Exam 10: Property, Plant, and Equipment: Accounting Model Basics

Nickel Corporation uses the fair value model of accounting for its investment property. The fair values of its property were: December 31, 2020, $ 180,000 and December 31, 2021, $ 195,000. At December 31, 2021, Nickel should

An expenditure that maintains an existing asset so that it can function in the manner intended should be

Chad Corporation purchased a tract of land for $ 765,000, which included a warehouse and office building. The following data were collected concerning the property: Land \ 300,000 \ 250,000 Warehouse 200,000 150,000 Office building What are the appropriate amounts that Chad should record for the land, warehouse, and office building, respectively?

Use the following information to solve the following questions: Morocco Corp. purchased land as a factory site for $ 250,000. They paid $ 10,000 to tear down two buildings on the land, and the salvage from these old buildings was sold for $ 1,350. Legal fees of $ 870 were paid for title investigation and making the purchase. Architect's fees were $ 10,300. Title insurance cost $ 600, and liability insurance during construction cost $ 650. Excavation costs were $ 2,610. A contractor was paid $ 600,000 to construct the new building. An assessment made by the city for pavement was $ 1,600. Interest costs during construction were $ 42,500. -The cost of the building should be recorded at

Examples of property, plant, and equipment include

Property, plant, and equipment purchased on long-term credit contracts should be accounted for at the

Use the following information to solve the following questions: Tunisia Inc. owns assets to which it applies the revaluation model (asset-adjustment method). The following additional information is available: 1. Accumulated Depreciation at December 31, 2021, (prior to any fair value adjustments) was $ 12,000. 2. Between December 31, 2020, and December 31, 2021, the property's fair value had increased by $ 30,000. 3. The December 31, 2021, balance in the revaluation surplus account (prior to any fair value adjustments) was $ 2,000. -The adjusted December 31, 2021, balance in the related contra-asset account will be

During calendar 2020, Somalia Corp. incurred weighted-average accumulated expenditures of $ 800,000 during construction of assets that qualified for capitalization of interest. The only debt outstanding during 2020 was a $ 900,000, 8%, five-year note payable dated January 1, 2018. The amount of interest that should be capitalized during calendar 2020 is

Which of the following expenditures after acquisition would NOT be capitalized?

Land was purchased to be used as the site for the construction of a plant. A building on the property was sold and removed by the buyer so that construction on the plant could begin. The proceeds from the sale of the building should be

On February 1, 2020, Sudan Corp. purchased a parcel of land for $ 300,000 as a factory site. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2020. Costs incurred during this period are listed below: Demolition of old building..............................................................$25,000 Architect's feer .................................................................................35,000 Legal fees for title invertigation and purchase contract.............. $\quad 5,000$ Construction costs............................................................................990,000 (5alvaged materials resulting from demolition were sold for $\$ 10,000$ .) Sudan should record the cost of the land and new building, respectively, at

Costs included in assets Eritrea Ltd. is expanding its operations. Due to the expansion, they incurred the following costs during the fiscal period when they constructed a new factory: Direct labour 70,000 Loan interest to finance expansion. 3,000 Architectural drawings 15,000 Purchase of company car for the new plant manager. 44,000 Direct material for factory 81,000 Allocation of overhead based on labour hours worked on factory 58,000 Imputed interest on lost opportunity costs 9,000 Instructions Which of these costs should be included in the cost of the new factory?

Which of the following is NOT included in the IAS16 definition of property, plant, and equipment (PPE)?

On January 2, 2020, Zimbabwe Corp. purchases a new machine. The company makes a $ 3,000 cash down payment, and agrees to pay eight semi-annual instalments of $ 2,000 each, starting July 1, 2020, signing a non-interest-bearing note to this effect. The cash equivalent price of the machine is not known, but the appropriate interest rate for this type of transaction is 8% p.a. Rounding to the nearest dollar (if necessary), Zimbabwe should record the cost of the machine at

Which of the following would NOT be included in the cost of an item of property, plant, and equipment?

On September 10, 2020, Angola Printing incurred the following costs for one of its printing presses: Purchase of stapling attachment.............................................................$84,000 Installation of attachment........................................................................10,000 Replacement parts for renovation of presz......................................... $\quad 36,000$ Labour and overhead in connection with renovation of presc ............ $\quad 14,000$ Neither the attachment nor the renovation increased the estimated useful life of the press. However, the renovation resulted in significantly increased productivity. What amount of the costs should be capitalized?

Acquisition Cost Rwanda Corporation purchased land at a cost of $ 100,000. Closing costs were $ 3,800, plus Rwanda paid $ 48,000 for site preparation so they could construct a building on the site. Instructions Calculate the amount that should be recorded as the cost of the land.

Use the following information to solve the following questions: On March 1, 2020, Mauritania Ltd. purchased land for $ 270,000 cash, which they intend to use for their new head office. Construction on the office building began on March 1. The following expenditures were incurred for construction: Date Expenditures March 1,2020 \4 50,000 April 1,2020 May 1,2020 450,000 June 1,2020 720,000 The office building was completed and ready for occupancy on July 1. To help pay for construction, Mauritania borrowed $ 360,000 on March 1, 2020, on a 9%, three-year note payable. Other than this note, the only other debt outstanding during 2020 was a $ 150,000, 10%, six-year note payable dated January 1, 2019. -The weighted-average accumulated expenditures on the construction project during 2020 were

Under ASPE, the costs for environmental clean-up at the end of an asset's useful life