Exam 9: Property,Plant,and Equipment; Intangibles; and Goodwill

On January 1,2014,RC purchased a machine for capital use.The invoice price was $5,000; terms 2/10,n/31.Provincial sales tax on the invoice price was 4 percent.Other cash payments by RC were: shipping,$250; installation,$500; breaking-in,$100,and $300 for a 3-year insurance policy on the machine.RC paid the invoice on January 15,2014.The machine account should be debited for:

Web content development costs may be expensed or capitalized.

Costs of reinstalling or rearranging factory machinery to attain greater productive efficiency should be:

The only costs of an internally developed patent that should be capitalized as patent costs are legal fees,other registration costs,and successful court tests.

In a charitable action,one firm is relieved of an obligation to a second firm.As a result,the debtor firm debits:

CZ purchased a new machine on June 1.A $1,200 down payment was made.In addition,four monthly payments of $4,000 each are to be made starting July 1.The cash price would have been $14,400.Installation costs of $200 also were incurred.The amount capitalized as the cost of the machine is:

DC bought Assets A,B,and C for a total cash price of $324,000.The assets were reflected in the accounts of the seller as follows: A,$75,000,B,$60,000,and C,$65,000.The property tax assessments were: A,$15,000,B,$4,000,and C,$6,000.Because the tax assessments were made by untrained people,they bear little resemblance to actual market prices.An independent and competent appraisal showed the following: A,$105,000,B,$70,000,and C,$95,000.DC should record the costs of the assets as follows: Asset A Asset B Asset C 1 \ 108,000 \ 108,000 \ 108,000 2 \ 126,000 84,000 114,000 3 \ 105,000 70,000 95,000 4 \ 75,000 60,000 65,000

Under the cost model,self-constructed assets may be recorded at fair market value if the company so wishes,regardless of costs incurred to date.

The lack of Goodwill on a company's financial statements indicates poor earnings potential.

On April 30,2013,a fire destroyed a machine that cost $24,000 when acquired on January 1,2011.The machine has an estimated 4-year useful life and no residual value.Straight-line amortization on the machine has been recognized through December 31,2011.Give the entries at date of the fire to record the fire loss,assuming the insurance company paid $9,000 cash on the claim.

Subsequent to acquisition,the cost of capital assets Land may include title search

Under IFRS,Property,Plant and Equipment should be broken down to its major components and depreciated accordingly.

Goodwill can be:

Donated land and buildings would normally be credited to a contributed capital account at their fair market values.

Goodwill should be reported on the balance sheet as:

The following expenditures were among those incurred by JB during the year ended December 31,2013: Replacement of tiles on portion of roof that had been leaking... Overhaul of machinery that is expected to extend its useful life for another two years... \4 ,000 6,000 How much should be charged to repairs and maintenance expense in 2013?

RJ owns a used crane that was originally purchased on August 1,2012,for $180,000.Straight-line monthly amortization has been recorded on the basis of an estimated useful life of 5 years and no residual value.On January 31,2015,RJ sold the crane for $92,000 cash.The pre-tax gain (loss) on the disposal was:

When a capital asset is acquired by donation,the preferred accounting at acquisition date is to:

Machines Unlimited acquired Machine N (new) in exchange for a slightly used machine (Machine O) and received $3,000 cash (Machine O was in high demand).The machines were similar.Machine N had a market value (cash equivalent price) of $27,000.Machine O originally cost $45,000 and accumulated amortization at the date of exchange was $24,000. Give the entry to record the exchange by Machines Unlimited.

When a basket purchase of several ling-lived assets is made,the purchase price will normally be assigned using the relative fair values of those assets.