7.A company recently purchased a building that it plans to renovate toget ready for use in its operations. All expenditures to repair andrenovate the existing building for its intended use are charged to:A)land.B)land improvements.C)land improvements expense.D)building.8. In a lump-sum purchase of assets, the relative-sales-value is definedas the:A)total price paid less the value of the most valuable asset.B)total price paid compared to the total market value.C)ratio of each asset's market value to the total market value.D)ratio of each asset's market value to the total book value.10. The Augusta Health Company purchased land, buildings andequipment for $2,400,000. The land has been appraised at $915,000, thebuildings at $1,125,000 and the equipment at $510,000. The equipmentaccount will be debited for:A)$541,875.B) $500,000.C)$480,000.D. $410,156

7.A company recently purchased a building that it plans to renovate to get ready for use in its operations. All expenditures to repair and renovate the existing building for its intended use are charged to: A)land. B)land improvements. C)land improvements expense. D)building.

7.A company recently purchased a building that it plans to renovate to get ready for use in its operations. All expenditures to repair and renovate the existing building for its intended use are charged to: A)land. B)land improvements. C)land improvements expense. D)building.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 77DC

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Calculate and allocate basis for the following problems. 1. A property is acquired for a purchase price of $230,000 cash plus acquisition costs of $20,000. The tax assessment for this property is as follows: Assessed Value Land Improvements Total assessments $40,000 160,000 $200,000 a. What is the acquisition basis for this property? b. What is the allocation for land? c. What is the allocation for improvements?
The cost of property acquired by direct cash purchase includes the cash paid and: A. the implied interest on the debt to finance the purchase.B. the market value of any noncash asset surrendered to acquire the asset.C. the estimated residual value of the asset.D. directly attributable costs of bringing the asset to working condition for its intended use.
Which of the following statements if not true? a. Depreciation is the process of allocating the purchase price of an asset minues its residual value to expense, for each period benefited by the asset. b. The cost of an asset includes all acquisition costs necessary to obtain the benefits to be derived from the asset. c. The service life of an asset is the measure of the number of years of service expected from the asset before its disposal. d. The residual value of an asset is the difference between the expected book value of the asset at the end of its service and the cost of disposal.
19 .All amounts paid to acquire a PPE and to get it ready for its intended use are referred to as: A. set up costs. B. expenditures. C)maintenance expense. D)the cost of an asset. 20. Costs that would be included with the purchase of a PPE are: A)the sum of all of the costs incurred to bring the asset to its intended use. B)only costs that exceed a certain amount. C)only the purchase price. D)none of the above. 21. Which of the following should be included in the cost of land? A) Construction cost of a parking lot B)Landscaping C) Real estate brokerage commission D) Lighting
The value of "Property, Plant, & Equipment, net" reported on the balance sheet represents: A) The allocated cost of using the asset for the year. B) The fair market value of the assets. C) The historical cost of the assets D) The cost of the assets not yet expensed on the income statement. The gain or loss from selling an asset reported on the income statement is computed as: A) The difference in the cash received and the historical cost of the assets B) The difference in the fair market value of the asset and the historical cost of the asset. C) The difference in the amount of cash received for the asset less the cost to sell the D) The difference in the book value o f the asset and the cash received for the asset
A non-current asset was acquired for $200,000 on 200-day terms. Which of the following statements regarding the $200,000 is correct? Group of answer choices It is an expenditure, but not a cost nor an expense. It is not a cost, nor an expenditure, nor an expense. It is a cost, but not an expenditure nor an expense. It is a cost and an expenditure, but not an expense. It is a cost and an expense, but not an expenditure.
A gain or loss on disposal of a plant asset is determined by comparing the Ⓒa) book value of the asset with the proceeds received from its sale. b) book value of the asset with the asset's original cost. c) original cost of the asset with the proceeds received from its sale. d) replacement cost of the asset with the asset's original cost.
7. Which of the following statements is true regarding capitalization of interest? A) The minimum amount of interest to be capitalized is determined by multiplying a weighted average interest rate by the amount of average accumulated expenditures on qualifying assets during the period B) Interest cost capitalized in connection with the purchase of land to be used as a building site should be debited to the land account and not to the building account. C) The amount of interest cost capitalized during the period should not exceed the actual interest cost incurred. D) When excess borrowed funds not immediately needed for construction are temporarily invested, any interest earned should be offset against interest cost incurred when determining the amount of interest cost to be capitalized.
Statement 1: When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the original cost.Statement 2: Any gain or loss from the disposal of the investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or lossStatement 3: If owner-occupied property is transferred to investment property that is to be carried at fair value, the difference between the carrying amount of the property and its fair value shall be included in profit or loss.Statement 4: If an entity determines that the fair value of an investment property is not reliably determinable on a continuing basis, the entity shall measure that investment property using the revaluation model. All statements are true. Only two of the statements are true. Only three of the statements are true. All statements are…
Statement 1: When an item of asset is transferred to and from the classification investment property, carried using the cost model, the measurement basis at the date of transfer is the original cost.Statement 2: Any gain or loss from the disposal of the investment property shall be determined as the difference between the net disposal proceeds and the carrying amount of the asset and shall be recognized in profit or lossStatement 3: If owner-occupied property is transferred to investment property that is to be carried at fair value, the difference between the carrying amount of the property and its fair value shall be included in profit or loss.Statement 4: If an entity determines that the fair value of an investment property is not reliably determinable on a continuing basis, the entity shall measure that investment property using the revaluation model. A. Only two of the statements are true. B. All statements are true. C. Only one of the statements is true. D. Only three…
Allocating the cost of a natural resource to the units removed is called amortization. True False 2.Costs incurred to acquire long-lived assets are capital expenditures. True False 3.Accumulated depreciation, as used in accounting, may be defined as: o An expense of doing business. o Funds (or cash) set aside to replace the asset being depreciated. o portion of the cost of plant asset recognized as expense since asset was acquired. o Earnings retained in the business.4. On January 1, 1999, Ubot Inc. purchased a piece of equipment for $60,000. It is estimated to have an economic life of 5 years and a salvage value of $10,000. The 200% declining-balance method for depreciation is used. What is the book value of the asset at the end of year 2000 ? A. o $24,000 B. o $40,000 C. o $36,000 D. o $21,600 5.It is not necessary to disclose the maturity dates of long-term obligations on the financial statements. True False 6.The…
Which statements are correct concerning measurement of cost of property, plant and equipment?I. The purchase price of an item of property, plant and equipment is the cash price equivalent at the date of recognitionII. If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and total payment is recognized as interest expense over the life of the asset.III. If an item of property, plant and equipment is acquired in exchange for a nonmonetary asset or a combination of monetary and nonmonetary asset, the cost of such item is measured at fair value unless the exchange transaction lacks commercial substance or fair value of either asset received or given up is not reliably determinable.IV. If an entity is able to determine reliably the fair value of both the asset given up and asset received in an exchange, the fair value of the asset given up is used to measure the cost of asset received in exchange.