Question :
91. On January 1, Year 3, All Business Machines (ABM) issued : 1230518
91. On January 1, Year 3, All Business Machines (ABM) issued 1,000 shares of its common stock for a building. Real estate appraisers estimated the building to have a market value of $55,000 on the date of acquisition. The common stock of ABM sold for $50 per share on the date of the acquisition. On January 1, Year 3, ABM paid $650 in real estate transfer taxes, $500 in real estate legal fees for recording the transaction, $1,750 in property taxes for Year 3, and $2,000 for a two-year insurance policy beginning January 1, Year 3. At what amount should the building appear in the Building account of ABM on January 1, Year 3?
A. $51,150
B. $52,900
C. $56,150
D. $59,900
E. $61.900
92. Grand Metropolitan is a consumer foods company headquartered in the United Kingdom. It has followed the common practice in the U.K. of treating expenditures on product development, quality control, and advertising as an expense each year. Grand Metropolitan has now decided to recognize the full value of its brand names as an asset on the balance sheet as of September 30, Year 6. To keep the balance sheet in balance and in accordance with U.K. practice, Grand Metropolitan will likely
A. decrease some other asset
B. increase a current liability
C. increase a noncurrent liability
D. increase shareholders’ equity
E. decrease shareholders’ equity
93. Intangible assets make up 40 percent of the total assets of a particular firm. This firm is most likely to be:
A. a pharmaceutical firm that invests in internal research and development to create new drugs
B. a consumer products company that invests in advertising to create brand recognition
C. an information processing company that develops computer software to use in its business
D. a restaurant business that has grown by acquiring other restaurant chains
E. all of the above
94. The acquisition cost for nonmonetary assets includes
A. invoice price, only
B. invoice price and transportation costs, only
C. invoice price, transportation costs, and installation costs, only
D. invoice price, transportation costs, installation costs, and handling charges, only
E. invoice price, transportation costs, installation costs, handling charges, and first year’s maintenance cost
95. When analyzing a balance sheet
A. one looks for a reasonable match between the nature and mix of assets and mix of liabilities plus shareholders’ equity
B. the proportion of short-term versus long-term financing should match the proportion of current assets versus noncurrent assets
C. the mix of long-term debt versus shareholders’ equity should reflect the degree of operating risk
D. all of the above
E. none of the above
96. Which of the following is not cash?
A. coins and currency
B. bank checks and money orders
C. bank deposits and time deposits
D. corporate stocks and bonds that the firm plans to hold for a relatively short period of time
E. all of the above are not cash
97. At December 31, Year 1, Adam Corporation has 5,000 shares of par value common stock, additional paid-in capital of $25,000, total shareholders’ equity of $80,000, and retained earnings of $45,000. What is the par value per share?
A. $1.00
B. $1.50
C. $2.00
D. $2.50
E. $3.00
98. At December 31, Year 1, Bubba Corporation has par value common stock with a par value of $1.50 per share, Additional paid-in capital of $60,000, total shareholders’ equity of $100,000, and retained earnings of $25,000. What is the number of common stock shares?
A. 5,000
B. 10,000
C. 15,000
D. 20,000
E. 25,000
99. At the end of the third year of operation, GreenWash Corporation has total assets equal to $100,000, liabilities totaling $90,000, and contributed capital of $30,000. What is the balance in retained earnings?
A. $40,000 (Dr)
B. $40,000 (Cr)
C. $20,000 (Dr)
D. $10,000 (Cr)
E. $20,000 (Cr)
100. Peter Company signed a new $36,000 three-year lease beginning October 1, Year 1, for a storage facility for holding merchandise inventory. On October 1, Year 1, Peter Company recorded the first year’s payment of $12,000 in the Prepaid Rent account. There was no balance in the Prepaid Rent account prior to this entry. Peter Company records adjustments only at the calendar year end. At December 31, Year 1, the adjusting entry needed to accurately reflect the correct balances in the Prepaid Rent and Rent Expense accounts would be to debit:
A. Prepaid Rent for $12,000 and credit Rent Expense for $12,000
B. Rent Expense for $12,000 and credit Prepaid Rent for $12,000
C. Prepaid Rent for $3,000 and credit Rent Expense for $3,000
D. Rent Expense for $3,000 and credit Prepaid Rent for $3,000
E. Rent Expense for $9,000 and credit Prepaid Rent for $9,000
