Intermediate Accounting Quiz

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1. | Question : | (TCO 1) The acquisition costs of property, plant, and equipment do not include: | | | Student Answer: | | The ordinary and necessary costs to bring the asset to its desired condition and location for use. | | | | The net invoice price. | | | | Legal fees, delivery charges, installation, and any applicable sales tax. | | | | Maintenance costs during the first 30 days of use | | Instructor Explanation: | Chapter 10 | | | | Points Received: | 4 of 4 | | Comments: | | | | 2. | Question : | (TCO 1) Cantor Corporation acquired a manufacturing facility on four acres of land for a lump-sum price of $8,000,000. The building included used but functional equipment. According to independent appraisals, the fair values were $4,500,000, $3,000,000, and $2,500,000 for the building, land, and equipment, respectively. The initial values of the building, land, and equipment would be: | | | Student Answer: | | Option a | | | | Option b | | | | Option c | | | | Option d | | Instructor Explanation: | | | | | Points Received: | 4 of 4 | | Comments: | | | | 3. | Question : | (TCO 3) When selling property, plant, and equipment for cash: | | | Student Answer: | | The seller recognizes a gain or loss for the difference between the cash received and the fair value of the asset sold. | | | | The seller recognizes a gain or loss for the difference between the cash received and the book value of the asset sold. | | | | The seller recognizes losses, but not gains. | | | | None of the above. | | Instructor Explanation: | Chapter 10 | | | | Points Received: | 4 of 4 | | Comments: | | | | 4. | Question : | (TCO 1) Interest is not capitalized for: | | | Student Answer: | | Assets that are

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