Economics

Using the straight-line method, depreciation for 2014 and book value at December 31, 2014, would be:

A. $10,000 and $20,000.

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B. $10,000 and $25,000.

C. $11,250 and $17,500.

D. $11,250 and $22,500.

27.  Using the double-declining balance method, depreciation for 2013 and book value at December 31, 2013, would be:

A. $22,500 and $22,500.

B. $22,500 and $17,500.

C. $20,000 and $25,000.

D. $20,000 and $20,000.

28.  Using the sum-of-the-years’-digits method, depreciation for 2013 and book value at December 31, 2013, would be:

A. $18,000 and $27,000.

B. $16,000 and $29,000.

C. $16,000 and $24,000.

D. $18,000 and $22,000.

29.  Classifying liabilities as either current or long-term helps creditors assess:

A. Profitability.

B. The relative risk of a firm’s liabilities.

C. The degree of a firm’s liabilities.

D. The amount of a firm’s liabilities.

30.  In January 2013, Vega Corporation purchased a patent at a cost of $200,000. Legal and filing fees of $50,000 were paid to acquire the patent. The company estimated a 10-year useful life for the patent and uses the straight-line amortization method for all intangible assets. In 2016, Vega spent $40,000 in legal fees for an unsuccessful defense of the patent. The amount charged to income (expense and loss) in 2016 related to the patent should be:

A. $40,000.

B. $65,000.

C. $215,000.

D. $25,000.

ane’s Donut Co. borrowed $200,000 on January 1, 2013, and signed a two-year note bearing interest at 12%. Interest is payable in full at maturity on January 1, 2015. In connection with this note, Jane’s should report interest expense at December 31, 2013, in the amount of:

A. $0.

B. $24,000.

C. $48,000.

D. $50,880.

33.  The key accounting considerations relating to accounts payable are:

A. Determining their existence and ensuring that they are recorded in the appropriate accounting period.

B. Determining their present value and ensuring that they are recorded in the appropriate accounting period.

C. Determining their existence and determining the correct amount.

D. Determining the present value of the principal and the amount of the interest.

34.  Which of the following may create employer liabilities in connection with their payrolls?

A. Employee withholding taxes.

B. Employee voluntary deductions.

C. Employee fringe benefits.

D. All of the above are correct

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