Question

1-A long-term asset is recorded at the:

Cost of the asset.

Additional costs to get the asset ready for use.

Cost of the asset plus all costs necessary to the asset ready for use.

Cost of the asset less all costs necessary to the asset ready for use.


2- The Open Grill incurred the following costs in acquiring a new piece of land:
Cost of the land

$

80,000

Commissions

4,800

Liability insurance for the first year

1,200

Cost of removing existing building

20,000

Sale of salvaged materials

(4,000

)

Total costs

$

102,000

What is the total recorded cost of the land?

$102,000.

$100,800.

$106,000.

$80,000.

3-
The Cheese Factory incurred the following costs related to acquiring a new piece of equipment:
Cost of the equipment

$

50,000

Sales tax (8%)

4,000

Shipping

3,000

Installation

2,000

Depreciation during the first month

1,000

Total costs

$

60,000

What is the total recorded cost of the equipment?

$60,000.

$50,000.

$57,000.

$59,000.


4- Which of the following is properly recorded as an intangible asset?

An internally developed trademark.

A piece of land.

A purchased patent.

An internally developed copyright.

5-
Which of the following correctly describes the nature of depreciation?

Depreciation represents the valuation of property, plant, and equipment over its service life.

Depreciation represents the valuation of an intangible asset over its service life.

Depreciation represents the allocation of the cost of property, plant, and equipment over its service life.

Depreciation represents the allocation of the cost of an intangible asset over its service life.

6-Accumulated depreciation is

An expense account.

An asset.

A contra-asset.

A liability.


7-Depreciation in accounting is the:

Decrease in fair value of an asset.

Decrease in selling price of an asset.

Allocation of an asset’s cost to an expense over time.

Change in fair value of an asset.

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Answer 1

A long-term asset is recorded at the cost of the asset plus all costs necessary to get the asset ready for use. The total recorded cost of the land is $102,000. The total recorded cost of the equipment is $57,000.

Step-by-step explanation:

1. A long-term asset is recorded at the cost of the asset plus all costs necessary to get the asset ready for use.

2. The total recorded cost of the land is $102,000.

3. The total recorded cost of the equipment is $57,000.

4. An internally developed trademark is properly recorded as an intangible asset.

5. Depreciation represents the allocation of the cost of property, plant, and equipment over its service life.

6. Accumulated depreciation is a contra-asset.

7. Depreciation in accounting is the allocation of an asset’s cost to an expense over time.