Question : 44. An asset which costs $18,800 and has accumulated depreciation of : 1229828

 

 

44. An asset which costs $18,800 and has accumulated depreciation of $6,000 is sold for $11,600. What amount of gain or loss will be recognized when the asset is sold? 
A. A gain of $1,200.
B. A loss of $1,200.
C. A loss of $7,200.
D. A gain of $7,200.

 

 

45. The entry to record amortization on a copyright would include: 
A. A debit to amortization expense
B. A debit to accumulated amortization
C. A debit to copyright
D. A credit to amortization expense

 

 

46. Which of the following would not be considered part of the cost of equipment recently purchased? 
A. Sales tax.
B. Transportation charges.
C. Installation and setup charges.
D. All three are capitalized costs.

 

 

47. Armstrong Company recently acquired a new computer system. Which of the following costs associated with the computer should not be debited to the Equipment account? 
A. Insurance coverage purchased by Armstrong to cover the computer during shipment from the manufacturer.
B. Wages paid to system programmers hired to prepare the new computer for use.
C. Replacement of several circuit boards damaged during installation.
D. Installation of new electrical power supplies required for the computer.

 

 

48. Coca-Cola’s famous name printed in distinctive typeface is an example of: 
A. A trademark.
B. A patent.
C. A copyright.
D. Goodwill.

 

 

49. When comparing the units-of-output method of depreciation with straight-line depreciation: 
A. The depreciation expense in the first year will always be greater under units-of-output method.
B. The depreciation expense in the first year will always be less under the units-of-output method.
C. The depreciation expense in the first year will always be the same.
D. The depreciation expense in the first year may be greater than, equal to, or less under the units-of-output method.

 

 

50. The fair market value of Lewis Company’s net identifiable assets is $5,000,000. Martin Corporation purchases Lewis’ entire business for $5,800,000. Which of the following statements is not correct? 
A. Martin Corporation paid $800,000 for goodwill generated by Lewis Company.
B. Martin feels that Lewis Company has the ability to generate earnings in excess of a normal return on net identifiable assets.
C. Martin will record amortization expense over a period not to exceed 40 years.
D. Martin Corporation will record $800,000 to goodwill, an intangible asset, which will be reported in its balance sheet.

 

 

51. Tomassi Company paid $450,000 to acquire a piece of real estate consisting of land and an office building with a parking lot. In this situation: 
A. The purchase price should be apportioned among the Land, Land Improvement, and Building accounts.
B. The entire purchase price should be debited to the Plant and Equipment account.
C. Land, Land Improvement, and Building accounts should each be debited for the respective appraisal value of each item.
D. Allocation of the entire $450,000 to Land results in an understatement of net income in the current and future accounting periods.

 

 

52. Which of the following is a capital expenditure? 
A. Sales tax paid in conjunction with the purchase of office equipment.
B. Monthly rent of a delivery truck.
C. Research and development costs.
D. Small expenditures to acquire long-lived assets, such as $13 to purchase a wastebasket.

 

 

53. The legal life of most patents is: 
A. 5 years.
B. 20 years.
C. 40 years.
D. 50 years.

 

 

 

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