Week 3 Quiz All Questions Details given below( Please Check)
Question 1
During 2004, Yvo Corp. installed a production assembly line to manufacture furniture. In 2005, Yvo purchased a new machine and rearranged the assembly line to install this machine. The rearrangement did not increase the estimated useful life of the assembly line, but it did result in significantly more efficient production. The following expenditures were incurred in connection with this project: What amount of the above expenditures should be capitalized in 2005?
Question 2
On January 2, 2005, Well Co. purchased 10 % of Rea, Inc.' s outstanding common shares for $ 400,000. Well is the largest single shareholder in Rea, and Well ' s officers are a majority on Rea ' s board of directors. Rea reported net income of $ 500,000 for 2005, and paid dividends of $ 150,000. In its December 31, 2005, balance sheet, what amount should Well report as investment in Rea?
Question 3
On December 31, 2004, Roth Co. issued a $ 10,000 face value note payable to Wake Co. in exchange for services rendered to Roth. The note, made at usual trade terms, is due in nine months and bears interest, payable at maturity, at the annual rate of 3 %. The market interest rate is 8 %. The compound interest factor of $ 1 due in nine months at 8 % is. 944. At what amount should the note payable be reported in Roth ' s December 31, 2004 balance sheet?