapeake Company paid $475,000 for a basket purchase that included office furniture, a building and land. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Office furniture – $95,000; Building – $370,000, Land – $66,000. Based on this information the amount of cost that would be allocated to the office furniture is closest to:
A. $95,000.
B. $85,500.
C. $158,333.
D. $52,500.
40.Anchor Company purchased a manufacturing machine with a list price of $80,000 and received a 2% cash discount on the purchase. The machine was delivered under terms FOB shipping point, and freight costs amounted to $1,200. Anchor paid $1,500 to have the machine installed and tested. Insurance costs to protect the asset from fire and theft amounted to $1,800 for the first year of operations. Based on this information, the amount of cost recorded in the asset account would be:
A. $81,100.
B. $79,600.
C. $82,900.
D. $78,400.
41.On March 1, Bunker Hill Company purchased a new stamping machine with a list price of $68,000. The company paid cash for the machine; therefore, it was allowed a 5% discount. Other costs associated with the machine were: transportation costs, $1,100; sales tax paid, $2,720; installation costs, $900; routine maintenance during the first month of operation, $1,000. The cost recorded for the machine was:
A. $68,420.
B. $64,600.
C. $69,320.
D. $70,320.
42.Leland Co. paid $400,000 for a purchase that included land, building, and office furniture. An appraiser provided the following estimates of the market values of the assets if they had been purchased separately: Land, $50,000, Building, $370,000, and Office Furniture, $80,000. Based on this information the cost that would be allocated to the land is:
A. $35,000.
B. $40,000.
C. $50,000.
D. $53,500.
43.On January 1, 2013, Frankfort Company made a basket purchase including land, a building and equipment for $760,000. The appraised values of the assets are $40,000 for the land, $680,000 for the building and $80,000 for equipment. Frankfort uses the double declining balance method of depreciation for the equipment which is estimated to have a useful life of four years and a salvage value of $10,000. The depreciation expense for 2013 for the equipment is:
A. $40,000.
B. $20,000.
C. $19,000.
D. $38,000.
44.On January 1, 2013, Innovative Manufacturing Company purchased equipment with a list price of $22,000 with a 5% cash discount. A total of $1,000 was paid for installation and testing. During the first year, Innovative paid $1,500 for insurance on the equipment and another $550 for routine maintenance and repairs. Innovative uses the units-of-production method of depreciation. Useful life is estimated at 100,000 units, and estimated salvage value is $2,000. During 2013, the equipment produced 13,000 units. What is closest to the amount of depreciation for the year?
A. $2,847
B. $2,587
C. $3,042
D. $2,782
45.Which of the following is considered an accelerated depreciation method?
A. Double declining balance
B. Units of production
C. MACRS
D. Both A and C
46.Which method of depreciation is used by most U. S. companies for financial reporting purposes?
A. Straight line
B. Units of production
C. Double declining balance
D. MACRS
47.Ferris purchased equipment that cost $45,000. The equipment had a useful life of 5 years and a $5,000 salvage value. Ferris used the double-declining-balance method to depreciate its assets. Which of the following choices accurately reflects how the recognition of the first year’s depreciation would affect the company’s financial statements?
A. Option A
B. Option B
C. Option C
D. Option D
48.On January 1, 2013 Midwest Co. purchased a truck that cost $38,000. The truck had an expected useful life of 10 years and a $4,000 salvage value. The amount of depreciation expense recognized in 2014 assuming that Midwest uses the double declining-balance method is:
A. $5,440.
B. $6,080.
C. $3,800.
D. $7,600.
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