materials in 2007 for $700,000. Before the December 31, 2006 balance
sheet date, the market price for these materials dropped to $510,000. The
journal entry to record this situation at December 31, 2006 will result in
a credit that should be reported 18) The gross profit method of inventory
valuation is invalid when 19) Which of the following is NOT a major
characteristic of a plant asset? 20) The cost of land does NOT include
21) If a corporation purchases a lot and building and subsequently tears
down the building and uses the property as a parking lot, the proper
accounting treatment of the cost of the building would depend on 22) To
be consistent with the historical cost principle, overhead costs incurred
by an enterprise constructing its own building should be 23) When
computing the amount of interest cost to be capitalized, the concept of
"avoidable interest" refers to 24) The period of time during which
interest must be capitalized ends when 25) Construction of a qualifying
asset is started on April 1 and finished on December 1. The fraction used
to multiply an expenditure made on April 1 to find weighted-average
accumulated expenditures is 26) 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 27) When a plant asset is acquired by issuance of
common stock, the cost of the plant asset is properly measured by the
28) If an industrial firm uses the units-of-production method for
computing depreciation on its only plant asset, factory machinery, the
credit to accumulated depreciation from period to period during the life
of the firm will 29) The term "depreciable cost," or "depreciable base,"
as it is used in accounting, refers to 30) Which of the following most
accurately reflects the concept of depreciation as used in accounting?
31) Prentice Company purchased a depreciable asset for $200,000. The
estimated salvage value is $20,000, and the estimated useful life is 10
years. The straight-line method will be used for depreciation. What is the
depreciation base of this asset? 32) Pine Company purchased a
depreciable asset for $360,000. The estimated salvage value is $24,000,
and the estimated useful life is 8 years. The double-declining balance
method will be used for depreciation. What is the depreciation expense