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Homework answers / question archive / 1)What falls under current assets? A

1)What falls under current assets? A

Accounting

1)What falls under current assets? A. Accounts payable B. Salary payable C. Inventory 1) A only 2) B only 3) C only 4) A and C only 5) A and B only 6. What falls under current liabilities? A. Marketable security B. Insurance prepayment C. Dividend payable 1) A only 2) B only 3) C only 4) A and C only 5) A and B only

2)Trinkle Co., Inc. made several purchases of long-term assets in Year 1. The details of each purchase are presented here. New Office Equipment 1. List price: $42,000; terms: 2/10 n/30; paid within discount period. 2. Transportation-in: $830. 3. Installation: $460. 4. Cost to repair damage during unloading: $551. 5. Routine maintenance cost after six months: $250. Basket Purchase of Copier, Computer, and Scanner for $52,000 with Fair Market Values 1. Copier, $23,199 2. Computer, $8,151. 3. Scanner, $31,350. Land for New Warehouse with an Old Building Torn Down 1. Purchase price, $79,500. 2. Demolition of building, $4,780. 3. Lumber sold from old building, $2,690. 4. Grading in preparation for new building, $9,000. 5. Construction of new building, $278,000 Required In each of these cases, determine the amount of cost to be capitalized in the asset accounts. Office equipment:
Office equipment: Asset Allocated Costs Office equipment Basket purchase: Asset Allocated Costs Copier Computer Scanner Total

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1)

What falls under current assets?

C. Inventory

Explanation: Current assets are those assets that are cash and cash equivalents, thats is they can be converted into cash in a years time. Inventory is a current assset as the company can sell them and make profits within a short span of time.

Accounts Payable : Its not an asset, its a current liability

Salaries Payable : Current Liability

What falls under current liability?

C. Dividends Payable

Explanation: Like Current Assets, Current liabilities are the dues that the company need to pay off in a short span of time, usually within a year. Dividend payable is a current liability as the shareholders need to paid immediately.

Marketable Security - It is a Current Asset

Prepaid Insurance - It is Current Asset not a liability.

2)

Statement showing allocated costs:

Office equipment:
Particulars Amt in $
List price 42,000
Discount (2% x 42,000) (840)
Transportation-in 830
Installation 460
Total cost 42,450

Note =

Cost to repair will not be capitalised as it does add value to the asset. And routine maintenance will also not to be capitalised.

Basket purchase

Asset

Fair Value($)

% of total fair value

Purchase Price

Working

 Allocated Costs($)
Copier

23,199

37%

52,000

52,000 × 37%

 19,240
Computer

8,151

13%

52,000

52,000 × 13%

 6,760
Scanner

31,350

50%

52,000

52,000 × 50%

 26,000
Total

62,700

       52,000
Land and building
Particulars Land Construction Costs
Purchase price 79,500  
Demolition of building 4,780  
Lumber sold from old building (2,690)  
Grading in preparation for new building 9,000  
Construction of new building   278,000
Total 90,590 278,000

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