Question

22. Which of the following is included in the cost of constructing a building? A. Cost of paving parking lot. B. Cost of repairing vandalism damage during construction. C. Insurance costs during construction. D. None of the above. 23. A revenue expenditure results in a debit to A. An asset account. B. A liability account. C. A revenue account. D. An expense account. 24. Putting a new roof on a building is an example of a capital expenditure A. True. B. False. 25. Depreciation is a method of allocating the cost of a fixed asset A. Over periods during which the company is paying for the asset. B. Over periods of declining value. C. Over the asset's useful life. D. During the life of the company. 26. Under the straight-line method of depreciation, the amount of depreciation expense will be the same each period. A. True. B. False. 27. The method of determining depreciation that yields successive reductions in the periodic depreciation charge over the estimated life of the asset is A. Straight-line. B. Units-of-activity. C. Double-declining balance. D. Both B and C above. 28. If a fixed asset has a cost of 75,000 and accumulated depreciation of $60,000 is sold for $25,000, the company would recognize a gain of $10,000. A. True B. False. 29. Which of the following methods should be used to amortize intangibles? A. Double-declining balance. B. Units-of-activity. C. Straight-line. D. None of the above. 30. The cost of natural resources is depleted using which of the following methods? A. Straight-line. B.Units-of-activity C. Double-declining balance. D. Any of the above is acceptable

Answer 1

Question No. - (22) - Answer -

Step - ( 1 ) - Facts of the Question given -

Which of the following is included in the cost of constructing a building -

• Option - (A) - Cost of paving parking lot.
• Option - (B) - Cost of repairing vandalism damage during construction.
• Option - (C) - Insurance costs during construction.
• Option - (D) - None of the above.

.

Step - ( 2 ) - Analysis -

Material, Labor and Overhead cost associated with the construction of the building are to be included in the cost of constructing a building.

In the given case Options - (A), (B) and (D) are Incorrect, because all these are not included in the cost of constructing a building.

.

Step - ( 3 ) - Conclusion -

Option - (C) is Correct, because Insurance costs during construction is included in the cost of constructing a building.