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

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Question 61

Multiple Choice

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In computing the capitalized interest for 2013, Crocus' average accumulated expenditures are:

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

E) C) and D)
F) None of the above

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Question 62

Multiple Choice

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An exclusive 20-year right to manufacture a product or use a process is a:

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

E) A) and D)
F) A) and C)

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Question 63

Multiple Choice

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Dreamworld's capitalized interest in 2013 was:

In Case A, Pensacola would record the new equipment at:

Lake Incorporated purchased all of the outstanding stock of Huron Company paying $950,000 cash. Lake assumed all of the liabilities of Huron. Book values and fair values of acquired assets and liabilities were: Lake would record goodwill of:

Axcel Software began a new development project in 2012. The project reached technological feasibility on June 30, 2013, and was available for release to customers at the beginning of 2014. Development costs incurred prior to June 30, 2013, were $3,200,000 and costs incurred from June 30 to the product release date were $1,400,000. The 2014 revenues from the sale of the new software were $4,000,000, and the company anticipates additional revenues of $6,000,000. The economic life of the software is estimated at four years. 2014 amortization of the software development costs would be:

Donated assets are recorded at:

McLean Mfg. Company sold a three-speed lathe for $24,000 cash. The lathe cost $66,200 and had a book value of $23,200. Required: Prepare the journal entry to record the sale.

Assets acquired by the issuance of equity securities are valued based on:

What was the final cost of Dreamworld's warehouse?

Simpson and Homer Corporation acquired an office building on three acres of land for a lump-sum price of $2,400,000. The building was completely furnished. According to independent appraisals, the fair values were $1,300,000, $780,000, and $520,000 for the building, land, and furniture and fixtures, respectively. The initial values of the building, land, and furniture and fixtures would be:

Champion Industries exchanged a dust-scrubbing piece of equipment for another version of the same type of equipment and received $12,000 cash. The old dust scrubber cost $76,200 and had a book value of $54,500. The new dust scrubber had a fair value of $58,500. Required: Prepare the journal entry to record the exchange. Assume the exchange has commercial substance.

Interest is eligible to be capitalized as part of an asset's cost, rather than being expensed immediately, when:

Eli Company purchased assets of Whitney Inc. at auction for $1,560,000. An independent appraisal of the fair value of the assets acquired is listed below: Required: Prepare the journal entry to record the purchase of the assets.

Peanut Corporation exchanged land and cash of $6,500 for equipment. The land had a book value of $45,000 and a fair value of $34,000. Assume the exchange has commercial substance. Required: Prepare the journal entry to record the exchange.

During the current year, Brewer Company acquired all of the outstanding common stock of Miller Inc. paying $12,000,000 cash. The book values and fair values of Miller's assets and liabilities acquired are listed below: Required: Prepare the journal entry to record the acquisition by Brewer Company.

How are donated assets recorded?

Kerry, Inc., exchanged land and cash of $8,000 for equipment. The land had a book value of $55,000 and a fair value of $60,000. Required: Prepare the journal entry to record the exchange. Assume the exchange has commercial substance.

The fixed-asset turnover ratio provides:

Agasse Industries began construction of a new facility and took out a $1,500,000, 8% construction loan on April 1, 2013. Agasse made payments to the general contractor of $400,000 on April 1, $900,000 on August 31, and $500,000 on December 31. Required: Compute the amount of interest that Agasse would capitalize in 2013.