Chapter 10 Practice Materials.docVIP

Chapter 10—Fixed Assets and Intangible Assets MULTIPLE CHOICE 1. A characteristic of a fixed asset is that it is a. intangible b. used in the operations of a business c. held for sale in the ordinary course of the business d. a long term investment ANS: B DIF: Easy OBJ: 10-01 NAT: AACSB Analytic | AICPA FN-Measurement 2. Land acquired so it can be resold in the future is listed in the balance sheet as a(n) a. fixed asset b. current asset c. investment d. intangible asset ANS: C DIF: Easy OBJ: 10-01 NAT: AACSB Analytic | AICPA FN-Measurement 3. Which of the following should be included in the acquisition cost of a piece of equipment? a. transportation costs b. installation costs c. testing costs prior to placing the equipment into production d. all are correct ANS: D DIF: Easy OBJ: 10-01 NAT: AACSB Analytic | AICPA FN-Measurement 4. Which of the following is included in the cost of constructing a building? a. insurance costs during construction b. cost of paving parking lot c. cost of repairing vandalism damage during construction d. cost of removing the demolished building existing on the land when it was purchased ANS: A DIF: Easy OBJ: 10-01 NAT: AACSB Analytic | AICPA FN-Measurement 5. Which of the following is included in the cost of land? a. cost of paving a parking lot b. brokerage commission c. outdoor parking lot lighting attached to the land d. fences on the land ANS: B DIF: Easy OBJ: 10-01 NAT: AACSB Analytic | AICPA FN-Measurement 6. Accumulated Depreciation a. is used to show the amount of cost expiration of intangibles b. is the same as Depreciation Expense c. is a contra asset account d. is used to show the amount of cost expiration of natural resources ANS: C DIF: Easy OBJ: 10-01 NAT: AACSB Analytic | AICPA FN-Measurement 7. A building with an appraisal value of $137,000 is made available at an offer price of $142,000. The purchaser acquires the property for $30,000 in cash, a 90-day note payable