Question Details

Which of the following is a capital expenditure 



1.	When a closely held corporation issues preference shares for land, the land should be recorded at the
a.	total par value of the shares issued.
b.	total book value of the shares issued.
c.	total liquidating value of the shares issued.
d.	fair value of the land.

	2.	Accounting recognition should be given to the gain realized on a non-monetary exchange of plant assets except when the exchange has
a.	no commercial substance and additional cash is paid.
b.	commercial substance and additional cash is received.
c.	commercial substance and additional cash is paid.
d.	All of these cause recognition of a gain.

	3.	For a non-monetary exchange of plant assets, accounting recognition should not be given to
a.	a loss when the exchange has no commercial substance.
b.	a gain when the exchange has commercial substance.
c.	a gain when the exchange has no commercial substance.
d.	a loss when the exchange has commercial substance.

	4.	An improvement made to a machine increased its fair value and its production capacity by 25% without extending the machine's useful life. The cost of the improvement should be
a. 	expensed.
b.	debited to accumulated depreciation.
c.	capitalized in the machine account.
d.	allocated between accumulated depreciation and the machine account.

	5.	Which of the following is a capital expenditure ?
a.	Payment of an account payable
b.	Retirement of bonds payable
c.	Payment of income taxes
d.	None of these




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