When a closely held corporation issues preferred stock for land, the land should be record

When a closely held corporation issues preferred stock for land, the land should be recorded at the

a.Total par value of the stock issued

b.Total book value of the stock issued

c.Appraised value of the land

d.Total liquidating value of the stock issued

2.A principal objection to the straight-line method of depreciation is that it

a.Provides for the declining productivity of an aging asset

b.Ignores variations in the rate of asset use

c.Tends to result in a constant rate of return on a diminishing investment base

d.Gives smaller periodic write-offs than decreasing charge methods

3.Property, plant, and equipment are conventionally presented n the balance sheet at

a.Replacement cost less accumulated depreciation

b.Historical cost less salvage value

c.Original cost adjusted for general price level changes

d.Acquisition cost less depreciated portion thereof

4.As generally used in accounting, depreciation

a.Is a process of asset valuation for balance sheet purposes

b.Applies only to long-lived intangible assets

c.Is used to indicate a decline in market value of a long-lived asset

d.Is an accounting process that allocates long-lived asset cost to accounting periods

5.Lyle, Inc., purchased certain plant assets under a deferred payment contract on December 31, 2014. The agreement was to pay $20,000 at the time of purchase and $20,000 at the end of each of the next five years. The plant assets should be valued at

a.The present value of a $20,000 ordinary annuity for five years

b.$120,000

c.$120,000 less imputed interest

d.$120,000 plus imputed interest

6.For income statement purposes, depreciation is a variable expense if the depreciation method used for book purposes is

a.Units of production

b.Straight line

c.Sum-of-the-year’s-digits

d.Declining balance

7.A method that excludes salvage value from the base for the depreciation calculation is

a.Straight line

b.Sum-of-the-year’s digits

c.Double-declining balance

d.Productive output

8.When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant, the cost incurred to tear down the building should be

a.Expensed as incurred

b.Added to the cost of the plant

c.Added to the cost of the land

d.Amortized over the estimated time period between the tearing down of the building   and the completion of the plant

9.A machine with a four-year estimated useful life and an estimated 15 percent salvage value was acquired on January 1, 2012. On December 31, 2014, the accumulated depreciation using the sum-of-year’s digits method would be

a.(Original cost less salvage value) multiplied by 9/10

b.Original cost multiplied by 9/10

c.Original cost multiplied by 9/10 less total salvage value

d.(Original cost less salvage value) multiplied by 1/10

10.The theoretical justification for reporting depreciation expense is

a.Depreciation expense represents a decrease in the value of the asset that has occurred during the accounting period.

b.Depreciation expense represents the impairment of the asset that has occurred during the accounting period.

c.Depreciation expense represents the unrealized loss that has been incurred by using the asset during the accounting period.

d.Depreciation expense represents the allocation of the historical cost of the asset that has been applied to the accounting period.