1. A company paid $326,000 for property that included land, land improvements, and a building. The land was appraised at $175,000, the land improvements were appraised at $70,000, and the building was appraised at $105,000. What is the allocation of property costs to the three assets purchased?
a. Land, $150,000; Land Improvements, $60,000; Building,
$90,000
b. Land, $163,000; Land Improvements, $65,200; Building,
$97,800
c. Land, $150,000; Land Improvements, $61,600; Building,
$92,400
d. Land, $159,000; Land Improvements, $65,200; Building,
$95,400
e. Land, $175,000; Land Improvements, $70,000; Building,
$105,000
2. A company purchased a truck for $35,000 on January 1, 2011. The truck is estimated to have a useful life of four years and an estimated salvage value of $1,000. Assuming that the company uses straight line depreciation, what is the depreciation expense on the truck for the year ended December 31, 2012?
a. $8,750
b. $17,500
c. $8,500
d. $17,000
e. $25,500
3. A company purchased machinery for $10,800,000 on January 1, 2011. The machinery has a useful life of 10 years and an estimated salvage value of $800,000. What is the depreciation expense on the machinery for the year ended December 31, 2012, assuming that the double declining balance method is used?
a. $2,160,000
b. $3,888,000
c. $1,728,000
d. $2,000,000
e. $1,600,000
4. A company sold a machine that originally cost $250,000 for $120,000 when accumulated depreciation on the machine was $100,000. The gain or loss recorded on the sale of this machine is
a. $0 gain or loss.
b. $120,000 gain.
c. $30,000 loss.
d. $30,000 gain.
e. $150,000 loss.
5. A company had average total assets of $500,000, gross sales of $575,000, and net sales of $550,000. The company’s total asset turnover is
a. 1.15
b. 1.10
c. 0.91
d. 0.87
e. 1.05