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# Cost Basis, Bond Redemption, Cash Flow From Operating Activities

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1) A used machine with a purchase price of \$77,000, requiring an overhaul costing \$8,000, installation costs of \$5,000, and special acquisition fees of \$2,000, would have a cost basis of _______.
\$92,000
\$91,000
\$87,000
\$86,000

2) Bonds Payable has a balance of \$900,000 and Premium on Bonds Payable has a balance of \$10,000. If the issuing corporation redeems the bonds at 102, what is the amount of gain or loss on redemption?
\$1,100 loss
\$1,100 gain
\$8,000 loss
\$8,000 gain

3) The net income reported on the income statement for the current year was \$250,000. Depreciation recorded on fixed assets and amortization of patents for the year were \$40,000 and \$9,000, respectively. Balances of current asset and current liability accounts at the end and at the beginning of the year are as follows:

End
Beginning

Cash
\$ 50,000
\$ 60,000

Accounts receivable
112,000
108,000

Inventories
105,000
93,000

Prepaid expenses
4,500
6,500

Accounts payable (merchandise creditors)
75,000
89,000

What is the amount of cash flows from operating activities reported on the statement of cash flows prepared by the indirect method?
\$271,000
\$279,000
\$327,000
\$256,000

#### Solution Preview

1. Cost is all amount spent in getting the machine ready for use. The cost is = 77,000+8,000+5,000+2,000 = 92,000

2. The carrying value of the ...

#### Solution Summary

The solution explains some multiple choice questions relating to cost basis, bond redemption and cash flow from operating activities

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