10.

he Rogers Distributing, Inc. is having a warehouse constructed by James Bros.

Rogers Distributing Inc. made the following payments to James Bros. on the dates shown:

4/1/09 $ 100,000

7/1/09 $ 80,000

11/1/09 $120,000

What is the amount of Weighted Average Accumulated Expenditures (WAAE)?

	A.	$100,000
	B.	$135,000
	C.	$300,000
	D.	$200,000

12.

The Fortuna Co. purchased a computer on 1/1/07 for $10,000. Annual depreciation on the asset was $1,000 per year. In 2010, the asset was sold for $5,000.

Assume the sale date was 1/1/10. Which of the following journal entries correctly records the sale?

A.

Cash	5,000
Equipment	10,000
Accumulated depreciation		3,000
Gain on sale		12,000

B.

Cash	5,000
Loss on sale	5,000
Equipment		10,000

C.

Equipment	10,000
Gain on sale		2,000
Cash		5,000
Accumulated depreciation		3,000

D.

Cash	5,000
Accumulated depreciation	3,000
Loss on sale	2,000
Equipment		10,000

13.

he Stevens Co. has suffered losses in its film developing division for the last two years. On 12/31/10, the controller decided that he would need to apply the impairment test to film developing equipment and make any required adjustments. He gathered the following information and determined that the asset was impaired:

• Balance in the Equipment account = $400,000
• Balance in Accumulated Depreciation = $300,000
• Future value of cash flows associated with the asset = $75,000
• Fair value of asset on 12/31/10 = $60,000.

Why is the asset considered to be "impaired?"

	A.	Cost of equipment ($400,000) exceeds future cash flows ($75,000)
	B.	Book value of the equipment ($100,000) exceeds future cash flows ($75,000)
	C.	Book value of the equipment $100,000) exceeds fair value ($60,000)
	D.	Fair value of asset ($60,000) is less than future cash flows ($75,000)