Exam 10: Investments in Noncurrent Operating Assets-Acquisition

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

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: Determine the amount of interest to be capitalized by Brent Industries for 2014.

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

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

Which of the following is correct?

Broadcast rights are an example of which general category of intangible asset that should be recognized separately according to current generally accepted accounting principles?

The third year of a construction project began with a $30,000 balance in Construction in Progress.Included in that figure is $6,000 of interest capitalized in the first two years.Construction expenditures during the third year were $80,000 which were incurred evenly throughout the entire year.The company has had over $300,000 in interest-bearing debt outstanding the third year,at a weighted average rate of 9 percent.How much interest for the third year is capitalized?

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?

In a "basket" or "lump-sum" purchase of assets,which of the following best describes the process by which the historical cost of the various assets acquired should be determined?

A copyright is an example of which general category of intangible asset that should be recognized separately according to current generally accepted accounting principles?

A trademark is an example of which general category of intangible asset that should be recognized separately according to current generally accepted accounting principles?

The Maker Company exchanged 25,000 shares of its own $50 par value common stock for a turret lathe from Turner Company.The market value of the Maker Company stock was $68 per share at the date of exchange.The equipment had a carrying value of $1,625,000. Record the exchange on the books of Maker Company in general journal form.

Which of the following principles best describes the current method of accounting for research and development costs?

Shorecrest Company recently accepted a donation of land with a fair value of $250,000 from the city of Sutton in return for a promise to build a plant in Sutton. The entry that Shorecrest should use to record this land is:

Dan Company recently acquired two items of equipment.The transactions are described below: June 10: Acquired a press at an invoice price of $6,500,subject to a 2% cash discount which was taken.Costs of freight and insurance during shipment were $205.Installation costs were $350. November 12: Acquired a welding machine at an invoice price of $4,000,subject to a 4% cash discount which was NOT taken.Additional welding supplies were acquired at a total cost of $300. The increase in the equipment account as a result of the above transactions would be

When a company replaces an old asphalt roof on its plant with a new fiberglass insulated roof,which of the following types of expenditure has occurred?

Which of the following research and development related costs should be capitalized and amortized over current and future periods?

On March 1,2014,the Hauk Company paid $400,000 for all the issued and outstanding stock of Bodo Corporation in a transaction properly accounted for as a purchase.The market values of the assets and liabilities of Bodo Corporation on March 1,2014,are as follows: Make the journal entry necessary for Hauk to record the purchase.

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

Osborne Company acquired three machines for $200,000 in a package deal.The three assets together had a book value of $160,000 on the seller's books.An appraisal costing the purchaser $2,000 indicated that the three machines had the following market values (book values are given in parentheses): Machine 1: $60,000 ($40,000) Machine 2: $80,000 ($50,000) Machine 3: $100,000 ($70,000) The three assets should be individually recorded at a cost of (rounded to the nearest dollar) Machine 1 Machine 2 Machine 3