Exam 10: Property, Plant, and Equipment: Acquisition and Disposal

Alternative terms for property, plant, and equipment include all of the following except

Several expenditures are listed below: Required: Indicate whether or not each expenditure would be included in the cost of property, plant, and equipment.

When exchanging nonmonetary assets

Assuming that the effects of interest capitalization are material, calculate the amount of interest costs to be capitalized by Marcus Corporation in 2010 in relation to the following events:

Mark Company exchanged a worn-out tractor that had cost $20, 000 and was half depreciated for a new tractor with a fair value of $12, 000.Mark paid an additional $2, 500 cash.The transaction lacked commercial substance. Required: Compute the amount at which Mark should record the new tractor.

Current GAAP describes three exceptions to the general rule of using fair value when exchanging nonmonetary assets. Required: List the three exceptions and provide an example of each.

During 2010, Redford Company acquired a new piece of equipment for its manufacturing process.In order to purchase the equipment, Redford made a down payment of $50, 000 and issued a $200, 000 five-year, 7% note.The annual payment of principal and interest was to be $48, 778.The market rate of interest for obligations of this kind is 12%.The present value factor for an ordinary annuity of 5 years at 12% is 3.604776. Required: a. Prepare the journal entry to record the acquisition b. Assume that the equipment had an est ablished cash price of $\$ 220,000$ . Prepare the jounal entry to record the transaction under this additional assumption

Which one of the following types of costs should not be included in the cost of a building?

Property acquired through donation is recorded at

Mirror Corp.has agreed to expand its operations by opening a manufacturing plant in Burns, Texas.In return, Burns will donate an abandoned building and the 5 acres on which it sits to Mirror.The land originally cost $1, 000, 000 and the building $3, 000, 000.The building's current book value is $380, 000, and current appraisals are: land $6, 000, 000 and building $2, 600, 000.Mirror has also agreed to provide 100 jobs for the next 5 years to Burns' city residents.Mirror estimates that the wages to these residents will amount to $4, 000, 000. Required: Prepare the journal entry to record this acquisition on Mirror's books.

Macey Co.exchanged a piece of equipment that had cost $40, 000 (now 75% depreciated)for a truck with a current appraised value of $13, 000.Macey Co.gave the other company the piece of equipment and $8, 000.Macey Co.should record

Robertson Company is making significant improvements to some of its assets, as follows. Required: a. Record the appropriate journal entry for replacing the furnace. b. When rec ording the transaction associated with the van there is a choice between two methods. Provide the journal entries for each method.

Required disclosure for property, plant, and equipment in the financial statements is based upon

Ralley Company exchanged a piece of equipment with a fair market value of $20, 000 and a book value of $25, 000 for a truck with a fair market value of $16, 000 and boot of $4, 000.Ralley Company should record the truck at a cost of

On February 1, 2010, Rummel Corporation purchased a parcel of land as a factory site for $50, 000.An old building on the property was demolished, and construction began on a new building that was completed on December 12, 2010.Costs incurred during this period are listed below: Demolition of old building \ 10,000 Architect's fees 22,000 Legal fees for title investigation and purchase contract 3,000 Construction costs 1,000,000 (Salvaged materials resulting from demolition were sold for $15, 000.) Rummel should record the cost of the land and the cost of the new building, respectively, as

Richmond, Inc.exchanged a piece of equipment with an original cost of $82, 000, accumulated depreciation to date of $40, 000, and a fair value of $46, 000 for a similar piece of equipment.The newly acquired equipment had a book value of $40, 000 and a fair market value of $46, 000.Richmond should record the equipment acquired at

Concerning current accounting for oil and gas properties, which statement is true?

Advantages of using historical cost as the basis of valuation of property, plant, and equipment include all of the following except

All of the following major types of assets would be included in the general category of property, plant, and equipment on the balance sheet except