4
4
4
The fraction
used to multiply an expenditure made on April 1 to find weighted-average accumulated
expenditures is
a. 8/8.
b. 8/12.
c. 9/12.
d. 11/12.
39. When funds are borrowed to pay for construction of assets that qualify for capitalization
of interest, the excess funds not needed to pay for construction may be temporarily
invested in interest-bearing securities. Interest earned on these temporary investments
should be
a. offset against interest cost incurred during construction.
b. used to reduce the cost of assets being constructed.
c. multiplied by an appropriate interest rate to determine the amount of interest to be
capitalized.
d. recognized as revenue of the period.
47. Plant assets purchased on long-term credit contracts should be accounted for at
a. the total value of the future payments.
b. the future amount of the future payments.
c. the present value of the future payments.
d. none of these.
48. When a plant asset is acquired by issuance of common stock, the cost of the plant asset
is properly measured by the
a. par value of the stock.
b. stated value of the stock.
c. book value of the stock.
d. fair value of the stock.
49. When a closely held corporation issues preferred stock for land, the land should be
recorded at the
a. total par value of the stock issued.
b. total book value of the stock issued.
c. total liquidating value of the stock issued.
d. fair value of the land.
50. Accounting recognition should be given to some or all of the gain realized on a
nonmonetary exchange of plant assets except when the exchange has
a. no commercial substance and additional cash is paid.
b. no commercial substance and additional cash is received.
c. commercial substance and additional cash is paid.
d. commercial substance and additional cash is received.
51. For a nonmonetary exchange of plant assets, accounting recognition should not be given
to
a. a loss when the exchange has no commercial substance.
b. a gain when the exchange has commercial substance.
c. part of a gain when the exchange has no commercial substance and cash is paid
(cash paid/received is less than 25% of the fair value of the exchange).
d. part of a gain when the exchange has no commercial substance and cash is
received (cash paid or received is less than 25% of the fair value of the exchange).
52. When an enterprise is the recipient of a donated asset, the account credited may be a
a. paid-in capital account.
b. revenue account.
c. deferred revenue account.
d. all of these.
53. A plant site donated by a township to a manufacturer that plans to open a new factory
should be recorded on the manufacturer's books at
a. the nominal cost of taking title to it.
b. it