University:
Grand Rapids Community College
Course:
Financial and Managerial Accounting: Information for Decisions - John J. Wild
Academic year:

2024
Views:

101

Pages:

1
Author:

stud_ice13

Solutions to the Multiple Choice Quiz 1. Cost Allocation for Property: o Given:  Total purchase price: $326,000  Appraised values: Land = $175,000, Land Improvements = $70,000, Building = $105,000 o Calculate the allocation by using each asset’s relative market value: Total appraised value=175,000+70,000+105,000=350,000  Land allocation: 175,000350,000×326,000=163,000  Land Improvements allocation: 70,000350,000×326,000=65,200  Building allocation: 105,000350,000×326,000=97,800 o Answer: (b) Land, $163,000; Land Improvements, $65,200; Building, $97,800. 2. Depreciation of a Truck Using Straight-Line Method: o Given:  Cost = $35,000, Useful life = 4 years, Salvage value = $1,000 o Depreciation per year: 35,000−1,0004=8,500 o Answer: (c) $8,500. 3. Double-Declining Balance Depreciation for Machinery: o Given:  Cost = $10,800,000, Useful life = 10 years, Salvage value = $800,000 o Year 1: Depreciation rate = 2×110=20% o Depreciation Year 1=10,800,000×20%=2,160,000 o Year 2: Beginning Book Value=10,800,000−2,160,000=8,640,000 o Depreciation Year 2=8,640,000×20%=1,728,000 o Answer: (c) $1,728,000. 4. Gain or Loss on Sale of a Machine: o Given:  Original cost = $250,000, Accumulated depreciation = $100,000, Sale price = $120,000 o Book Value at sale: 250,000−100,000=150,000 o Since Sale Price < Book Value, calculate loss: 120,000−150,000=−30,000 o Answer: (c) $30,000 loss. 5. Total Asset Turnover Calculation: o Given:  Average Total Assets = $500,000, Net Sales = $550,000 o Total Asset Turnover: 550,000500,000=1.10 o Answer: (b) 1.10.