FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: Acquisition and Disposition of Property, Plant, and Equipment

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 1

Multiple Choice

Review LaterAdd Note

Review Later

Plant assets purchased on long-term credit contracts should be accounted for at

A) the total value of the future payments.
B) the future amount of the future payments.
C) the present value of the future payments.
D) None of these answers are correct.

Correct Answer

verified

Show Answer

Question 2

Multiple Choice

Review LaterAdd Note

Review Later

What amount should Armstrong Co. record for the asset received?

A) $45,000
B) $48,000
C) $57,000
D) $60,000

Correct Answer

verified

Show Answer

Question 3

Multiple Choice

Review LaterAdd Note

Which of the following nonmonetary exchange transactions represents a culmination of the earning process?

Plant assets may properly include

Use the following information for questions 82 through 85. On January 2, 2014, Indian River Groves began construction of a new citrus processing plant. The automated plant was finished and ready for use on September 30, 2015. Expenditures for the construction were as follows: Indian River Groves borrowed $2,200,000 on a construction loan at 12% interest on January 2, 2014. This loan was outstanding during the construction period. The company also had $8,000,000 in 9% bonds outstanding in 2014 and 2015. -What were the weighted-average accumulated expenditures for 2015 by the end of the construction period?

When a company purchases land with the intention of developing it for a particular use, interest costs associated with those expenditures qualify for interest capitalization.

Tram Industries, a company who uses IFRS reporting standards, is installing a new plant. The company has incurred the following costs Which of these costs can Tram capitalize in accordance with IFRS?

Consider each of the items below. Place the proper letter in the blank space provided to indicate the nature of the account or accounts to be debited when recording each transaction using the preferred accounting treatment. Prepayments should be recorded in balance sheet accounts. Disregard income tax considerations unless instructed otherwise. -In March, the Lyon Theatre bought projection equipment on the installment basis. The contract price was $23,610, payable $5,610 down, and $2,250 a month for the next eight months. The cash price for this equipment was $22,530.

On August 1, 2014, Mendez Corporation purchased a new machine on a deferred payment basis. A down payment of $2,000 was made and 4 annual installments of $12,000 each are to be made beginning on September 1, 2014. The cash equivalent price of the machine was $46,000. Due to an employee strike, Mendez could not install the machine immediately, and thus incurred $600 of storage costs. Costs of installation (excluding the storage costs) amounted to $1,600. The amount to be capitalized as the cost of the machine is

On December 1, Miser Corporation exchanged 4,000 shares of its $25 par value common stock held in treasury for a parcel of land to be held for a future plant site. The treasury shares were acquired by Miser at a cost of $40 per share, and on the exchange date the common shares of Miser had a fair value of $50 per share. Miser received $12,000 for selling scrap when an existing building on the property was removed from the site. Based on these facts, the land should be capitalized at

When a company exchanges nonmonetary assets and a loss results, the company recognizes the loss only if the exchange has commercial substance.

On January 1, 2014, Jackson Company has a building with a carrying value of $80,000 and a remaining useful life 5 years that was recently valued at $240,000. Assuming that the company uses straight-line depreciation, IFRS would show the depreciation as

Horner Company buys a delivery van with a list price of $60,000. The dealer grants a 15% reduction in list price and an additional 2% cash discount on the net price if payment is made in 30 days. Sales taxes amount to $800 and the company paid an extra $600 to have a special device installed. What should be the recorded cost of the van?

Under IFRS, if a company uses the revaluation model for fixed assets, companies must revalue the class of assets regularly.

On February 1, 2014, Nelson Corporation purchased a parcel of land as a factory site for $280,000. An old building on the property was demolished, and construction began on a new building which was completed on November 1, 2014. Costs incurred during this period are listed below: Nelson should record the cost of the land and new building, respectively, as

Assets classified as Property, Plant, and Equipment can be either acquired for use in operations, or acquired for resale.

On December 1, 2014, Kelso Company acquired new equipment in exchange for old equipment that it had acquired in 2011. The old equipment was purchased for $140,000 and had a book value of $53,200. On the date of the exchange, the old equipment had a fair value of $56,000. In addition, Kelso paid $182,000 cash for the new equipment, which had a list price of $252,000. The exchange lacked commercial substance. At what amount should Kelso record the new equipment for financial accounting purposes?

The period of time during which interest must be capitalized ends when

Sutherland Company purchased machinery for $960,000 on January 1, 2011. Straight-line depreciation has been recorded based on a $60,000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2015 at a gain of $18,000. How much cash did Sutherland receive from the sale of the machinery?

Worthington Chandler Company purchased equipment for $36,000. Sales tax on the purchase was $2,400. Other costs incurred were freight charges of $600, repairs of $350 for damage during installation, and installation costs of $675. What is the cost of the equipment?