# Accounting 211 Final Set 6

### 12 terms by giesercm

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FIFO

### The logic behind the lower-of-cost-or-market rule is

An asset is not worth more than it would cost the owner to replace it

### Goods in transit between the buyer and seller belong to

The answer depends upon whether the goods were shipped F.O.B. shipping or F.O.B destination

### Beech Soda Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows: On January 14, Beech Soda Inc. sold 25 units of this product. The other 28 units remained in inventory at January 31. Refer to the above data. Assuming that Beech Soda uses the FIFO flow assumption, the cost of goods sold to be recorded at January 14 is

\$268 (16 x \$10) + (9 x \$12) = \$268

### Which of the following would not be considered part of the cost of equipment recently purchased?

Sales tax, transportation charges, installation and setup charges - All three are capitalized costs

### An accelerated depreciation method

Recognizes more depreciating expense in the early years of an asset's useful life and less in the later years

Land

### The inclusion of the intangible asset goodwill in the financial statements of the company indicates

That the company has purchased a going business at a price in excess of the fair market value of the net identifiable assets

### Harvard Company purchased equipment having an invoice price of \$11,500. The terms of sale were 2/10, n 30, and Harvard paid within the discount period. In addition, Harvard paid a \$160 delivery charge, \$185 installation charge, and \$931 sales tax. The account recorded as the cost of this equipment is

\$12,546 = (\$11,500 x 0.98) + \$160 + \$185 + \$931

### On April 30, 2009 Tilton Products purchased machinery for \$88,000. The useful life of this machinery is estimated at 8 years with an \$8,000 residual value. Refer to the above data. Assume that in its financial statements, Tilton Products uses straight line depreciation and the half-year convention. Depreciation expense recognized on this machinery in 2009 and 2010 will be:

\$5000 in 2009 and \$10,000 in 2010
(\$88,000-\$8,000) / 8 = \$10,000 / 2 = \$5,000 in 2009 and \$10,000 in 2010

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