Question 1

Which of the following is least likely to be classified in property,plant and equipment?

Accepted Answer

A) Land improvements 
B) Land 
C) Natural resources 
D) Idle land 
A) Land improvements 
B) Land 
C) Natural resources 
D) Idle land

Question 2

Minor spare parts will normally be included in inventory,while major spare parts will be considered property,plant and equipment.

Accepted Answer

A) True 
 B)False

Question 3

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 SAMTO's entry for the exchange assuming the market value of SAMTO's machine was $1,600.

Accepted Answer

@#IMG-DLM& The gain is allowed because t

Question 4

HF had asset A that was reflected in the company records as follows: Cost,$25,000; accumulated amortization,$20,000.Its market value: $6,000.HF acquired asset B that had a cash price of $13,500 and paid for it by trading in asset A plus paying cash boot of $8,000.Give the entry by HF to record the acquisition of asset B,assuming the two assets was:
(A) Similar:
(B) Dissimilar:

Accepted Answer

(A) @#IMG-DLM& Since the cash considerat

Question 5

What is the rationale for the difference in accounting treatment for exchanges of similar and dissimilar assets? Comment on both cases where cash is paid and cash is received.

Accepted Answer

When dissimilar assets are exchanged,the

Question 6

When a company's shares are issued in exchange for equipment and the fair values of both are determinable,the equipment will be valued at the fair value of the shares.

Accepted Answer

A) True 
 B)False

Question 7

BR acquired a new machine that had a cash price of $10,800.The company paid $1,000 cash and traded in an old machine that originally cost $24,000 with accumulated amortization of $14,000.Give the exchange entry for BR under each of the two assumptions:
Assumption A-the assets are similar:
Assumption B-the assets are dissimilar:

Accepted Answer

Assumption A (simila

Question 8

Accounting for tangible capital assets is primarily in conformity with the:

Accepted Answer

A) historical cost principle. 
B) historical cost principle and reporting principle. 
C) matching principle and reporting principle. 
D) matching principle. 
E) matching principle and historical cost principle. 
A) historical cost principle. 
B) historical cost principle and reporting principle. 
C) matching principle and reporting principle. 
D) matching principle. 
E) matching principle and historical cost principle.

Question 9

On January 1,2013,The Landing Strip Inc.purchased a 5-acre tract of land with a building thereon.The asking price was $17,500.Payment in full was as follows: Cash,$6,822; The Landing Strip Inc.common shares,par $5 (market value $20 per share based on several recent transactions on the market) 250 shares,and a $5,000 non-interest bearing note payable due December 31,2016.The current market rate of interest is 12 percent.Allocate 20 percent of the cost to the building.
Give the entry to record this transaction on January 1,2013.

Accepted Answer

The answer of On January 1,2013,The Landing Strip Inc.purchased a...

Question 10

With respect to exploration and evaluation assets,until what point can a company capitalize costs?

Accepted Answer

A) Once the legal right to mine or explore the property has been established. 
B) Until technical feasibility has been established. 
C) Until commercial viability has been established. 
D) Until technical feasibility and commercial viability have both been established. 
A) Once the legal right to mine or explore the property has been established. 
B) Until technical feasibility has been established. 
C) Until commercial viability has been established. 
D) Until technical feasibility and commercial viability have both been established.

Question 11

Plant assets may properly include idle equipment awaiting sale.

Accepted Answer

A) True 
 B)False

Question 12

(Appendix 1) ABC Inc.purchased a shopping complex and with it,a large condominium complex attached to it in the amount of $20,000,000 on January 1,2013 Both complexes are designated investment property.Both facilities are estimated to have a useful life of eighteen years and a salvage value of $2 million dollars.On December 31st,2013,the fair value of both complexes was $25 million.ABC Inc.prepares its financial statements under IFRS.Assuming that ABC uses the Cost Model to account for the complex,the carrying value of both complexes on December 31st,2013 would be:

Accepted Answer

A) $16 million. 
B) $25 million. 
C) $18 million. 
D) $19 million. 
A) $16 million. 
B) $25 million. 
C) $18 million. 
D) $19 million.

Question 13

During 2013,DB incurred the following expenditures (cash) on its office building.For each item,give the required entry (entries).
(A) Normal,recurring,maintenance and repairs,$1,350.
(B) Unusual,high cost repairs,$48,000,which added additional value to the building.
(C) Replaced the original freight elevator in the building with a new elevator that cost $40,000 (cash).The old elevator (original cost,$30,000; accumulated amortization,$23,000) was sold for $7,700.

Accepted Answer

The answer of During 2013,DB incurred the following expenditures (cash)...

Question 14

ASPE contains separate guidance on exploration and evaluation costs whereas IFRS does not.

Accepted Answer

A) True 
 B)False

Question 15

A firm acquired used equipment on January 1st,2014,by issuing a note calling for four equal payments to be made each December 31 starting in 2014.The note's principal value equals the negotiated price of $40,000,and the interest rate implied in the note is consistent with the market rate of interest for this level of risk (8%).What is the amount to be recorded for the equipment?

Accepted Answer

A) Less than $40,000 
B) More than $40,000 
C) $40,000 
D) Insufficient information 
A) Less than $40,000 
B) More than $40,000 
C) $40,000 
D) Insufficient information

Question 16

CK incurred $68,000 of research and development costs in its laboratory to develo a patent,which was granted on January 2,2001.Legal fees and other costs associated with registration of the patent totalled $27,201.CK estimates that the economic life of the patent will be eight years.What amount should CK charge to patent amortization expense for the year ended December 31,2008?

Accepted Answer

A) $-0- 
B) $1,600 
C) $3,400 
D) $20,400 
A) $-0- 
B) $1,600 
C) $3,400 
D) $20,400

Question 17

Goodwill should properly appear on the financial statements of a company which:

Accepted Answer

A) has purchased an entity, and has not yet fully amortized the goodwill. 
B) consistently operates profitably. 
C) consistently reports above-normal profits. 
D) meets all of the conditions regarding legal goodwill. 
A) has purchased an entity, and has not yet fully amortized the goodwill. 
B) consistently operates profitably. 
C) consistently reports above-normal profits. 
D) meets all of the conditions regarding legal goodwill.

Question 18

DC purchases a tract of land with a current market value of $130,000.Its book value in the accounts of the seller was $73,501.In exchange for the land,DC issued 10,000 of its common shares,with an estimated market value of $15 per share (these shares are not traded in an established market).DC should record the cost of the land at:

Accepted Answer

A) $73,500. 
B) $100,000. 
C) $130,000. 
D) $150,000. 
A) $73,500. 
B) $100,000. 
C) $130,000. 
D) $150,000.

Question 19

When a firm receives a plant asset as a donation,what account should be credited?

Accepted Answer

A) Contributed capital 
B) Income 
C) Liability 
D) Deferred credit 
E) Revenue 
A) Contributed capital 
B) Income 
C) Liability 
D) Deferred credit 
E) Revenue

Question 20

Only identifiable intangible assets meet the criteria for capitalization.

Accepted Answer

A) True 
 B)False

Which of the following is least likely to be classified in property,plant and equipment?

Minor spare parts will normally be included in inventory,while major spare parts will be considered property,plant and equipment.

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 SAMTO's entry for the exchange assuming the market value of SAMTO's machine was $1,600.

What is the rationale for the difference in accounting treatment for exchanges of similar and dissimilar assets? Comment on both cases where cash is paid and cash is received.

When a company's shares are issued in exchange for equipment and the fair values of both are determinable,the equipment will be valued at the fair value of the shares.

Accounting for tangible capital assets is primarily in conformity with the:

With respect to exploration and evaluation assets,until what point can a company capitalize costs?

Plant assets may properly include idle equipment awaiting sale.

ASPE contains separate guidance on exploration and evaluation costs whereas IFRS does not.

Goodwill should properly appear on the financial statements of a company which:

When a firm receives a plant asset as a donation,what account should be credited?

Only identifiable intangible assets meet the criteria for capitalization.

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

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

Which of the following is least likely to be classified in property,plant and equipment?

Minor spare parts will normally be included in inventory,while major spare parts will be considered property,plant and equipment.

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 SAMTO's entry for the exchange assuming the market value of SAMTO's machine was $1,600.

What is the rationale for the difference in accounting treatment for exchanges of similar and dissimilar assets? Comment on both cases where cash is paid and cash is received.

When a company's shares are issued in exchange for equipment and the fair values of both are determinable,the equipment will be valued at the fair value of the shares.

Accounting for tangible capital assets is primarily in conformity with the:

With respect to exploration and evaluation assets,until what point can a company capitalize costs?

Plant assets may properly include idle equipment awaiting sale.

ASPE contains separate guidance on exploration and evaluation costs whereas IFRS does not.

Goodwill should properly appear on the financial statements of a company which:

When a firm receives a plant asset as a donation,what account should be credited?

Only identifiable intangible assets meet the criteria for capitalization.

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