Exam 10: Investments in Noncurrent Operating Assets-Acquisition

During the year just ended,Salt Company made the following expenditures relating to its plant building: How much should be charged to repair and maintenance expense during the year just ended?

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.

If a company constructs a laboratory building to be used as a research and development facility,the cost of the laboratory building is matched against earnings as

On September 10,Gravelly Company incurred the following costs for one of its printing presses: Neither the attachment nor the renovation increased the estimated useful life of the press.However,the renovation resulted in significantly increased productivity.What amount of the costs should be capitalized?

Which of the following is true?

The general ledger of the Flybird Corporation as of December 31 includes the following accounts: In the preparation of Flybird's balance sheet as of December 31,what should be reported as total intangible assets?

An improvement made to a machine increased its fair market value and its production capacity by 25 percent without extending the machine's useful life.The cost of the improvement should be

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

The term "intangible assets" is used in accounting to denote

On January 1,2014,Mercury Airlines contracted with Dover Aircraft to construct an aircraft to Mercury's specifications at a cost of $2,000,000.During 2014,Mercury paid Dover $400,000 on January 1,and another $250,000 on September 30.On January 1,Mercury borrowed $360,000 at 13% to partially finance the construction,an obligation still outstanding at the end of 2014.The remaining amount paid to Dover was financed from available working capital.Mercury has approximately $1,600,000 of additional debt outstanding at an average interest cost of 12%. Required: What is the total capitalized cost of the aircraft under construction at the end of 2014?

Which of the following most accurately describes the position taken by current generally accepted accounting principles?

On October 1,Azuma,Inc.exchanged 8,000 shares of its $25 par value common stock for a parcel of land to be held for a future plant site.Azuma's common stock had a fair market value of $80 per share on the exchange date.Azuma received $36,000 from the sale of scrap when an existing building on the site was razed.The land should be carried at

On June 30,2014,Diode Inc.purchased for cash at $50 per share all 150,000 shares of outstanding common stock of Moore Company.Moore's balance sheet at June 30,2014,showed net assets with a book value of $6,000,000.The fair value of Moore's property,plant,and equipment on June 30,2014,was $800,000 in excess of its book value.What amount,if any,will be recorded by Diode as goodwill on the date of purchase?

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?

When a company purchases land with a building on it and immediately tears down the building so that the land can be used for the construction of a plant,the costs incurred to tear down the building should be

Bluesy Company acquired land and paid for it in full by issuing $700,000 of its 10 percent bonds payable and 40,000 shares of its common stock,par $10.The stock was selling at $21 per share and the bonds were trading at 102.What amount should Bluesy record as the cost of the land?

Which of the following is true regarding the traditional approach to estimating the fair value of an intangible asset?

During 2014,Robby,Inc.incurred the following costs: In its income statement for the year ended December 31,2014,Robby should report research and development expense of

The Morris Corporation acquired land,buildings,and equipment from a bankrupt company at a lump-sum price of $180,000.At the time of acquisition,Morris paid $12,000 to have the assets appraised.The appraisal disclosed the following values: What cost should be assigned to the land,buildings,and equipment,respectively?

A company purchased land to be used as the site for the construction of a plant.Timber was cut from the building site so that construction of the plant could begin.The proceeds from the sale of the timber should be