L10: PPE and amortization

Which of the following payments is not included in the cost of land?

• A. Removal of old building

• B. Legal fees

• C. Property taxes in arrears paid at acquisition

• D. Cost of fencing and lighting

Willard Windows paid $150,000 for two machines valued at $120,000 and $60,000. Willard will record these machines at costs of

• A. $120,000 and $60,000

• B. $75,000 each

• C. $100,000 and $50,000

• D. $90,000 and $60,000

Which of the following items is a repair?

• A. New brakes for delivery truck

• B. Paving of a company parking lot

• C. Cost of a new engine for a truck

• D. Building permit paid to construct an addition to an existing building

Which amortization method’s amounts are NOT computed based on time?

• A. Straight-line

• B. Units-of-production (UOP)

• C. Double-declining-balance (DDB)

• D. All are based on time

A company paid $900,000 for a building and was amortizing it by the straight-line method over a 40-year life, with estimated residual value of $60,000. After 10 years it became evident that the building’s remaining useful life would be 40 years with a residual value of $50,000. Amortization for the 12th year is

• A. $16,000

• B. $21,000

• C. $17,250

• $28,000