University of Texas - MATH 1301 QUIZ 2: 1)Merry Co

University of Texas - MATH 1301

QUIZ 2:

1)Merry Co. purchased a machine costing ?125,000 for its manufacturing operations and paid shipping costs of ?20,000. Merry spent an additional ?10,000 in testing and preparing the machine for use. What amount should Merry record as cost of the machine?

a. 155,000                    b. 145,000          c. 135,000              d. 125,000

2. Peterson, Inc. purchased a machine under a deferred payment contract on December 31, 20x1. Under the terms of the contract, Peterson is required to make eight annual payments of ?140,000 each beginning December 31, 20x2. The appropriate interest rate is 8%. The purchase price of the machine is

a. 1,389,190                b. 1,120,000       c. 868,900             d. 804,520

3. Marburg Manufacturing Company purchased a machine on January 2, 20x2. The invoice price of the machine was ?40,000, and the vendor offered a 2 percent discount for payment within ten days. The following additional costs were incurred in connection with the machine:

If the invoice is paid within the discount period, Marburg should record the acquisition cost of the machine at

a. 41,650                      b. 41,100              c. 40,400               d. 39,200

4. On July 1, 20x1, Town Company purchased for ?540,000 a warehouse building and the land on

           which it is located. The following data were available concerning the property:                                            

Town should record the land at

a. 140,000                    b. 180,000            c. 200,000            d. 216,000

5. The Oscar Corporation acquired land, buildings, and equipment from a bankrupt company at a lump-sum price of ?180,000. At the time of acquisition, Oscar paid ?12,000 to have the assets appraised. The appraisal disclosed the following values:

What cost should be assigned to the land, buildings, and equipment, respectively? a. 64,000, 64,000, and 64,000

b. 90,000, 60,000, and 30,000

c. 96,000, 64,000, and 32,000

d. 120,000, 80,000, and 40,000

6. On December 1, 20x1, Boyd Co. purchased a ?400,000 tract of land for a factory site. Boyd razed an old building on the property to make way for the construction of the new factory. Boyd sold the materials it salvaged from the demolition. Boyd incurred additional costs and realized salvage proceeds during December 20x1 as follows:

In its December 31, 20x1 statement of financial position, Boyd should report a balance in the land account of

a. 464,000                    b. 460,000            c. 442,000            d. 422,000

7. On February 12, Laker Company purchased a tract of land as a factory site for ?175,000. An existing building on the property was razed and construction was begun on a new factory building in March of the same year. Additional data are available as follows:

8. Amble, Inc. exchanged a truck with a carrying amount of ?12,000 and a fair value of ?20,000 for a truck and ?5,000 cash. The fair value of the truck received was ?15,000. At what amount should Amble record the truck received in the exchange?

a. 7,000                         b. 9,000                c. 12,000               d. 15,000

9. On March 31, 20x1, Winn Company traded in an old machine having a carrying amount of

?16,800, and paid a cash difference of ?6,000 for a new machine having a total cash price of

?20,500. On March 31, 20x1, what amount of loss should Winn recognize on this exchange? a. 0    b. 2,300                             c. 3,700                 d. 6,000

10. On October 1, Takei, Inc. exchanged 8,000 shares of its ?25 par value ordinary share for a parcel of land to be used as site for a new plant. Takei's ordinary share had a fair value of ?80 per share on the exchange date. Takei received ?36,000 from the sale of scrap when an existing building on the site was razed. The land should be carried at

a. 200,000                    b. 236,000          c. 604,000              d. 640,000