Question

10.

he Rogers Distributing, Inc. is having a warehouse constructed by James Bros.

Rogers Distributing Inc. made the following payments to James Bros. on the dates shown:

4/1/09              $ 100,000

7/1/09              $ 80,000

11/1/09            $120,000

What is the amount of Weighted Average Accumulated Expenditures (WAAE)?

	A.	$100,000
	B.	$135,000
	C.	$300,000
	D.	$200,000

12.

The Fortuna Co. purchased a computer on 1/1/07 for $10,000. Annual depreciation on the asset was $1,000 per year. In 2010, the asset was sold for $5,000.

Assume the sale date was 1/1/10. Which of the following journal entries correctly records the sale?

	A.	Cash 5,000 Equipment 10,000     Accumulated depreciation 3,000    Gain on sale 12,000
	B.	Cash 5,000 Loss on sale 5,000      Equipment 10,000
	C.	Equipment 10,000     Gain on sale 2,000     Cash 5,000 Accumulated depreciation 3,000
	D.	Cash 5,000 Accumulated depreciation 3,000 Loss on sale 2,000            Equipment 10,000

13.

he Stevens Co. has suffered losses in its film developing division for the last two years. On 12/31/10, the controller decided that he would need to apply the impairment test to film developing equipment and make any required adjustments. He gathered the following information and determined that the asset was impaired:

• Balance in the Equipment account = $400,000
• Balance in Accumulated Depreciation = $300,000
• Future value of cash flows associated with the asset = $75,000
• Fair value of asset on 12/31/10 = $60,000.

Why is the asset considered to be "impaired?"

	A.	Cost of equipment ($400,000) exceeds future cash flows ($75,000)
	B.	Book value of the equipment ($100,000) exceeds future cash flows ($75,000)
	C.	Book value of the equipment $100,000) exceeds fair value ($60,000)
	D.	Fair value of asset ($60,000) is less than future cash flows ($75,000)

Answer 1