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

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Question 41

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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.

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Question 42

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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:

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Question 43

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P.Chang & Co.exchanged land and $9,000 cash for equipment.The book value and the fair value of the land were $106,000 and $90,000,respectively. Chang would record equipment and a gain/(loss)of:

Assets acquired in a lump-sum purchase are valued based on:

The cost of self-constructed fixed assets should:

The acquisition costs of property,plant,and equipment do not include:

Productive assets that are physically consumed in operations are:

Briefly explain the differences between U.S.GAAP and International Financial Reporting Standards (IFRS)in accounting for government grants for the purchase of assets.

Dreamworld's capitalized interest in 2016 was:

Holiday Laboratories purchased a high-speed industrial centrifuge at a cost of $420,000.Shipping costs totaled $15,000.Foundation work to house the centrifuge cost $8,000.An additional water line had to be run to the equipment at a cost of $3,000.Labor and testing costs totaled $6,000.Materials used up in testing cost $3,000.The capitalized cost is:

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.

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

Interest is not capitalized for:

When selling property,plant,and equipment for cash:

The average accumulated expenditures for 2017 by the end of the construction period was:

On August 15,2016,Willis Inc.acquired all of the outstanding common stock of Bork Inc.paying $7,400,000 cash.The book values and fair values of Willis' assets and liabilities are listed below: Required: Prepare the journal entry to record the acquisition by Willis Inc.

Listed below are five terms followed by a list of phrases that describe or characterize each of the terms.Match each phrase with the number for the correct term.

The balance sheets of Davidson Corporation reported net fixed assets of $320,000 at the end of 2016.The fixed-asset turnover ratio for 2016 was 4.0,and sales for the year totaled $1,480,000.Net fixed assets at the end of 2015 were:

Research and development expense for a given period includes:

Use the following to answer questions On June 1,2015,the Crocus Company began construction of a new manufacturing plant.The plant was completed on October 31,2016.Expenditures on the project were as follows ($ in millions) : On July 1,2015,Crocus obtained a $70 million construction loan with a 6% interest rate.The loan was outstanding through the end of October,2016.The company's only other interest-bearing debt was a long-term note for $100 million with an interest rate of 8%.This note was outstanding during all of 2015 and 2016.The company's fiscal year-end is December 31. -What is the amount of interest that Crocus should capitalize in 2015,using the specific interest method?