2023 Question 1 Which of the following is not capitalized when a piece of production equipment is acquired | Assignments Online

Question 1

Which of the following is not capitalized when a piece of production equipment is acquired for a factory?

 

Sales taxes.

Installation costs. 

Transportation costs. 

Ordinary repairs.

 

Question 2

On January 1, 200X Post Company purchased a machine for $80,000.  The machine had a salvage value of $8,000 and a useful life of 10 years.  Using straight line depreciation, the accounting entry for recording depreciation expense for the second year of operation would be:

 

Debit depreciation expense – $7,200, credit accumulated depreciation – $7,200. 

Debit depreciation expense – $8,000, credit accumulated depreciation – $8,000.

 Debit depreciation expense – $8,000, credit machine – $8,000. 

Debit depreciation expense – $4,000, credit machine – $4,000.

 

Question 3

Post Company uses straight- line depreciation for all of its depreciable assets.  Post sold a piece of machinery on December 31, 2009, that it purchased on January 1, 2009 for $ 2,000. The asset had a five- year life and zero residual value.  Accumulated depreciation was $400. If the sales price of the used machine was $ 1,200, the resulting gain or loss on disposal was which of the following amounts?

 

Loss of $ 400.    

Loss of $800 

Gain of $400 

Gain of $ 1,200.

 

Question 4

Post Company purchased a patent on January 1, 200X for $50,000. The patent has a useful life of 10 years. The accounting entry to record the patent amortization expense for the first year would be:

 

Debit patent amortization expense $50,000; credit patent $50,000.

 Debit patent amortization expense $5,000; credit patent $5,000.

 Debit patent $50,000; credit accounts payable $50,000.

 Debit patent $5,000; credit accounts payable $5,000.