Use the following to answer questions 26-27:
On October 12, 2006, Livingston Corporation invested $500,000 inshort-term available-for-sale marketable securities. The marketvalue of this investment was $530,000 at December 31, 2006, but hadslipped to $525,000 by December 31, 2007.
26. Refer to the above data. Infinancial statements prepared on December 31, 2006, LivingstonCorporation reports:
A) The asset Investments in Marketable Securities at $500,000 withfootnote disclosure of the market value of $530,000.
B) The asset Investments in Marketable Securities at$530,000, and a $30,000 Unrealized Holding Gain included in totalstockholders' equity.
C) The asset Investments in Marketable Securities at$530,000, and a $30,000 gain recognized in the incomestatement.
D) The asset Investments in Marketable Securities at $500,000, anda $30,000 Unrealized Holding Gain included in total stockholders'equity.
27. Refer to the above data. Assuming Livingston does not sell thisinvestment; financial statements prepared at December 31, 2007,report:
A) Investments in Marketable Securities of $500,000, reduced by a$30,000 Unrealized Holding Gain on Investments, in the assetsection of the balance sheet.
B) The asset Investments in Marketable Securities of$500,000 in the balance sheet, and a $25,000 Unrealized HoldingLoss on Investments in the income statement.
C) The asset Investments in Marketable Securities of$525,000, and a $5,000 Unrealized Holding Loss deducted from totalstockholders' equity.
D) Investment in Marketable Securities of $525,000 in the assetsection of the balance sheet, with a $25,000 Unrealized HoldingGain on Investments included in the stockholders' equitysection.
28. Anasset which costs $7,200 and has accumulated depreciation of $1,800is sold for $4,500. What amount will be recognized when the assetis sold?
A) A gain of $900
B) A loss of $900
C) A loss of $2,700
D) A gain of $2,700
29. Coca-Cola's famous name printed in distinctive typeface is anexample of:
A) A trademark.
B) A patent.
C) A copyright.
D) Goodwill.
30. CarlsonImports sold a depreciable plant asset for cash of $35,000. Theaccumulated depreciation amounted to $70,000, and a loss of $5,000was recognized on the sale. Under these circumstances, the originalcost of the asset must have been:
A) $65,000.
B) $75,000.
C) $100,000.
D) $110,000.
31. Tivoli Instrumentation solda depreciable asset for cash of $100,000. The original cost of theasset was $400,000. Tivoli recognized a gain of $15,000 on thesale. What was the amount of accumulated depreciation on the assetat the time of its sale?
A) $315,000.
B) $85,000.
C) $385,000.
D) $300,000.
32. Machinery acquired new on January 1 at a cost of $50,000 wasestimated to have a useful life of 10 years and a residual salvagevalue of $20,000. Straight-line depreciation was used. On January1, following six full years of use of the machinery, managementdecided that the estimate of useful life had been too long and thatthe machinery would have to be retired after two more years, thatis, at the end of the eighth year of service. Under this revisedestimate, the depreciation expense for the seventh year of usewould be:
A) $6,000.
B) $8,000.
C) $11,000.
D) $12,000.
33. The ability of a partner toenter into a contract on behalf of all partners is called
a. voluntary agency.
b. mutualagency.
c. unlimitedliability.
d. voluntaryassociation.
34. Which of the following doesnot result in dissolution of a partnership?
a. Admissionof a new partner
b. Sale ofpartnership assets
c. Death of apartner
e. Bankruptcyof a partner
35. Jerry and Rose have agreed toform a partnership. Accordingly Rose will invest $40,000 worth ofequipment which has a note payable of $15, 000 which thepartnership assumes, and Jerry will invest $40,000 in cash. TheRose’s capital account balance will be.
A. $40,000
B. $25,000
C. $15,000
D. $80,000
36. One method of distributing income and losses is to give eachpartner a stated
ratio of the total income or loss.There are two partners Jerry & Rose, each making an equalcontribution to the firm (50/50). However the partnership agreementstates that distributions would be made 60% and 40% respectively.Jerry and Rose are partners of the firm which had a net income$100,000. Therefore Jerry’s share of income is:
A. $50,000
B. $40,000
C. $100,000
D. $60,000
37. After March, 2004 international standards required thatgoodwill
A) Be capitalized and amortized over 20 years or less.
B) Be capitalized and amortized over 40 years or less.
C) Be capitalized and reviewed annually and its value should beadjusted if impaired.
D) Be expensed immediately.
38. Manufacturing overhead isbest described as:
A) All manufacturing costs other than direct materials and directlabor.
B) All period costs associated with manufacturingoperations.
C) Indirect materials and indirect labor.
D) All operating expenses other than selling expenses and generaland administrative expenses.
39. Which of the followingcosts would not be considered part of the manufacturing overhead ofa furniture manufacturer?
A) The cost of compliance with federal factory safetyregulations.
B) Depreciation expense on factory equipment.
C) The cost of grease used to lubricate factoryequipment.
D) The cost of wood used in furniture construction.
