Exam 8: Operating Assets: Property, Plant, and Equipment, and Intangibles

Fulsom Co. began construction of a new factory at the beginning of 2015. At the end of the year, construction was completed, and construction costs totaled $200,000. Fulsom borrowed $180,000 at the beginning of 2015 to finance the construction and repaid the loan at the end of 2015. The interest rate on the loan was 9%. Determine the following amounts. A. The actual interest incurred on the construction loan during 2015. B. The interest to be capitalized for 2015. C. The total cost of the factory reported on the balance sheet. D. What impact does capitalizing interest have on net income for 2015? Explain.

Goodwill can be recorded as an asset when an

Crouch Apartments purchased an apartment building to rent to university students on December 15, 2012. The tenants moved in on January 1, 2013. On Super Bowl Sunday, a student punched a hole in the wall when his favorite team fumbled the ball. It cost the landlord $400 to repair the hole. How should this cost be recorded?

Acquisition cost is also referred to as .

is are the right to produce or sell a published work.

If Paulson Transport continues to use the ship in its eleventh year, what is the correct accounting procedure?

Burgess Company purchased an asset on January 1, 2014, for $10,000. The asset was expected to have a ten-year life and a $1,000 salvage value. The company uses the straight-line method of depreciation. On January 1, 2016, the company determines that the asset will last only five more years. Calculate the amount of depreciation for 2016. Depreciation for 2014 and 2015: $10,000 - $1,000/10 years =

Identify where each of the following accounts would be reported on Coca­Cola's financial statements -Goodwill

Dayton Ridge Co. purchased new trucks at the beginning of 2015 for $600,000. The trucks had an estimated life of 4 years and an estimated residual value of $50,000. Dayton Ridge uses straight-line depreciation. At the beginning of 2016, Dayton Ridge sold the trucks for $480,000 and purchased new trucks for $700,000. Determine the following amounts: A. Book value of the trucks at the end of 2015. B. Gain loss on the sale of the trucks at the beginning of 2016 Indicate the amount and whether a gain or loss.

Select where the following accounts would be reported on Coca­Cola's financial statements. Select all that apply. -Loss on sale of patent a. Balance Sheet - Property, Plant, and Equipment b. Balance Sheet - Intangible Assets c. Balance Sheet - Current Assets d. Balance Sheet - Other Assets e. Income Statement - Operating Section f. Income Statement - Other Revenue and Expense Section g. Statement of Cash Flows

Which of the following items is added to net income to determine cash flows from operating activities when the indirect method is used to prepare the Operating Activities category of the statement of cash flows?

Asset turnover is calculated as Net income divided by Average Total Assets.

Identify where each of the following accounts would be reported on Coca­Cola's financial statements -Research and development costs

If a company constructs an asset over a period of time and borrows money, the amount of interest incurred during construction on the borrowed money is

Given below is a list of items that may be reported on a statement of cash flows. Identify each as one of the following using the indirect method: -Amortization of a copyright

Given below are costs incurred by Bunker Company during 2014 and 2015. Bunker follows the policy of decreasing the intangible asset account directly as amortized. Research was conducted to discover a new product and costs of $200,000 in 2014 and $80,000 in 2015 were incurred. After several months, a product was created and a patent secured for a cost of $150,000, effective as of July 1, 2015. The company expects to have increased revenues of $500,000 over the next several years. The patent is expected to be useful for the next 10 years. A. Prepare a partial income statement for the year ended December 31, 2015. B. How should the $80,000 cost incurred in 2015 be reported on the financial statements?

Research and development costs should be presented as intangible assets.

isare a costs that improves an operating asset and is are added to the asset account.

Exeter Corporation purchased a piece of equipment with a price of $80,000 on March 1, 2015. The amounts below are related to the equipment purchase. Match the items below and explain why each revenue expenditure is not capitalized. -Terms of the purchase were 2/10, net 30. Edison paid for the purchase on March 8.

Greer Company purchased land for $256,000. Additional costs include a $15,300 fee to a broker, a survey fee of $2,400, $1,750 to construct a fence and a legal fee of $8,500. What is the cost of the land?