Question 1

Walker Corporation exchanged land and $4,500 cash for material handling equipment.The land had a book value of $45,000 and a fair value of $58,000.Assume the exchange has commercial substance.
Required:
Prepare the journal entry to record the exchange.

Accepted Answer

The answer of Walker Corporation exchanged land and $4,500 cash...

Question 2

How are assets valued when they are acquired by issuing stock?

Accepted Answer

Record the asset at fair value of the asset or the security,whichever is more clearly evident.

Question 3

During the current year,Peterson Data Corporation acquired all of the outstanding common stock of Junior Jackson Inc.(JJI),paying $36 million in cash.Peterson recorded the assets acquired as follows:  
The book value of JJI's assets and owners' equity before the acquisition were $22 million and $18 million,respectively.
Required: Compute the fair value of JJI's liabilities that Peterson assumed in the acquisition.

Accepted Answer

Fair value of assets - Fair value of liabilities = Cash paid
Therefore,Fair value of liabilities = Fair value of assets - Cash paid = $43 million - 36 million
= $7 million.

Question 4

The exclusive right to benefit from a creative work,such as a film,is a:

Accepted Answer

A)  Patent.
B)  Copyright.
C)  Trademark.
D)  Franchise.

Question 5

The exclusive right to display a symbol of product identification is a:

Accepted Answer

A)  Patent.
B)  Copyright.
C)  Trademark.
D)  Franchise.

Question 6

When is interest capitalized? Briefly describe how the amount to be capitalized is computed.

Accepted Answer

The answer of When is interest capitalized? Briefly describe how...

Question 7

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Accepted Answer

The answer of Listed below are five terms followed by...

Question 8

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Accepted Answer

The answer of Listed below are five terms followed by...

Question 9

Under International Financial Reporting Standards,research expenditures are:

Accepted Answer

A)  Expensed in the period incurred.
B)  Expensed in the period they are determined to be unsuccessful.
C)  Capitalized if certain criteria are met.
D)  Expensed if unsuccessful,capitalized if successful.

Question 10

The successful efforts method of accounting for oil and gas exploration costs allows costs incurred in searching for oil and gas within a large geographical area to be capitalized.

Accepted Answer

A) True 
 B)False

Question 11

Use the following to answer questions 
In its 2016 annual report to shareholders,Plank Breweries included the following note:
Fixed Assets
Fixed assets consist of the following (in $ thousands):
  Total depreciation expense was approximately $2.121 million and $2.179 million for the years ended December 31,2016 and 2015,respectively.
Also,Plank Breweries reported the following information in its annual report (in $ thousands):
  Required:
-Use a T- account to show the balances and changes during 2016 in Plank Breweries:
Fixed assets account and Accumulated depreciation-fixed assets account (in $ thousands).

Accepted Answer

The answer of Use the following to answer questions 
In...

Question 12

In its 2016 annual report to shareholders,Custard Cup Inc.included the following note:
Note 4 Property,Plant,and Equipment
Property,plant,and equipment (PPE)at December 31,2016,and December 31,2015,consisted of the following:
  
Depreciation expense for property,plant and equipment was $26 million in 2016.
Required: Compute the Accumulated depreciation on PPE disposed of by Custard Cup during 2016.

Accepted Answer

The answer of In its 2016 annual report to shareholders,Custard...

Question 13

Assuming that the exchange lacks commercial substance,Horton would record land-new and a gain/(loss)of:

Accepted Answer

The answer of Assuming that the exchange lacks commercial substance,Horton...

Question 14

Use the following to answer questions 
On June 1,2015,the Crocus Company began construction of a new manufacturing plant.The plant was completed on October 31,2016.Expenditures on the project were as follows ($ in millions):
  On July 1,2015,Crocus obtained a $70 million construction loan with a 6% interest rate.The loan was outstanding through the end of October,2016.The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 8%.This note was outstanding during all of 2015 and 2016.The company's fiscal year-end is December 31.
-In computing the capitalized interest for 2016,Crocus' average accumulated expenditures are:

Accepted Answer

A)  $ 46.30 million.
B)  $103.54 million.
C)  $122.30 million.
D)  $124.25 million.

Question 15

Vijay Inc.purchased a three-acre tract of land for a building site for $320,000.On the land was a building with an appraised value of $120,000.The company demolished the old building at a cost of $12,000,but was able to sell scrap from the building for $1,500.The cost of title insurance was $900 and attorney fees for reviewing the contract were $500.Property taxes paid were $3,000,of which $250 covered the period subsequent to the purchase date.The capitalized cost of the land is:

Accepted Answer

A)  $336,400.
B)  $336,150.
C)  $334,650.
D)  $201,150.

Question 16

Average accumulated expenditures for 2016 was:

Accepted Answer

A)  $300,000.
B)  $350,000.
C)  $500,000.
D)  $400,000.

Question 17

The relative fair values are used to determine the valuation of individual assets acquired in a lump-sum purchase.

Accepted Answer

A) True 
 B)False

Question 18

Juliana Corporation purchased all of the outstanding stock of Caldwell Inc. ,paying $2,700,000 cash.Juliana assumed all of the liabilities of Caldwell.Book values and fair values of acquired assets and liabilities were: 
Juliana would record goodwill of:

Accepted Answer

A)  $1,180,000.
B)  $ 600,000.
C)  $ 880,000.
D)  $ 100,000.

Question 19

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Accepted Answer

The answer of Listed below are five terms followed by...

Question 20

On July 1,2016,Jekel & Hyde Inc.purchased land and incurred other costs relative to the construction of a new warehouse.A summary of economic activities is listed below:
  
Required:
Indicate the accounts that would be affected by the above transactions and the resulting balance in each account.Apply the interest on the construction loan to the cost of the building only.

Accepted Answer

The answer of On July 1,2016,Jekel & Hyde Inc.purchased land...

Exam 10: Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Walker Corporation exchanged land and $4,500 cash for material handling equipment.The land had a book value of $45,000 and a fair value of $58,000.Assume the exchange has commercial substance. Required: Prepare the journal entry to record the exchange.

How are assets valued when they are acquired by issuing stock?

The exclusive right to benefit from a creative work,such as a film,is a:

The exclusive right to display a symbol of product identification is a:

When is interest capitalized? Briefly describe how the amount to be capitalized is computed.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

Under International Financial Reporting Standards,research expenditures are:

The successful efforts method of accounting for oil and gas exploration costs allows costs incurred in searching for oil and gas within a large geographical area to be capitalized.

Assuming that the exchange lacks commercial substance,Horton would record land-new and a gain/(loss)of:

Average accumulated expenditures for 2016 was:

The relative fair values are used to determine the valuation of individual assets acquired in a lump-sum purchase.

Juliana Corporation purchased all of the outstanding stock of Caldwell Inc. ,paying $2,700,000 cash.Juliana assumed all of the liabilities of Caldwell.Book values and fair values of acquired assets and liabilities were: Juliana would record goodwill of:

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.