Question 1

Start-u and relocation costs generally meet the criteria for capitalization under IFRS.

Accepted Answer

A) True 
 B)False

Question 2

SC has an old asset that originally cost $225,000 (accumulated amortization,$114,000).Its current market value is $114,001.SC purchased another asset by paying cash $13,500 and trading in the old asset.The new asset had a list price of $150,000 and a cash price of $135,000.The assets are similar.SC should record the cost of the new machine at:

Accepted Answer

A) $121,500. 
B) $124,500. 
C) $135,000. 
D) $163,500. 
A) $121,500. 
B) $124,500. 
C) $135,000. 
D) $163,500.

Question 3

On January 1,2013,WT purchased a new machine to be used in the business.It paid $10,000 cash down payment and signed an interest-bearing note payable that required it to make three equal annual payments of $5,000 each (including principal and interest).The first payment will be made on December 31,2013.Assume an 11 percent per annum interest rate,and use the net approach.
(a) Give the entry on January 1,2013,to record the acquisition:
(b) Give the entry on December 31,2013,to record the first payment on the note payable:

Accepted Answer

The answer of On January 1,2013,WT purchased a new machine...

Question 4

On January 1,2013,VW purchased a new machine for $30,000.The estimated useful life was 10 years with an estimated residual value of $6,000.Straight-line amortization is used and is computed to the nearest month.On July 1,2021,the machine was sold for $9,000 cash.The gain (loss) on disposal was:

Accepted Answer

A) $1,000 gain. 
B) $1,200 gain. 
C) $1,800 gain. 
D) $3,000 loss. 
A) $1,000 gain. 
B) $1,200 gain. 
C) $1,800 gain. 
D) $3,000 loss.

Question 5

The following information pertains to equipment constructed by a firm for its own use.The construction is finished. $$\begin{array} {| l | l | } 
\hline \text { Materials used in construction } & \$ 40,000 \
\hline \text { Labour cost during construction } & 20,000 \
\hline \text { Fringe benefits on above labour } & 5,000 \
\hline \text { Incremental overhead due to Construction } & 8,000 \
\hline \begin{array} { l } 
\text { Interest expense on debt during Construction (assume this meets the requirements for } \
\text { interest capitalization) }
\end{array} & 4,000 \
\hline
\end{array}$$ The market value of the equipment immediately after construction was completed was $65,000.What is the loss on construction incurred by the firm?

Accepted Answer

A) $0 
B) $12,000 
C) $8,000 
D) $5,000 
E) $4,000 
A) $0 
B) $12,000 
C) $8,000 
D) $5,000 
E) $4,000

Question 6

CY acquired some land in exchange for 80 of its own common shares.The shares were traded widely and sold at the time for $120 per share.The land is similar to other tracts,which recently sold for $10,000.Give the entry for the acquisition of the land.Below the entry,justify the basis for the amount you used in the entry.

Accepted Answer

@#IMG-DLM& Cost principle: Use market va

Question 7

Intangible assets have all of the following characteristics,except:

Accepted Answer

A) their ownershi 
B) confers rights, but no physical substance. 
C) they provide benefits to current operations only. 
D) they are relatively long-lived. 
E) they have no physical substance. 
A) their ownershi 
B) confers rights, but no physical substance. 
C) they provide benefits to current operations only. 
D) they are relatively long-lived. 
E) they have no physical substance.

Question 8

An intangible asset is usually amortized by a direct credit to the related asset account.

Accepted Answer

A) True 
 B)False

Question 9

A firm currently occupies a facility on land it also owns.The firm decides to raze this facility and in its place construct a new state-of-the-art complex.The gross cost to raze the old facility is $100,000 but the firm was able to sell some of the salvage material for $15,000.The book value of the old facility was $30,000 before demolition.What is the recognized loss on the old facility?

Accepted Answer

A) Zero; the loss is capitalized as part of the new complex 
B) $85,000 
C) $115,000 
D) $130,000 
E) $15,000 
A) Zero; the loss is capitalized as part of the new complex 
B) $85,000 
C) $115,000 
D) $130,000 
E) $15,000

Question 10

Goodwill is measured as the excess of the price paid for an entity in excess of total market value of the identifiable net assets of the purchased entity.

Accepted Answer

A) True 
 B)False

Question 11

ABC Inc.is a public entity which applies the Fair Value Model to all of its Investment property.On January 1,Year 1,the company purchased a rental property for $1,200,000.This property was independently appraised at $1,100,000 on December 31st,Year 1.The present value of the property's cash flows was $1,150,000 on that date.The year-end adjusting journal entry would include:

Accepted Answer

A) a loss of $50,000. 
B) a debit to Revaluation surplus - OCI- Land for $100,000. 
C) a credit to depreciation expense of $100,000. 
D) a debit to contributed surplus of $50,000. 
A) a loss of $50,000. 
B) a debit to Revaluation surplus - OCI- Land for $100,000. 
C) a credit to depreciation expense of $100,000. 
D) a debit to contributed surplus of $50,000.

Question 12

ABC acquired equipment on January 1st,2014 for $3,000 cash,plus a note which is payable in 5 annual instalments of $2,000 each beginning on 12/31/2014.If the market interest rate on similar notes is 10 percent (and is implicitly included in the annual instalments) the cost of the equipment (rounded to the nearest dollar) is:

Accepted Answer

A) $10,580. 
B) $11,626. 
C) $12,000. 
D) $13,000. 
A) $10,580. 
B) $11,626. 
C) $12,000. 
D) $13,000.

Question 13

SB traded in printing press A with a book value of $5,200 and a market value of $6,000 for printing press B that had a market value of $8,801.Press B was both larger and faster than the one exchanged and was quoted at $10,000.SB also paid $2,800 cash boot.What should SB record as the cost of press B?

Accepted Answer

A) $6,000 
B) $8,000 
C) $8,800 
D) $10,000 
A) $6,000 
B) $8,000 
C) $8,800 
D) $10,000

Question 14

On April 1,2013,MC purchased for $270,000 a tract of land on which was located a warehouse and office building.The following data were collected concerning the property: $\begin{array}{c}
\begin{array}{|l|}
\hline
\\hline
\\hline
\\hline
Land\\hline
Warehouse\\hline
\text{Office building.}\\hline
\end{array}
\begin{array}{l|}
\hline
Current\\hline
Assessed\\hline
Valuation\\hline
 \$ 87.500 \\hline
37,500\\hline
100,000\\hline
\end{array}
\begin{array}{l|}
\hline
\text { Vendor's } \\hline
\text { Original } \\hline
\text { Cost } \\hline
\$ 70,000 \\hline
40,000 \\hline
90,000\\hline
\end{array}
\end{array}$ What are the appropriate amounts that MC should record for the land,warehouse,and office building,respectively?

Accepted Answer

A) Land, $94,500; Warehouse, $54,000; Office building, $121,500 
B) Land, $105,000; Warehouse, $45,000; Office building, $120,000 
C) Land, $70,000; Warehouse, $40,000; Office building, $90,000 
D) Land, $87,500; Warehouse, $37,500; Office building, $110,000 
A) Land, $94,500; Warehouse, $54,000; Office building, $121,500 
B) Land, $105,000; Warehouse, $45,000; Office building, $120,000 
C) Land, $70,000; Warehouse, $40,000; Office building, $90,000 
D) Land, $87,500; Warehouse, $37,500; Office building, $110,000

Question 15

Land excavation costs incurred with the intention of constructing a building on the site would be added to the cost of the Land.

Accepted Answer

A) True 
 B)False

Question 16

JP acquired a tract of land and paid for it in full by issuing (A) $400,000 of its 9 percent bonds payable after a year and (B) 50,000 of its common shares.The shares were selling at $17.82 per share.The land should be recorded at a cost of (rounded to the nearest thousands):

Accepted Answer

A) $832,000. 
B) $900,000. 
C) $1,258,000. 
D) $1,284,000. 
A) $832,000. 
B) $900,000. 
C) $1,258,000. 
D) $1,284,000.

Question 17

Discounts available for early payment of liabilities on purchases of capital assets should:

Accepted Answer

A) be capitalized as a part of the cost of the asset, whether taken or not, and subsequently included as amortization expense. 
B) be recorded and reported as a contra account to the related liability account. 
C) not be capitalized as cost of the asset whether taken or not. 
D) be given no recognition until taken or until the discount period has expired: if not taken, the discounts should be added to the cost of the asset. 
A) be capitalized as a part of the cost of the asset, whether taken or not, and subsequently included as amortization expense. 
B) be recorded and reported as a contra account to the related liability account. 
C) not be capitalized as cost of the asset whether taken or not. 
D) be given no recognition until taken or until the discount period has expired: if not taken, the discounts should be added to the cost of the asset.

Question 18

On January 1,2014,CS bought a machine on a $60,000,14 percent,3-year note payable.The note will be paid in six equal semi-annual payments starting June 30,2014.CS should record the cost of the machine as:

Accepted Answer

A) $39,980. 
B) $40,498. 
C) $51,600. 
D) $60,000. 
A) $39,980. 
B) $40,498. 
C) $51,600. 
D) $60,000.

Question 19

CH recently purchased the Elgin Hotel and the land on which it is located.The plans are to demolish the Elgin and to build a new luxury hotel on the site.CH should account for the total purchase cost of the Elgin as follows:

Accepted Answer

A) Capitalize it as part of the cost of the new hotel. 
B) Depreciate it over the period from the acquisition until the Elgin is torn down. 
C) Record it as an extraordinary loss in the year the Elgin is demolished. 
D) Capitalize it as part of the cost of the land. 
A) Capitalize it as part of the cost of the new hotel. 
B) Depreciate it over the period from the acquisition until the Elgin is torn down. 
C) Record it as an extraordinary loss in the year the Elgin is demolished. 
D) Capitalize it as part of the cost of the land.

Question 20

Additions and major inspections which are expected to benefit more than one period are capitalized,while routine maintenance expenditures are normally expensed.

Accepted Answer

A) True 
 B)False

Start-u and relocation costs generally meet the criteria for capitalization under IFRS.

On January 1,2013,VW purchased a new machine for $30,000.The estimated useful life was 10 years with an estimated residual value of $6,000.Straight-line amortization is used and is computed to the nearest month.On July 1,2021,the machine was sold for $9,000 cash.The gain (loss) on disposal was:

Intangible assets have all of the following characteristics,except:

An intangible asset is usually amortized by a direct credit to the related asset account.

Goodwill is measured as the excess of the price paid for an entity in excess of total market value of the identifiable net assets of the purchased entity.

Land excavation costs incurred with the intention of constructing a building on the site would be added to the cost of the Land.

JP acquired a tract of land and paid for it in full by issuing (A) $400,000 of its 9 percent bonds payable after a year and (B) 50,000 of its common shares.The shares were selling at $17.82 per share.The land should be recorded at a cost of (rounded to the nearest thousands):

Discounts available for early payment of liabilities on purchases of capital assets should:

On January 1,2014,CS bought a machine on a $60,000,14 percent,3-year note payable.The note will be paid in six equal semi-annual payments starting June 30,2014.CS should record the cost of the machine as:

CH recently purchased the Elgin Hotel and the land on which it is located.The plans are to demolish the Elgin and to build a new luxury hotel on the site.CH should account for the total purchase cost of the Elgin as follows:

Additions and major inspections which are expected to benefit more than one period are capitalized,while routine maintenance expenditures are normally expensed.

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

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

Start-u and relocation costs generally meet the criteria for capitalization under IFRS.

On January 1,2013,VW purchased a new machine for $30,000.The estimated useful life was 10 years with an estimated residual value of $6,000.Straight-line amortization is used and is computed to the nearest month.On July 1,2021,the machine was sold for $9,000 cash.The gain (loss) on disposal was:

Intangible assets have all of the following characteristics,except:

An intangible asset is usually amortized by a direct credit to the related asset account.

Goodwill is measured as the excess of the price paid for an entity in excess of total market value of the identifiable net assets of the purchased entity.

Land excavation costs incurred with the intention of constructing a building on the site would be added to the cost of the Land.

JP acquired a tract of land and paid for it in full by issuing (A) $400,000 of its 9 percent bonds payable after a year and (B) 50,000 of its common shares.The shares were selling at $17.82 per share.The land should be recorded at a cost of (rounded to the nearest thousands):

Discounts available for early payment of liabilities on purchases of capital assets should:

On January 1,2014,CS bought a machine on a $60,000,14 percent,3-year note payable.The note will be paid in six equal semi-annual payments starting June 30,2014.CS should record the cost of the machine as:

CH recently purchased the Elgin Hotel and the land on which it is located.The plans are to demolish the Elgin and to build a new luxury hotel on the site.CH should account for the total purchase cost of the Elgin as follows:

Additions and major inspections which are expected to benefit more than one period are capitalized,while routine maintenance expenditures are normally expensed.

The Framework for Financial Reporting

Accounting Judgements

Statements of Income and Comprehensive Income

Statements of Financial Position and Changes in Equity; Disclosure Notes

The Statement of Cash Flows

Financial Assets: Cash and Receivables

Cost-Based Inventories and Cost of Sales

Depreciation,Amortization,and Impairment

Financial Instruments: Investments in Debt and Equity Securities

Filters