Kingston Company purchased a piece of equipment on January 1, 2012. The equipment cost $120,000 and had an estimated life of 8 years and a salvage value of $15,000. What was the depreciation expense for the asset for 2013 under the double-declining-balance method?

$22,500.

$30,000.

$13,000.

$23,438.

Which of the following statements concerning financial statement presentation is not a true statement?

The balances of all individual assets, as they appear in the subsidiary plant ledger, should be disclosed in the footnotes.

Intangibles are reported separately under Intangible Assets.

The balances of major classes of assets may be disclosed in the footnotes.

The balances of the accumulated depreciation of major classes of assets may be disclosed in the footnotes.

The book value of a plant asset is the difference between the

cost of the asset and the amount of depreciation expense for the year.

replacement cost of the asset and its historical cost.

cost of the asset and the accumulated depreciation to date.

proceeds received from the sale of the asset and its original cost.

Research and development costs

must be expensed when incurred under generally accepted accounting principles.

are classified as intangible assets.

are capitalized and then amortized over a period not to exceed 40 years.

should be included in the cost of the patent they relate to.

A company purchased factory equipment on June 1, 2013, for $80,000. It is estimated that the equipment will have a $5,000 salvage value at the end of its 10-year useful life. Using the straight-line method of depreciation, the amount to be recorded as depreciation expense at December 31, 2013, is

$7,500.

$3,750.

$4,375.

$3,125.

Interest may be included in the acquisition cost of a plant asset

if the asset acquisition is financed by a long-term note payable.

if it is a part of a lump-sum purchase.

during the construction period of a self-constructed asset.

if the asset is purchased on credit.

Gagner Clinic purchases land for $150,000 cash. The clinic assumes $1,500 in property taxes due on the land. The title and attorney fees totaled $1,000. The clinic has the land graded for $2,200. What amount does Gagner Clinic record as the cost for the land?

$150,000

$132,500

$154,700

$132,200

The effective-interest method for amortization of bond discounts is required under

Both GAAP and IFRS.

GAAP only.

IFRS only.

Neither GAAP or IFRS

If bonds can be converted into common stock,

they will carry a higher interest rate than comparable bonds without the conversion feature.

the bondholder may benefit if the market price of the common stock increases substantially.

they will be converted only if the issuer calls them in for conversion.

they will sell at a lower price than comparable bonds without a conversion feature.

The discount on bonds payable or premium on bonds payable is shown on the balance sheet as an adjustment to bonds payable to arrive at the carrying value of the bonds. Indicate the appropriate addition or subtraction to bonds payable:

Premium on Discount on

Bonds Payable Bonds Payable

Add Add

Deduct Add

Add Deduct

Deduct Deduct

From the standpoint of the issuing company, a disadvantage of using bonds as a means of long-term financing is that

income to stockholders may increase as a result of trading on the equity.

interest must be paid on a periodic basis regardless of earnings.

the bondholders do not have voting rights.

bond interest is deductible for tax purposes.

A bondholder that sends in a coupon to receive interest payments must have a(n)

mortgage bond.

unsecured bond.

bearer bond.

serial bond.

A cash register tape shows cash sales of $1,500 and sales taxes of $120. The journal entry to record this information is

Cash1,620

Sales Revenue1,620

Cash1,620

Sales Taxes Payable120

Sales Revenue1,500

Cash1,500

Sales Tax Expense120

Sales Revenue1,620

Cash1,620

Sales Revenue1,500

Sales Taxes Revenue 120

On August 1, 2012, a company borrowed cash and signed a one-year interest-bearing note on which both the face value and interest are payable on August 1, 2013. How will the note payable and the related interest be classified in the December 31, 2012, balance sheet?

Notes PayableInterest Payable

Current LiabilityCurrent liability

Noncurrent LiabilityNot shown

Current LiabilityNoncurrent liability

Noncurrent LiabilityCurrent liability

Admire County Bank agrees to lend Givens Brick Company $300,000 on January 1. Givens Brick Company signs a $300,000, 8%, 9-month note. What entry will Givens Brick Company make to pay off the note and interest at maturity assuming that interest has been accrued to September 30?

Interest Payable12,000

Notes Payable300,000

Interest Expense6,000

Cash 318,000

Notes Payable318,000

Cash 318,000

Notes Payable300,000

Interest Expense18,000

Cash318,000

Interest Expense18,000

Notes Payable300,000