Exam 10: Investments in Noncurrent Operating Assets-Acquisition

Which of the following intangible assets does NOT have the characteristic of exchangeability?

The cost of a building to be used in the operations of a business should usually include all of the following except

On April 30,2014,Brother,Inc.purchased for $30 per share all 200,000 of Cousin Corp.'s outstanding common stock.On this date Cousin's balance sheet showed net assets of $5,000,000.Additionally,the fair value of Cousin's identifiable assets on this date was $400,000 in excess of their carrying amount.On Brother's April 30,2014,consolidated balance sheet,what amount should be reported as goodwill?

Goodwill should be recorded in the accounting records only when

A donated plant asset for which the fair value has been determined,and for which incidental costs were incurred in acceptance of the asset,should be recorded at an amount equal to its

Which of the following is true regarding International Accounting Standard No.23 (IAS 23),"Borrowing Costs," and FASB Statement of Financial Accounting Standards No.34 (SFAS No.34),"Capitalization of Interest Cost"?

According to SFAS No.34,"Capitalization of Interest Cost," interest should be capitalized for assets that are

On February 1,2013,Forwards Corporation purchased a parcel of land as a factory site for $455,000.An old building on the property was demolished and construction begun on a new warehouse that was completed April 15,2014.Costs incurred on the construction project are listed below. Determine the cost of the land and new building.

You are the auditor of Donaldson Corporation,a newly organized company that manufactures plastic cups using an extrusion process.One of the promoters of the company was formerly involved in an enterprise that used the extrusion process and has agreed to contribute an extrusion machine to the new company in return for shares of stock of Donaldson Corporation.What concerns would you have as the auditor of Donaldson Corporation regarding this transaction?

On-Call Service Corporation bought a building lot to construct a new corporate office building.An older home on the building lot was razed immediately so that the office building could be constructed.The cost of purchasing the older home should be

A company made the following cash expenditures on a self-constructed building begun January 1 of the current year: The building is still under construction at year-end.What is the amount of the average accumulated expenditures for the purpose of capitalizing interest?

Diamond,Inc.purchased a machine under a deferred payment contract on December 31,2013.Under the terms of the contract,Diamond is required to make eight annual payments of $140,000 each beginning December 31,2014.The appropriate interest rate is 8 percent.The purchase price of the machine is

On July 31,2014,Mason Company purchased for $4,000,000 cash all of the outstanding common stock of Turquoise Company when Turquoise's balance sheet showed net assets of $3,200,000.Turquoise's assets and liabilities had fair values different from the book values as follows: As a result of the transaction,what amount will be shown as goodwill in the July 31,2014,consolidated balance sheet of Mason Company and its wholly owned subsidiary,Turquoise Company?

A company is constructing an asset for its own use.Construction began in 2013.The asset is being financed entirely with a specific new borrowing.Construction expenditures were made in 2013 and 2014 at the end of each quarter.The total amount of interest cost capitalized in 2014 should be determined by applying the interest rate on the specific new borrowing to the

Solara Company entered into a contract with Hammer Construction Company to construct a building.Construction began in 2014 and was completed in 2015.As of January 1,2015,Solara had made total progress payments to Hammer of $50,000.In addition,interest capitalized on the building during 2014 was $2,500.Solara made additional payments on June 30,2015,and December 31,2015.Solara had issued $80,000 of 9% bonds to finance part of the construction.The average interest on Solara's additional debt was 11% for 2015. How much interest should be capitalized by Solara for 2015?

According to the most current FASB standards,intangible assets acquired in a basket purchase which represents the acquisition of an entire business should be

Everheat Company is an oil and gas exploration firm.During 2014,Everheat engaged in five different exploration projects.The costs associated with these projects are as follows: Only Projects 2 and 5 were successful.As of the end of the year,production had not yet started at either of these two sites. Assuming that all exploration costs were paid for in cash,make the journal entry to record the expenditures for the year using (1)the successful efforts method. (2)the full cost method.

During 2014,Brent Industries,Inc.constructed a new manufacturing facility at a cost of $12,000,000.The weighted average accumulated expenditures for 2014 were calculated to be $5,400,000.The company had the following debt outstanding at December 31,2014: (a)10 percent,five-year note to finance construction of the manufacturing facility,dated January 1,2014,$3,600,000. (b)12 percent,20-year bonds issued at par on April 30,2013,$8,400,000. (c)8 percent,six-year note payable,dated March 1,2013,$1,800,000. Determine the amount of interest to be capitalized by Brent Industries for 2014.

According to the most current FASB standards,intangible assets acquired in a basket purchase that does not represent the acquisition of an entire business should be

Cirrus Inc.purchased certain plant assets under a deferred payment contract.The agreement was to pay $40,000 per year for ten years.The plant assets should be valued at