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Question 1A company purchased for cash a machine with a list price of $90,000. The machine was shipped FOB shipping point at a cost of $5,000. Installation and test runs of the machine cost $3,000. The recorded acquisition cost of the machine is which amount?

1	$98,000
2	$128,000
3	$90,000
4	$93,000

Question 2 Small, ordinary repairs made to keep a truck running over its useful life have been debited to the Vehicles account. As a result of this, which of the following occurred?

1	The balance in the Vehicles account was correctly stated.
2	The balance in the Vehicles account was overstated.
3	The expenses for the period were overstated.
4	The net income for the period was understated.

Question 3 What is the annual straight-line depreciation for an asset that cost $34,600, has an estimated service life of 8 years, and an estimated salvage value of $1,400?

1	$4,150
2	$1,450
3	$4,325
4	$4,500

Question 4 An asset cost $50,000, has an estimated salvage value of $1,500, and an estimated useful life of 8 years. What is thedouble-declining-balance depreciation rate?

1	20.0%
2	25.0%
3	16.0%
4	32.5%

Question 5 An asset having a four-year service life and a salvage value of $5,000 was acquired for $45,000 cash on June 20. Ignore the half-year convention and calculate the depreciation expense at the end of the first year, December 31?

1	$10,000, under the straight-line method
2	$22,500, under the double-declining-balance method
3	$7,000, under the straight-line method
4	$11,250, under the double-declining-balance method

Question 6 Publicly traded companies can use a depreciation method that does not conform to generally accepted accounting principles but is based on a declining-balance method. What is the name of this accelerated depreciation method?

1	Asset Cost Recovery Statement
2	Asset Cost Recognition System
3	Modified Accelerated Cost Recovery System
4	Accelerated Cost Recovery System

Question 7 On June 28, 2011, a business sold for $1,500 a plant asset that cost $5,000. The asset had a 5-year useful life, nosalvage value, and had been used by the business since January 1, 2008. Straight-line depreciation was used. The fiscal year ends on December 31. What was the result of selling the plant asset?

1	No gain or loss on the disposal of plant assets
2	A $1,000 gain on the disposal of plant assets
3	A $500 loss on the disposal of plant assets
4	A $500 unrecognized gain on the sale of a plant asset.

Question 8 Your company currently is generating normal earnings that are equal to a 12% return on net identifiable assets of $450,000. A comparable company is generating normal earnings that are equal to 10% return on net identifiable assets of $450,000. What is the estimated goodwill of your company, when compared to the other company?

1	$90,000
2	$45,000
3	$9,000
4	$15,000

Question 9 The Baker Mining Company acquired an iron ore deposit for $2,000,000. The company's geologist estimated the deposit to contain 1,500,000 tons of iron ore. At the end of the first year, 60,000 tons had been extracted. The end-of-year journal entry to record the depletion of the iron ore would include which of the following?

1	A credit to Iron Ore Inventory of $45,000
2	A credit to Accumulated Depletion of $80,000
3	A debit to Iron Ore Inventory of $50,000
4	None the above, until all of the ore is extracted

Question 10 Which of the following are investing activities?

1	Selling a plant asset
2	Exchanging an old asset and cash for a new plant asset
3	Depreciating or amortizing an asset
4	Both (A) and (B)

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