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

XY purchased a plant,including land,buildings,and machinery,for $50,000.These items were carried on the books of the seller as follows: land,$15,000; building,$40,000,and machinery,$20,000.Immediately after the purchase,XY employed a reliable firm to appraise the assets with the following results: land,$12,000; building,$15,000,and machinery,$33,000. At what amount should each separate asset be recorded on the books of XY? Land,$__________________ Building,$_____________ Machinery,$__________________.

Firm A purchased all the outstanding common shares of firm B for $300,000.Information about firm B follows: Book value Market value Total assets \ 600,000 \ 800,000 Total liabilities 550,000 550,000 How much will Firm A record as goodwill on this purchase?

With respect to software intended for resale,costs may only be capitalized once technical feasibility is established.

Company B purchased a large machine at a cash equivalent cost of $25,000 on January 1,2001.On that date the company paid $10,000 cash and gave a one-year,10 percent interest-bearing note payable for the remaining $15,000.Therefore,the company should debit the machinery account for $25,000.

MB replaced a major component of its plant (original cost of the component,$12,000 (60 percent depreciated),with a new component that cost $17,500 in cash.Therefore,MB should make the following entry: 1) Accumulated amortization Plant. Gain on disposal Cash 7,200 17,500 7,200 17,500 2) Plant (or accumulated amortization). Cash. 17,500 17,500 3) Accumulated amortization. Plant. Loss on disposal. Cash. 7,200 5,500 4,800 17,500 4) Plant \ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots 17,500 Loss on disposal................... 12,000 Plant \ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots 12,000 Cash \ldots\ldots\ldots\ldots\ldots\ldots\ldots\ldots 17,500

Which of the following confers exclusive right to conduct business in a particular territory?

Leasehold improvements always are depreciated over their estimated useful life.

With respect to exploration and evaluation assets,costs incurred in the pre-exploration and evaluation phase are:

In December 2000,RJ exchanged an old bottling machine,which cost $60,000 and was two-thirds depreciated,for a similar used machine having a current fair value of $24,000,and received a cash difference of $1,000.What is the amount of gain that RJ should recognize on this exchange in the year ended December 31,2000?

Involuntary safety costs must always be capitalized under both IFRS and ASPE.

All of the following items are identifiable intangible assets,except:

Discounts given for early payment of credit purchases of capital assets should be:

The cost of an addition to an existing structure should be debited to an asset account and depreciated over the life of the structure or the addition,whichever is shorter.

A change in the amortization rate for an intangible asset should be accounted for:

CM replaced a major component in Plant A which has been operating 20 years and has a 30-year estimated useful life.The new replacement component cost $150,000 cash.When the plant was constructed,the old component cost $60,000.Give the entry (or entries) to record this transaction.

The cost of rearranging the factory equipment to increase efficiency should be recorded as a capital expenditure in the normal situation.

(Appendix 2) ABC Inc.purchased Machinery in the amount of $50,000 on January 1^st,2013.The machinery is estimated to have a 5-year useful life with no salvage value.The machinery qualifies for a 20% government subsidy.As a result,ABC Inc.received a government subsidy of $10,000 toward the purchase of the equipment.What is the effect of this subsidy on the company's 2013 Statement of Earnings/Comprehensive Income?

When a corporation issues preferred shares that are readily marketable,in exchange for land,the land should be recorded at the:

Under the successful efforts method of accounting for exploration and evaluation of assets:

SAMTO,Inc.transferred $400 cash and a machine (cost,$10,000; accumulated amortization $9,000) to SLO UGH,Inc.in return for SLO UGH's similar machine (cost $12,000,accumulated amortization,$10,500).Provide SLO UGH's entry for the exchange assuming the market value of Santo's machine was $1,600 and SLO UGH's Inc.machine was $2,000.